Lease Requirements
Deasy’s Act
LANDLORD AND TENANT LAW AMENDMENT ACT, IRELAND, 1860
Basis of relationship
3. The relation of landlord and tenant shall be deemed to be founded on the express or implied contract of the parties, and not upon tenure or service, and a reversion shall not be necessary to such relation, which shall be deemed to subsist in all cases in which there shall be an agreement by one party to hold land from or under another in consideration of any rent.
Writing
4. Every lease or contract with respect to lands whereby the relation of landlord and tenant is intended to be created for any freehold estate or interest, or for any definite period of time not being from year to year or any lesser period, shall be by deed executed, or note in writing signed by the landlord or his agent thereunto lawfully authorized in writing.
Irish Cases
Covenants Run
Lyle v Smyth
King’s Bench Division.
23 November 1908
[1909] 43 I.L.T.R 255
Lord O’Brien L.C.J., Gibson, Madden Kenny JJ.
O’Brien, L.C.J.
This case brings up again a controversy which has existed for some centuries in the law—namely, when does a *256 covenant run with the land? [His Lordship states the facts and reads the covenant in the lease.] The words are—“During the continuance.” The sea wall which is referred to is not on any part of the demised premises, but is essential to the protection and preservation of the demised premises. Mr. Justice Wright states, in paragraph 5 of the case stated, that it was further proved that a storm occurred on Nov. 6, 1905, that the whole wall and the wall as a whole is necessary for the protection of the coast at that point. The learned judge also finds that if the defendant is bound to contribute his proportion would be £20 6s. The question is—Is he, under the circumstances, bound to contribute? I am of opinion that the defendant, who is the assignee of the lessee, is bound to contribute on two grounds—viz., (1) That the obligation to contribute is not a mere collateral agreement, but is a covenant which runs with the land; and (2) the covenant is one coming within the provisions of s. 12 of the Landlord and Tenant (Ireland) Act, 1860. The word assigns is used, and what is provided for is clearly for the benefit, protection, and, indeed I might say, for the preservation of the subject-matter demised. It has been held that though a thing to be done is not upon part of the land demised, yet if it is clearly for the benefit, support, and maintenance of the subjectmatter demised the obligation runs with the land: see Easterby v. Salmon, 6 Bing 644, p. 658 (judgment of Chief Baron Alexander). In the present case the wall affected the value of the thing demised in the most distinct way. The difficult question in the case is—Does the obligation created by the lease on the lessee to contribute a proportionate sum of the amount expended by the lessor on the upkeep of the wall run with the land? There is no case precisely in point. In my opinion, having regard to the object contemplated, the obligation comes within that class of obligations which run with the land. The instrument contemplates that in the first instance the repairs shall be made by the lessor, yet he works for the common interest of the tenants in a matter that concerns the land, and he may be regarded as agent pro tanto — that is, an agent to repair so much of the wall as may be necessary. But what is the common liability? In Morland v. Cook, L. R. 6 Eq. 262, Lord Romilly is reported to have said:—“All persons enjoying the benefit of a sea wall are bound and are liable to repair in the absence of special custom.” Mr. Justice Wright has found it was for the benefit of both landlord and tenant that this wall should be kept up. The covenant provided for its upkeep, and regulated the proportion of liabilities. The obligation was in substance and in esse an obligation that ran with the land. Now, coming to s. 12 of the Landlord and Tenant Act (Ireland), 1860, there arises a question of very great general importance. His Lordship having referred to the judgment of Lord Justice Holmes in Re M’Naul’s Estate, [1902] 1 Ir. R. 114, continued:— Tenure is gone as the foundation of landlord and tenant; that relation now rests on contract, and Dewar’s Case so much relied on does not assist us. If the relation of landlord and tenant rests upon privity of contract should not an “assignee” be bound by an instrument in which the word “assigns” is used when he takes under that instrument, and must be presumed to know its contents, and when the thing contracted to be done is clearly for the support, maintenance, benefit and protection of the premises demised. The defendant has entered upon the subject-matter of the tenancy under an instrument which uses the word “assigns,” and now endeavours to renounce the contractual obligation which relates to the subject-matter of the contract. This, in my opinion, he cannot do. On all grounds the plaintiff is entitled to judgment.
Gibson, Madden, and Kenny, JJ., concurred.
Dawson v Davis
Exchequer Division.
9 May 1879
[1879] 13 I.L.T.R 125
Palles C.B., Dowse B.
Demurrer.—The statement of claim in this action, which was brought to recover arrears of rent-charge, alleged as follows:—“1. By an indenture dated the 26th day of October, 1850, and made between William M’Cormick of the one part, and the plaintiff of the other part, William M’Cormick granted to the plaintiff for her life an annuity or yearly rent-charge of £25, charged upon, and to be issuing out of, the lands and hereditaments hereinafter mentioned, payable half-yearly, on every 1st day of May and 1st day of November.1 2. By a conveyance dated the 1st day of July, 1874, the Right Honourable Stephen Woulfe Flanagan, as one of the judges of the late Landed Estates Court, granted to the defendant part of the Long Meadows, known as Nos. 1, 2, and 3, Park-place, Conyngham-road, as also another house not numbered, all situate in the barony of Castleknock, and county of Dublin, subject to the aforesaid annuity or yearly rent-charge of £25 for the life of the plaintiff, and payable half-yearly on every 1st of November and every 1st of May. 2 3. The defendant entered into possession of the said lands, and under the said last-mentioned conveyance, and while he was so possessed five half-yearly payments of the said rent-charge, to wit:—£12 10s. on the 1st of November, 1876; £12 10s. on the 1st of May, 1877; £12 10s. on the 1st of November, 1877; £12 10s. on the 1st of May, 1878; £12 10s. on the 1st of November, 1878, accrued due, and became and was payable from the defendant to the plaintiff; yet the defendant did not pay the same, and the same remains wholly due and unpaid.”3
The defendant demurred to the statement of claim on the ground that it was not thereby shown that the defendant was in any manner bound to pay the annuity or yearly rent-charge in the said statement of claim mentioned, and on other grounds sufficient in law to sustain this demurrer. In reply to a notice from the plaintiff requiring the defendant to furnish him with the points of law relied upon in support of the demurrer, the following points of demurrer to the statement of claim were set out and served on the plaintiff:—1. It is not shown by the statement of claim that the defendant is in any manner bound to pay the annuity or yearly rent-charge therein mentioned. 2. It is not alleged that the indenture of the 26th of October, 1850, in the statement of claim mentioned, contains any covenant to pay the said annuity or yearly rent-charge, moreover, such a covenant does not run with the lands, or bind the assignee thereof. 3. The only person liable to pay the said annuity or yearly rent-charge is William M’Cormick in the statement of claim mentioned, if living, or his personal representative, if he is dead, as such personal covenant does not run with lands.
J. Murray (with him, Webb, Q.C.), in support of the demurrer.—The question is whether the liability of a purchaser, such as the defendant, is of a personal nature. The statement of claim does not allege that the covenant exists in the deed of conveyance of the Landed Estates Court. The rights of the plaintiff under this deed are to distrain for the amount of the rent-charge, or to apply to have a receiver appointed over the lands, but there is no personal liability against the defendant. The covenant does not run with the land or rent or reversion: Platt on Covenants, 475.4 A grant of rent-charge does not run with the land, but the heir is liable. In Brewster v. Kidgill, 12 Mod. Rep. 171, Lord Holt, C.J., says: “If he (the tenant) be assignee, I do not think him chargeable in law; for this covenant does not run with the land. I make no doubt, but that the assignee of the rent shall have covenant against the grantor, because it is a covenant annexed to the thing granted; but that the covenant should run with the rent against the assignee of the land, I see no *125 reason.” The covenant sued on is clearly personal and does not run with the land: Milnes v. Branch, 5 M. & S. 411. The plaintiff cannot sue the defendant in debt for arrears of the annuity: Randall v. Rigby, 4 M. & W. 130. The covenant is only collateral to secure payment of the rent-charge: Exors. of Kennedy v. Stewart, 7 I. L. R. 421; Butler v. Archer, 12 I. C. L. R. 104.
Palles, C.B.
[It is my view that an action would lie, because of the obligation to pay, just as well if there was no covenant at all.]
Thomas v. Sylvester, L. R. 8 Q. B. 368, is to be distinguished, because that decision is not that an action lies on a covenant, but in debt. If the annuity were charged on the land by will, no one would be bound in law to pay it.
[Palles, C.B.—Supposing M’Cormick was sued for the rent-charge, and payed it, would he have no remedy against you?]
He is primarily liable at all events.
[Palles, C.B.—What I doubt is that the defendant can keep the land and not pay the rent-charge.]
In Whitaker v. Forbes, L. R. 10 C. P. 583 (on app. 1 C. P. D. 51), Lord Cairns, C., seems to throw doubt on the authority of Thomas v. Sylvester; at most it only goes to establish that in some cases debt will lie. The remedies provided in the deed are, distress and re-entry.
Eiffe, contra.—We do not rely on the point that the covenant runs with the land, but contend that both at law and in equity we are entitled, on this statement of claim, to recover. Under the 21st section of the Judicature Act this division has the jurisdiction of all the other divisions, and can grant equitable relief. The ground at common law on which we rely is that the rent-charge accrued due while the defendant was in possession. The grantees of the Landed Estates Court ought to be liable.
[Palles, C.B.—The 87th section of the “Landed Estates Court Act” makes provision for creating a liability in the grantee. Dowse, B.—Does the annuity deed show that M’Cormick was possessed in fee?]
His tenure as to part of the lands was not freehold. As regards Thomas v. Sylvester (ubi sup.), the point of that case was that there was a demurrer, because the plaintiff regarded the debt as of a personal nature.
[Palles, C.B.—It is not necessary to show that the action is maintainable at common law.]
In Whitaker v. Forbes (ubi sup.), Lord Cairns lays it down that in such a case as this there is no liability by way of contract, but by privity of estate.
As to the equitable view of the case he cited Cupit v. Jackson, 13 Price 721; Beamish v. Austen, 9 Ir. L. T. Rep. 97.
Webb, Q.C., in reply.—Even assuming that the Court of Chancery has power to grant relief this court has not. The 36th section of the Judicature Act provides that “there shall be assigned to the Chancery Division … all causes for the raising of portions or other charges on land.” The equity jurisdiction given by the Judicature Act to the common law courts does not empower this court to grant relief here, because the action has been assigned to the wrong division. The plaintiff’s remedy for this would be to have a receiver appointed or by distress.
[Palles, C.B.—If this statement of claim were a bill filed for the appointment of a receiver, I think it would be demurrable.]
If the heir-at-law took, subject to a rent-charge, it cannot be contended that he could be sued. The consequences of introducing such a principle, as that involved in holding the defendant here liable, are so grave that the court should pause before it makes so important a change in the law of real property in this country, which differs considerably from that of England.
[Palles, C.B.—We are not introducing any new liability, but the question is as to where the liability rests.]
If the rent-charge will not run, as a liability, with the land under a covenant a fortiori it will not run where the liability is only implied: Roach v. Wadham, 6 East, 228.
[Palles, C.B.—If you are not in the position of the original grantor, I am prepared to go the whole length with you.]
There was no privity of estate at all, and the Landed Estate Court conveyance was not the conveyance of M’Cormick.
Dowse, B.
[How is it less than a conveyance from M’Cormick?]
Because the Landed Estates Court creates a new estate in every case where it conveys land. The question is, can you, by an action for debt, raise the question of the liability to pay a rent-charge. No real action, or one for debt lies: Dodd v. Thompson, L. R. 1 C. P. 133. Thomas v. Sylvester (ubi sup.) is the only case where debt has been held to lie, and we contend that it has been wrongly decided.
Palles, C.B.
[I am very much impressed with the reasons of the decision in that case.]
If this is not in the nature of a debt the court will not make it so. Formerly the remedy at common law used to be by an assize of novel disseisin, and the action did not then run with the land: Co. Litt. 153 A; Roscoe’s Real Actions, 332.
[Palles, C.B.—Under the old law the plaintiff would have been obliged to bring an action which would have resulted in a judgment for rent and averages personally against the tenant; it was an action in rem carrying something else with it. Dowse, B.—If the plaintiff shows that to the extent of the land he can get judgment against you, he must succeed. Palles, C.B.—Sir W. Leving’s case, 26 Ed. III. 64, would show that this action was founded on a debt, and long previous to Thomas v. Sylvester, it had been held that where the tenant was dead the form of the action was in debt.]
Debt does not lie for arrears of annuity during the continuance of the freehold: Webb v. Jiggs, 4 M. & S. 113.
He, also, cited Rasley v. Freeman, 3 I. R. 63; Freeman v. Hanah, 12 C. B. 413; 10 Chas. I., Sess. 2, cap. 5 (Ir.); 22 Hen. VIII., c. 37.
Palles, C.B.—In this case we are of opinion that the demurrer must be overruled. It is true that the facts are not clear upon the face of the pleadings, but they may be properly set out by amendment, if necessary. At present no distinction exists between law and equity, and we are, therefore, bound to give effect to equitable doctrines when applicable to a case brought before us. We could not, by allowing this demurrer, say that the plaintiff had no cause to seek relief. Formerly such an action as this would be properly brought in a court of equity, and there is no doubt that at common law an action of debt for arrears of rent-charge could not have been maintained. According to the provisions of 3 & 4 Will. IV., c. 27, the only action which could be maintained would have been a real action or a real and mixed action. The reason that formerly the action of debt did not lie at common law was because debt was suspended by the existence of a higher remedy in a real action. That rent-charge is due by the assignee of the land is laid down in Leving’s case (ubi sup.) and in Thomas v. Sylvester (bui sup.) We are prepared to treat the de *126 cisions of the courts at Westminster just in the same manner that those courts would treat our decisions, that is with the greatest respect, and we will follow them, provided that we are satisfied that the grounds of their judgments are right. Accordingly, being satisfied with the reasoning in Thomas v. Sylvester, we must hold that the demurrer cannot be sustained; and being of opinion that that case was rightly decided, we think that it rules the case before us. Leving’s case also has been followed for three hundred years, and is undoubtedly an authority here. It has been contended, on behalf of the defendant, that he was not assignee of the estate of M’Cormick (the grantor of the annuity or rent-charge) in the lands in question. We must hold that he was. Further, we are satisfied that a new estate was not created by the Landed Estates Court conveyance; that conveyance operated only as transfer of the previously existing estate which was in M’Cormick. For these reasons we are of opinion that the demurrer cannot be allowed.
Dowse, B.
I am content to base my judgment on the ground that there is a good common law right of action, and that it may be maintained here. Thomas v. Sylvester is not distinguishable in any way from this case, and being satisfied with the grounds of the judgment in that case, we must overrule this demurrer. We will allow the plaintiff to amend the statement of claim, and give the defendant a week to plead to the statement of claim when amended.
Square Management Ltd v Dunnes Stores Dublin Co
[2017] IECA 256
JUDGMENT of Ms. Justice Whelan delivered on the 6th day of October 2017
Introduction
1. Dunnes Stores Dublin Company (hereinafter “Dunnes”) holds the leasehold interest in two units at Tallaght Shopping Centre (hereinafter “the Shopping Centre”). On 23rd September, 2014 An Bord Pleanála granted planning permission, Planning Register Reference Number SD13A/0192 to the third named respondent, Indego, for the phased construction of, inter alia, a six level multi-storey car park to include 832 car parking spaces on part of the common areas including the Northern Car Park Area of the Shopping Centre. Overall, the development proposed results in a net increase in parking capacity of 432 spaces at the Shopping Centre.
2. This appeal concerns whether the first and second named respondents (hereinafter referred to as “the Landlord”), as owners of the Shopping Centre and its common areas are entitled to carry out the development on foot of the planning permission.
3. Dunnes contends that they enjoy rights either under the terms of an Indenture dated 1st August, 1991 (hereinafter “the 1991 Indenture”) or otherwise pursuant to the terms of leases dated 11th June, 1990 (hereinafter “the E & G Lease”) and 21st August, 1992 (hereinafter the “F Lease”) of such a nature as to entitle it to veto or otherwise restrain the proposed development. They further insist that the common areas of the shopping centre and, in particular, the Northern Car Park Area be maintained for the respective terms of the said leases in its current configuration of 289 surface level car parking spaces. In the case of the E & G Lease the residue of the term outstanding is in excess of 9,950 years.
4. In a comprehensive judgment delivered 2nd March, 2017, Barrett J. in the High Court found for the Landlords holding inter alia that the 1991 Indenture was null and void: see [2017] IEHC 146. He further held that the development was permitted by the terms of the E & G and F Leases and that the proposed development was not a derogation from the grants of either of the said leases.
The Title
5. The title was considered in detail by Barrett J. in his judgment. Given that the respective rights of the parties at issue in this appeal are governed by the terms of certain key deeds it is necessary to briefly set them out again.
6. The Landlord’s title may be summarised as follows:-
On 22nd October, 1984, an Agreement was made between Dublin Corporation of the one part and L & C Properties Limited of the other part whereby L & C agreed to build the development which later came to be known as Tallaght Shopping Centre. Dublin Corporation agreed to grant to L & C Properties a lease on the terms of a draft Head Lease annexed to the said agreement subject to the terms as therein provided.
7. A specific proviso contained in the said agreement provides as follows:-
“(5) The Corporation shall provide by way of licence to the Lessee at a fee of 1 Pound (IR £1.00) per annum in the form annexed hereto car – parking facilities for up to 2,000 car spaces on completion of the Approved Development with finished and adequate access roadways services and roadways to service yard areas footpaths and pedestrian malls and lighting to serve the same at a location or locations agreed or to be agreed between the Corporation and the Lessee in proximity to the Approved Development regard being had at all times to the further development of the Town Centre, Tallaght, such car parking facilities to be maintained by the Lessee to the satisfaction of the Corporation and the same shall be handed over by the Corporation to the Lessee complete in all respects as to such access roadways, footpaths and pedestrian malls, lighting, entrances and exits, surface markings, foundations and surfaces not later than the date of completion of the approved development under clause (3) hereof. The said Licence shall provide, inter alia, that the Lessee shall be entitled to make such appropriate regulations as it may consider necessary in relation to the operation of the said car park.”
8. This agreement was ultimately rescinded by a subsequent agreement made between the same parties on 8th September, 1988 and was superseded by a Lease executed on the same date.
The 1988 Indenture
9. The Landlord’s leasehold root of title thus derives from an Indenture of Lease made on 8th September, 1988 (hereinafter “the 1988 Indenture”) between Dublin Corporation of the first part, Dublin County Council of the second part, and the Landlord’s predecessor in title, L & C Properties Limited of the third part.
10. In the 1988 Indenture, “the licensed lands” are defined as meaning the lands “hereby licensed upon the terms and conditions contained in the First, Second and Third parts of the Third schedule hereto.”
11. It demises 10 acres for the term of 10,000 years from 8th September, 1988.
12. The Third Schedule to the 1988 Indenture is in three parts each pertaining to a different parcel of the adjoining lands. Various elements are of note in the context of these proceedings. Part 2 of the Third Schedule pertains to the lands described by the parties in these proceedings as the “call back lands”, being lands the title to which was retained by Dublin Corporation and which it reserved for anticipated future building development and in respect of which it reserved to itself the right to call for possession of all or part of same. In the meantime, Dublin Corporation granted a licence to the lessee to lay out the “call back lands” as car parking facilities on a temporary basis pending it being required by the Corporation or its successors or assigns for building purposes.
13. The “call back lands” comprised three plots of ground over part of the Northern Car Park Area at the shopping centre and continued in the beneficial ownership of Dublin Corporation and hence subject to termination of the licence and the possibility of possession being called for. Later, title passed to South Dublin County Council and ultimately the “call back lands” were acquired by the second named respondent, National Asset Property Management DAC on or about 24th October, 2014.
14. In part 3 of the Third Schedule to the 1988 Indenture, Dublin Corporation and Dublin County Council granted a licence to the Lessee, L & C Properties, to enter upon certain lands marked yellow on the annexed map “for the purpose of constructing, maintaining and servicing, inter alia, car parking facilities and other works provided for in the Fourth Schedule at the lessee’s expense”.
15. In substance, the lessee was granted a non-exclusive licence to park and any car parking provided by the lessee was to be available for use by the Corporation including for the users of any buildings constructed on the “call back lands”.
The Guardian Indenture
16. By Indenture of Assignment and Transfer of 1st August, 1989 (hereinafter the “Guardian Indenture”) between L & C Properties Limited on the first part, Dublin Corporation on the second part, Dublin County Council on the third part and Guardian Assurance plc on the fourth part, L & C assigned its interest in the shopping centre under the 1988 Indenture to Guardian Assurance for the residue of the term of 10,000 years. Dublin Corporation and Dublin County Council granted to Guardian Assurance the licences “as appurtenant to the premises the licenses specified in Parts One, Two and Three of the Third Schedule of the Lease subject to the provisions and conditions therein contained”.
The 1989 Indenture
17. By Indenture of Lease dated 1st August, 1989 (hereinafter “the 1989 Indenture”) made between Guardian of the first part and L & C of the second part, Guardian sub demised the property back to L & C for the term of 9,990 years from the date of the Indenture. Guardian granted to L & C, with the consent and by the direction of the Dublin Corporation and Dublin County Council certain licences over the demised lands in substantially identical terms to the licences contained in the 1988 Indenture.
18. The operative part of the 1989 Indenture provides as follows:-
“2. In consideration of the Lessee undertaking and covenanting to construct and complete the Covenanted Works pursuant to the covenant in that behalf hereinafter contained at clause D hereof in accordance with the terms and provisions of the Fourth Schedule hereto and in consideration also of the covenants and conditions on the part of the Lessee therein contained the Lessor with the consent and by the direction of the Corporation and the Council as to its estate, right, title and interest in the licensed lands and the Corporation and the Council respectively as to all their estates, rights, titles and interests in the Licensed Lands hereby grant to the Lessee as appurtenant to the demised lands for the term of this Lease the benefit of the licences in accordance with the provisions contained in the First, Second and Third Parts of the Third Schedule hereto upon the terms and conditions therein contained.”
Common Parts Transfer
19. There was a further Indenture dated 19th October, 1990 (“the Common Parts Transfer”) made between Guardian Assurance, first part, L & C Properties, second part, Ansbacher, third part and The Square Management Limited, fourth part. Guardian and L & C, as beneficial and registered owners respectively, granted, assigned and transferred to The Square Management Limited the common areas of the shopping centre together with the leasehold reversions of the shopping centre units for the respective residues unexpired of the terms of the 1988 and 1989 Indentures together with the licences specified in the First, Second and Third Parts of the 1988 and 1989 Indentures respectively. It is noteworthy that neither Dublin County Council nor Dublin Corporation was a party to the Common Parts Transfer.
2014 Transfer
20. By deed of Transfer dated 24th October, 2014 made between South Dublin County Council of the one part and National Asset Property Management Limited of the other part, South Dublin County Council (which had previously acquired the interest of Dublin Corporation in, inter alia, the call back lands) transferred certain properties adjacent to the shopping centre including the common areas and the “call back lands” to National Asset Property Management Limited.
Dunnes’ title
The E & G Lease
21. By Indenture made 11th June, 1990 between L & C Properties Limited first part, Ansbacher and Company Limited second part and Dunnes Stores Dublin Company third part (the “E & G Lease”), Dunnes acquired a unit in the shopping centre for the term of 9,980 years from 1st March, 1990 subject to the yearly rent of £1 thereby reserved and the covenants on the part of the tenant and the conditions therein contained. The habendum in the E & G Lease provides:-
“AND for the consideration aforesaid the Landlord with the consent of the Bank hereby grants unto the Tenant the Licence specified in the Fourth Part of the First Schedule hereto.”
The Fourth Part of the First Schedule sets out the licence granted to Dunnes as follows:-
“Licence Subject to the provisions of the Third part of this Schedule the right of the Tenant, its permitted Successors, Assigns, Licensees and invitees to use the car parking spaces as designated for such use by the Landlord during the term hereby granted.”
22. Dunnes agreed with the Landlord in Section III, at clause 3.2 (15) to perform and observe applicable covenants in the 1989 Indenture:-
“3.2(15) “Other than the covenant to pay the rent, the covenant to construct and complete the covenanted works and the Approved Development as provided in the Superior Lease and any other covenants which shall be deemed to be varied or of no relevance having regard to the provisions of these presents, to perform and observe the covenants, conditions and provisions in the Superior Lease insofar as same apply to the Demised Premises.”
23. Section V of the E & G Lease contains the following proviso:-
“Limitation on Acquisition of Easements
5. 1 (3) The Tenant shall not be entitled to any rights of light and air to the Demise Premises to any other right or easement whatsoever (other than those hereby expressly granted) which would or might restrict or interfere with the free user, development, reconstruction or rebuilding of the Square, Towncentre Tallaght or any part thereof but the Tenant shall always be entitled to such rights of light and air to the Demise Premises which may reasonably be considered necessary for the proper carrying on of its trade or business.”
24. There is a further proviso for the benefit of the Landlord in Part V, Clause 5.1 (4):-
“Adjoining Lands
5.1 (4) (…) the Landlord shall have power at all times without obtaining any consent from or making any compensation to the Tenant to deal as the Landlord may think fit with any of the lands and premises adjoining or opposite to the Demised Premises and to erect or suffer to be erected on such adjoining, nearby, opposite or neighbouring lands and premises any building whatsoever whether such buildings shall or shall not affect or diminish the light or air which may now or at any time or times during the said term be enjoyed by the Tenant or other Lessees or Tenants or occupiers of the Demised Premises or any part thereof.”
25. The rights and easements excepted and reserved for the benefit of the Landlords are specified in the Third Part of the First Schedule. Of central importance in these proceedings is clause 6 which provides:-
“6. Subject to the conditions for reinstatement herein contained full and free right and liberty to alter and/or redevelop (by way of improvement, development, renovation, refurbishment or otherwise) or carry out modifications or extensions or additions to or at the Centre including the Common Areas and to authorise any present or future owner or occupier of nearby or adjoining premises (within or outside the Centre) to demolish, build or rebuild, alter or develop the building or buildings thereon or use the same in any manner notwithstanding that any such demolition, building, rebuilding, alteration, development or user as aforesaid may affect or interfere with or diminish the light coming to the Demised Premises or may temporarily interfere with the occupation, use or amenity or engagement of the Demise Premises.”
1991 Indenture
26. By Indenture made the 1st August, 1991 (hereinafter “the 1991 Indenture”) between The Square Management Limited of the first part, L & C Properties Limited of the second part and Dunnes of the third part, The Square Management Limited and L & C assigned the benefit of the licences specified in the 1989 Indenture to Dunnes “TO THE INTENT that the said Licences shall endure for the term of 9,980 years from the 15th day of March, 1990.”
27. Central to Dunnes’ appeal is the nature and extent (if any) of the rights they enjoy under this Indenture.
The F Lease
28. By Indenture of 21st August, 1992 (hereinafter “the F Lease”) between Square Management of the first part, L & C Properties Limited of the second part and Denis Guiney Limited of the third part, L & C demised unto Denis Guiney Limited a commercial unit (Store F, Level 3) in the shopping centre for the term of 35 years from 1st September, 1992. The said demise was granted together with the easements and rights specified in the Second Part of the First Schedule excepting and reserving unto the Landlord and the Freeholder the rights, easements, exceptions and reservations in like terms to the E & G Lease.
29. By virtue of a Transfer of Leasehold Folio 78275 L, County Dublin dated 20th December, 2002, Denis Guiney Limited transferred its leasehold interest under the F Lease to Dunnes. Dunnes thereby acquired the lessee’s title under the F Lease.
Purported Revocation
30. Following the granting of planning permission to Indego by An Bord Pleanála on 23rd September, 2014 the Landlords corresponded with Dunnes regarding the proposed carrying out of the development on foot of the permission. Ultimately, on 29th October, 2015 the landlords’ solicitors wrote to Dunnes in the following terms:-
“If and insofar as it is asserted that you have any rights to use the lands at the Centre (whether for car parking or otherwise) beyond the rights expressly provided for in your lease dated 11th June, 1990 (which assertion is not admitted), for the avoidance of doubt any such purported rights are hereby revoked with effect from 1st July, 2016 and this letter should be treated as notice of such revocation.”
31. At issue in this appeal is whether this letter was effective to revoke the rights of Dunnes under the 1991 Indenture.
Pleadings
32. On 9th November, 2015, the Landlords instituted the within proceedings by summons seeking:-
• a declaration that Dunnes had no estate in the common areas.
• an injunction restraining Dunnes from asserting any estate, interest, title or right of property over the common areas or any part thereof.
• a declaration that Dunnes had no right to use the common areas beyond the rights expressly provided for in the E & G Lease.
• an injunction restraining Dunnes from asserting that that it has any right to use the common areas (whether for car parking or otherwise) beyond the rights expressly provided for in the E & G Lease.
• a declaration that any right of Dunnes to use the common areas beyond the rights expressly provided for in the E & G Lease is determinable on the giving of notice and
• a declaration that the period of notice given by letter dated 29th October, 2015 was valid and sufficient.
33. In their second amended statement of claim delivered the 1st April, 2016 the Landlords plead the terms of the E & G Lease and the F Lease.
34. They claim that they are authorised pursuant to the rights expressly excepted and reserved to them pursuant to the Third Part of the First Schedule, Clause 6 in both the E & G and F Leases. They also plead that Dunnes have no proprietary or other rights in respect of the common areas beyond the rights they enjoy pursuant to the E & G Lease and the F Lease. It is further pleaded that the purported assignment by the 1991 Indenture of licences granted in the 1989 Indenture is null and void and of no effect.
35. In addition to the relief sought in the plenary summons, the following relief is claimed:-
• A Declaration that Dunnes has no right by way of easement or any other entitlement to use the lands or any part thereof (whether for car parking or otherwise) arising from the F Lease.
• A Declaration that the purported assignment of licences contained in the 1991 Indenture is null and void and of no effect.
• A declaration that if the 1991 Indenture is valid it operates as a sub-licence of the rights purported to be granted thereby.
• A declaration that the benefit of the licences claimed by Dunnes, whether acquired by assignment or by sub-licence, take effect as a licence coupled with an interest being the E & G Lease and the F Lease and take effect subject to the terms of those Leases and in particular Clause 6 of the Third Part of the First Schedule.
36. In its third amended defence and counterclaim delivered on 2nd November, 2016 Dunnes deny that the 1991 Indenture is null and void or that it failed to assign the benefit of the licences contained in the 1989 Indenture. Dunnes plead that the Landlords are estopped from pleading that the 1991 Indenture is null, void or of no effect. Dunnes plead that estoppel arises in a number of discrete ways including; by the execution of the 1991 Indenture, by the conduct of Guardian Assurance plc, South Dublin County Council and Dublin City Council standing by and raising no objections to the 1991 Indenture, by the conduct of the Landlords in acting in a manner consistent with Dunnes having been assigned car parking rights and by virtue of the letters dated 3rd October, 1990 and the deeds of confirmation dated 22nd January, 1991 and 12th March, 1992.
37. Dunnes also counterclaimed seeking:-
• A declaration that Dunnes has the benefit of a licence pursuant to Part III of the Third Schedule to the 1989 Indenture to have access to and egress from the centre over the lands as currently laid out and to park vehicles on the Lands.
• A declaration that the licence is irrevocable save in the circumstances provided for in Clause 2 (a) of Part III of the Third Schedule.
• A declaration that the letter from the Landlords’ solicitors dated 29th October, 2015 did not have the effect of revoking the licence.
• A declaration that the erection of buildings on the lands would constitute a significant and permanent interference with Dunnes’ rights over the lands.
38. Claims concerning an alleged easement as a means of access and egress to and from Units E, F and G are not being proceeded with in this appeal.
The High Court
39. The action was heard in the High Court over 6 days between the 29th November and 7th December, 2016. Barrett J. delivered his detailed and considered judgment on 2nd March, 2017. In part VI of his judgment, he set out the key questions which in his view arose, accepting the Landlords’ contention that the case was one of contractual interpretation turning on the answers to the following four key questions:-
(i) Does the E & G Lease entitle the Landlord to carry out development on the Northern Car Park Area, being “nearby or adjoining premises” within the meaning of that Lease?
(ii) Does the 1991 Indenture have the effect that Dunnes enjoys an irrevocable right for its customers to park on the Northern Car Park Area?
(iii) If the Landlords have the right to carry out development on the Northern Car Park Area, does the proposed development interfere with Dunnes’ rights such as to amount to a derogation from grant?
(iv) Does Dunnes have an easement of right of way and parking by prescription over the Northern Car Park Area?
40. As stated above, the claim for easements of right of way and parking are not being pursued in this appeal.
41. Barrett J. considered that the general principles of contractual interpretation were applicable and he cited with approval, in part VII of the judgment, the principles adumbrated by Lord Hoffmann in Investors Compensation Scheme Limited v. West Bromwich Building Society [1998] 1 W.L.R.896, as cited with approval by Geoghegan J. in Analog Devices B.V. v. Zürich Insurance Company [2005] 1 IR 274.
42. He further cited with approval the well known dicta of Lord Clarke in Rainy Sky v. Kookmin Bank [2011] 1 W.L.R. 2100 where at page 2908 he stated:-
“The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person with all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”
43. The trial judge, in part VIII of his judgment, embarked upon an analysis of the 1988 and 1989 Indentures. He noted and attached importance to the use of the phrase “as appurtenant to the demised lands” in both Indentures. He went on to consider in part IX certain legal text books; Megarry & Wade, The Law of Real Property (8th ed.) and Wylie, Irish Land Law (5th ed., 2013) as well as the Supreme Court judgment in Honiball v. McGrath [2002] IESC 26 and concluded, quite correctly in my view, at paragraph 47 of the judgment:-
“it is clear from the foregoing that the consequence of a licence being coupled with an interest is that such licence cannot be conveyed independently but must remain coupled caboose-like to the relevant interest.”
44. In part X of his judgment, Barrett J. considered the terms of the E & G Lease. He attached weight, at paragraph 52 of the judgment, to the fact that Dunnes had failed to adduce any factual evidence of detriment that will be occasioned to it as a consequence of the proposed development:-
“Its only witness as to fact, Mr. Druker, a retired estate agent whose half-century of experience involved his advising clients primarily in the areas of property agency and development, was quite frank in this regard (Day 4, p.50). Asked as to the facts on which he based his suggestion that the proposed development will affect Dunnes’ business, Mr. Druker stated that he was offering an opinion. When counsel for the plaintiffs suggested that this was not based on any fact, Mr. Druker indicated that this was so. Pressed still further by counsel, who stated “I want to know on what facts you say that [the proposed development] will adversely affect Dunnes Stores”, Mr. Druker answered “I can’t give you the facts because it hasn’t, it hasn’t occurred.” Likewise, Mr. Markey, a chartered surveyor and former director of Lisney, called by Dunnes as an expert witness, indicated (Day 5, p.40) that he had not adduced any empirical evidence to support the conclusions in his expert report.”
45. At para. 53, Barrett J. continued:-
“Leaving aside this weakness in the factual evidence provided by Dunnes, the truth is that following the completion of the proposed development Dunnes’ customers will continue to have an abundance of surface parking available to them. Indeed, there may even be a surfeit of surface parking (…) Moreover, the court is entirely persuaded by the evidence that this parking will be quickly and easily accessible.”
46. Dunnes assert that in this regard the trial judge misdirected himself. They further assert that the fact that there will be other surface car parking is not relevant in this case. The issue, from its perspective, is interference with the most convenient car park which they claim constitutes an amenity.
47. In considering the Common Parts Transfer & Assignment dated 19th October, 1990, the trial judge noted that neither Dublin Corporation or Dublin County Council were a party to the said instrument. At paragraph 60 of the judgment, he continues:-
“As can be seen, there is no mention of the Corporation and the Council, the original grantors of the licences, an omission which meant that it might conceivably be contended, at some future stage, that one or other or both of them had not in fact consented to the assignment of the licences (which it will be recalled, were personal in nature). It was sought to “close out” this concern by having the Corporation and Council respectively execute Deeds of Confirmation that confirmed the transfer of licences; that is their intended purpose and effect. Thus by Deed of Confirmation of 22nd January, 1991 between Dublin County Council of the first part, Guardian Assurance of the second part, L & C of the third part and SML of the fourth part, it was agreed, inter alia, that “the benefit of the… Licences may be freely assigned by GA and L & C to Management (and confirm retrospectively their consent to any such assignment already made at the date hereof [the fact of such assignment must, of course, have been known] and acknowledge that such assignment had effect to vest said Licences in Management”. A like confirmation features in the separate Deed of Confirmation executed on 12th March, 1992, between Dublin Corporation of the first part and Guardian Assurance, L & C and SML of the second, third and fourth parts respectively.”
48. The trial judge identifies a number of key features about the 1991 Indenture:-
• that the term of 9,980 years granted did not accord with the term of 9,990 years granted in the 1989 Indenture;
• that the term of the licence specified in the 1991 Indenture is 9,980 years from 15th March, 1990 whereas the term of the E & G Lease is 9,980 years from 1st March, 1990.
49. Arising from these two observations, Barrett J. opined at para. 63 of the judgment:-
“[A] question perhaps arises whether the 1991 Indenture is effective in what it seeks to achieve, given that it seeks to assign something different from what was granted. However, the court does not consider it necessary to address this aspect of matters because of the third point below.”
50. The trial judge proceeded to set out his third point as follows at para. 63:-
“[T]his, it seems to the court, is where the 1991 Indenture flounders, the 1991 Indenture seeks to effect a bare assignment of the licences whereas, as has been touched upon by the court previously above, what one is treating with when one comes to the licences at issue in these proceedings is, in each case, a licence coupled with an interest and, to borrow from the above-quoted segment of Megarry and Wade;
“At common law such a licence is both irrevocable and assignable, but only as an adjunct to the interest with which it is coupled. It therefore has no independent existence merely as a licence.”
In purporting to assign otherwise (and it does) the 1991 Indenture must be and is therefore null and void and of no legal effect. Without prejudice to the foregoing, the court notes that it does not accept the alternative possibility proffered by the plaintiffs that the 1991 Indenture operates as the grant of a sub-licence coupled with, subject to and for the term of the E & G Lease. To reach such a conclusion it would be necessary to do considerable violence to the text of the 1991 Indenture. Moreover, the court has seen no authority to support the proposition that the terms of a licence coupled with an interest are overridden by any terms attached to the interest to which it is coupled.”
51. For reasons set out hereafter, I do not agree that the 1991 Indenture created a bare licence or that it is null and void and of no legal effect.
52. Barrett J. considered Dunnes’ contention that by the open letters dated 3rd October, 1990 and the 1991 and 1992 Deeds of Confirmation, Dublin City Council and Dublin Corporation agreed that the benefit of the licences could be freely assigned to SML for the use by SML, its successors and assigns in common with all others so authorised by SML, its successors and assigns provided such use was for the purposes specified in the 1989 Indenture. At paragraph 64 of the judgment the Barrett J. states:-
“The purpose and effect of the 1991 and 1992 Deeds of Confirmation has already been considered above; they sought to “close out”, on a historical and continuing basis, an issue as to consent that was then perceived to arise in and under the Common Parts Transfer and Assignment. So far as the letters of 3rd October, 1990, are concerned, they commence respectively with text which embeds the consents they contain in the overall context of the 1988 Indenture and the 1989 Indenture and then expressly state as follows, in sub-para. (b) of each letter:-
“The benefit of the [1988 Indenture and 1989 Indenture] may be freely assigned by Guardian Assurance… and L & C… respectively to… [SML] for the use by… [SML], its successors and assigns in common with all others so authorised by… [SML], its successors and assigns provided that such use is for the purposes as specified in the said Indentures for the benefit of the Square Towncentre, Tallaght, County Dublin.” [emphasis added]
53. At paragraph 65 of the judgment, Barrett J. considers this extract from the letters and its import in the following manner:-
“What are the purposes to which the above-quoted text refers? It seems to the court that those purposes must be the building and setting of shop units by way of lease, including the E & G Lease of 11th June, 1990, and the F Lease of 21st August, 1992. The Deeds and the letter do nothing to detract from the express content of those leases, nor, when it comes to the 1991 Indenture, do those Deeds or letters cure the central deficiency presenting the 1991 Indenture, being that it seeks to effect a bare assignment of licences that each come coupled with an interest, even though at common law such a licence is assignable only as an adjunct of the interest with which it is coupled.”
Non-Derogation from Grant
54. Barrett J. then turned in para. 66 to a consideration of the principle of non-derogation from grant which Dunnes had invoked:-
“… by reference to what it maintains is an obligation, implicit in the grant of the leases not to extend the Centre in a manner which causes permanent interference to the use and enjoyment of Dunnes’ units (the permanent/temporary aspect of matters has already been touched upon by the court previously above).”
55. The trial judge then cited with approval Laffoy J.’s judgment in Conneran v. Corbett & Sons [2004] IEHC 389 and in particular the following passage:-
“As regards the rule that a man may not derogate from his grant, the philosophy here is that, when a man transfers his land to another, knowing that it is going to be used for a particular purpose, he may not do anything which is going to defeat that purpose and thereby frustrate the intention of both parties when the transfer is made. Usually application of this principle creates property rights in favour of the grantee which take the form of restrictions enforceable against the grantor’s land. “ (para.67)
56. He also considered in detail the decision of the English High Court in Platt v. London Underground Ltd [2001] 2 E.G.L.R. 121 and considered 11 principles set forth by Neuberger J. in that judgment.
57. At paragraph 71, Barrett J. states:-
“Between them Conneran and Platt offer abundant guidance to the court in seeking to determine whether there has been a derogation from grant in the context of the within proceedings. Conneran points the court in the direction of looking for “a real and substantial interference with the express and implied rights acquired by the plaintiffs under the leases”. Likewise Platt, among the various principles it identifies (which point in the main to factual considerations that will differ from case to case) mentions, as a helpful test for identifying derogation, “whether the act or omission has caused the demised premises to become unfit or substantially less fit than the purpose for which they were let…”. In essence, it seems to the court that what one is looking for when testing for derogation from grant is actual or likely deprivation of a grantee’s reasonable enjoyment of its existing rights as grantee.”
58. Barrett J. reviewed in detail the evidence of Dunnes’ witnesses and concluded at paragraph 73:-
“The essence, indeed the height, of Dunnes’ case when it comes to derogation from grant is that during the roughly 14 month period that it will take to construct the new multi-story car park which is a part of the proposed development, Dunnes’ customers will not enjoy the surface car parking in the Northern Car Park Area. There is uncontradicted evidence before the court that customers will instead avail of the South, West and East surface car parks, as well as the existing multi-story car park.”
59. He concluded at para. 74:-
“This evidence does not show that Dunnes’ use of the demised premises will be affected in such a manner as to constitute a derogation from grant. And the evidence adduced by the plaintiffs points to anything but a derogation from grant arising or likely to arise.”
60. The judge reviewed the evidence regarding existing car parking arrangements including the evidence of the landlords’ witnesses Mr. Hamill and Mr. Millward. He recalled Mr. Hamill’s evidence at trial where he had stated:-
“I’m not sure why huge reliance is placed on 289 spaces [in the Northern Car Park Area]… There are 2,000 at least other spaces in the shopping centre, 400 of which are in the current multi-story car park, and there is absolutely loads of surface car parking to facilitate every shopper and every unit in the shopping centre.”
61. Barrett J. noted that one of the Landlords’ witnesses, Mr. Millward (day 4, p.6) confirmed in his evidence that during the construction phase there would be a significant number of parking spaces available – in the region of 26,000 hourly parking slots per day for the use of shopping centre customers even while the Northern Car Park Area is closed.
62. With regard to the post-development parking arrangements the trial judge determined as follows at paragraph 77 of the judgment:-
“Mr. Markey, in the course of his oral testimony, indicated that the ideal scenario at the Square is surface car parking of 600 spaces. Following the proposed development, the unchallenged evidence in the case is that there will be more than 1,000 such spaces. There was some suggestion by Dunnes that there might be congestion in the lift area that will feed from the to-be-constructed multi-story car park. There is no empirical evidence before the court to support this contention and the evidence of Mr. Hamill and Mr. Gallagher in this regard indicates that the lift arrangements, and the flexibility for alternative lift arrangements if required, has been well thought through so as to avoid any congestion issues presenting or being allowed to continue.”
63. At paragraph 81 of the judgment, the trial judge noted the expert evidence that had been adduced at the hearing regarding the commercial benefits of the development:-
“Moreover, though he suggests in his expert report that Dunnes’ customers might go to the nearest Aldi if deprived of the Northern Car Park Area, Mr. Markey accepted in his oral testimony that the nearest Aldi has underground parking only and no surface car park. And, when asked a few questions by the court, Mr. Markey indicated that the proposed improvements should rebound to the benefit of all tenants.”
64. The trial judge did not accept that there may or will be any derogation from grant if the proposed development proceeds as planned.
65. For the reasons set out hereafter I agree with the trial judge’s determination that the proposed development does not give rise to any derogation from grant.
Revocation Notice
66. Barrett J. then considered the issue of the validity of the revocation notice in respect of the licence created by the 1989 Indenture which was served on Dunnes on 29th October, 2015. It was contended on behalf of Dunnes at the trial that the said notice was ineffective. The trial judge determined the issue at para. 83 as follows:-
“The court has already concluded that the purported assignment of the licences by way of the 1991 Indenture is ineffective and thus it does not need to consider whether the purported revocation of what was never assigned was in fact effective.”
67. He then goes on to say, obiter:-
“Had the court been required to consider whether the notice of revocation was effective, it would have found that it was not effective. This is because clause 2 (a) of the licence provides that the licence is irrevocable, subject to a proviso that it may be revoked in instances of breach which the court understands not to arise. (…) A licence that is quiet as to its revocability is the complete opposite of a licence which, as here, states itself expressly to be irrevocable save in defined circumstances which do not present.”
68. I agree that the letter of the 29th October, 2015 was not effective to revoke the 1991 Indenture for the reasons hereinafter set out.
69. At the conclusion of his judgment, the trial judge raised and answered a series of questions as follows:-
1. Does the E & G Lease entitle the Landlord to carry out development on the Northern Car Park Area, being nearby or adjoining premises within the meaning of that Lease?
Answer; Yes.
2. Does the 1991 Indenture have the effect that Dunnes enjoy an irrevocable right for its customers to park on the Northern Car Park Area?
Answer; No.
3. If the plaintiffs have the right to carry out development on the Northern Car Park Area, does the proposed development interfere with Dunnes’ rights such as to amount to a derogation from grant?
Answer; No.
4. Does Dunnes have an easement of right of way and parking by prescription over the Northern Car Park Area?
Answer; No.
Orders
70. Arising from its findings and determination the High Court proceeded to make, inter alia, the following orders which are the subject of this appeal:-
“5. That the defendant has no right to use, whether by way of easement or prescription or otherwise, the lands outlined in green on the map set out in the Schedule hereto or any part thereof, whether for car parking or otherwise, beyond the rights expressly provided for in Indenture of Lease dated 11 June 1990 and made between (i) L & C Properties Limited, (ii) Ansbacher and Company Limited and (iii) Dunnes Stores Dublin Company (known as the “E & G Lease”) and in Indenture of Lease dated 21st August 1992 and made between (i) The Square Management Limited, (ii) L & C Properties Limited and (iii) Denis Guiney Limited (known as the “F Lease”);
71. I agree with that determination and order for the reasons hereinafter set out.
72. The other order which is subject to appeal is as follows:-
“6. That the purported assignment of licences contained in Indenture of Assignment dated 1 August 1991 and made between (i) The Square Management Limited, (ii) L & C Properties Limited and (iii) Dunnes Stores Dublin Company (known as the “1991 Indenture”) is null and void and of no effect.”
73. I very respectfully do not agree with this determination as hereinafter stated, though in my view, this does not materially affect the determination of the central issue in this appeal.
74. It was also ordered that Dunnes’ counterclaim be dismissed.
The Appeal
75. Dunnes appeal from aspects of the judgment and orders made in the High Court. In respect of orders 5 and 6 above the following are the grounds of appeal:-
“1. The trial judge erred in law and fact in failing to find that the Appellant has the right to use the lands outlined in red on the map at Schedule 2 to the High Court Order (“the Lands”) for parking pursuant to the licence granted in Part III of the Third Schedule to the Indenture dated 1 August 1989 between Guardian Assurance plc of the First part, the Right Honourable the Lord Mayor, Aldermen and Burgesses of Dublin of the Second part, the County Council of the County of Dublin of the Third part and L & C Properties Limited of the fourth part (“the 1989 Indenture”), the benefit of which was transferred to the Appellant under the Indenture dated 1 August 1991 between the First Respondent of the First part, L & C Properties Limited of the Second part and the Appellant of the Third part (“the 1991 Indenture”) quite apart from the rights provided for under the Lease dated 11 June 1990 between L & C Properties Limited (“L & C”) of the 1st part, Ansbacher and Company Limited of the 2nd part and the Appellant of the 3rd part (“the E & G Lease”) and in the Lease dated 21 August 1992 between the First Respondent of the First part, L & C of the Second part and Denis Guiney limited of the Third part (“the F Lease”).”
2. The trial judge erred in law and fact in holding that the licence granted in part 3 of the 3rd Schedule to the 1989 Indenture is a licence coupled with an interest.
3. The trial judge erred in law and fact in holding that the 1991 Indenture sought to effect a bare assignment of a licence coupled with an interest.
4. Further and in the alternative, if the licence in Part III of the Third Schedule is a licence coupled with an interest, the trial judge erred in law and fact in holding that the 1991 Indenture effected a bare assignment of such licence in circumstances where the Appellant had then, and continues to have, an interest in the lands outlined in blue on the map at Schedule 2 to the High Court order (“the Centre”).
5. The trial judge erred in law in failing to find that the First Respondent, being a party to the 1991 Indenture, could not disclaim it by reason of the doctrine of estoppel by deed.
6. The trial judge erred in law in holding that principles of contractual interpretation were to be applied to the interpretation of deeds.
7. The trial judge’s judgment fails to deal at all with the doctrine of estoppel by deed despite the Appellant expressly raising it in written submissions filed prior to hearing and in the closing oral submissions in the High Court.”
76. In respect of order 7 made by the trial judge dismissing all of Dunnes’ counterclaim, Dunnes appeal the refusal of certain declarations sought. The following grounds of appeal are relied upon:-
“1. Dunnes counterclaim – had firstly sought a declaration that they and their permitted successors, assigns, licensees, tenants under tenants, servants, agents, customers and invitees, have the benefit of a licence, pursuant to Part III of the Third Schedule to the 1989 Indenture, to have access to an egress from the Shopping Centre over the Lands as currently laid out and to park vehicles on the Lands. In support of this ground of appeal, Dunnes rely on the grounds of appeal set out earlier above and which it advances in support of its appeal in relation to Orders 5 and 6.
2. The second relief counterclaimed for by Dunnes was “A declaration that the said licence is irrevocable save in the circumstances provided for in clause 2 (a) of Part III.” Dunnes’ assert that the trial judge erred in refusing to grant this declaration in circumstances where he (correctly, in Dunnes view) found, at paragraph 83 of his judgment, that the licence was irrevocable.
3. The third declaration sought by Dunnes in the counterclaim was; “A declaration that the letter from the Plaintiffs’ solicitors dated 29 October 2015 did not have the effect of revoking the said licence.” Dunnes assert that it’s entitlement to this declaratory relief follows from relief number 2 above and the finding of the trial judge, at paragraph 83 of his judgment, that the said letter would not have been effective to revoke the licence.
4. Dunnes further appeal the dismissal of their application in the counterclaim for “A declaration that the erection of buildings on the Lands would constitute a significant and permanent interference with the Defendant’s rights over the lands.” This aspect of the appeal is based on three grounds as follows;
i. The trial judge erred in fact in law in his interpretation of clause 6 of the Third Part of the First Schedule to the E & G and F Leases in that he failed to find that the availability of surface car parking in the Northern Car Park Area was an amenity of the Appellant’s units in the Centre and an aspect of the occupation and use of, and engagement with, the said units. The Appellant contend that the surface car parking constituted an amenity of its Units.
ii. The trial judge erred in fact in law and finding, at paragraph 51 of his judgment, that, following completion of the proposed development works by the Respondents on the Lands in the Northern Car Park Area, there would be no permanent interference with the occupation, use, amenity or engagement of the Appellant’s units in the Centre. The appellant contends that the completed works will constitute a permanent interference with one of the amenities of its Units – car parking in the Northern Car Park Area – and that consequently the works are not permitted by Clause 6 of the Third Part of the First Schedule to the E & G and F Leases.
iii. The trial judge erred in law in asking himself the wrong questions and/or in failing to ask the correct question otherwise posed by him in the course of his judgment, that is whether the proposed development was entirely consistent with and contemplated by clause 6 of the Third Part of the First Schedule to the E & G Lease (and the F Lease), in that the trial judge failed to consider the issue of permanent as opposed to temporary interference with amenity.
Cross Appeal
77. The Landlords have filed a notice of cross appeal which is confined to one ground:-
“Without prejudice to the Respondents’ contention that the form of the 1991 Indenture could not or did not effect an assignment, and/or was void, the Trial Judge stated that if necessary he would have held that the Notice of Revocation was invalid. The Respondents say that such a finding would have been made in error. If the 1991 Indenture operated to effect a bare licence, such licence was granted without consideration, did not induce the Appellant to act to its detriment and the Appellant has not relied upon it. In those circumstances such bare licence was revoked by notice notwithstanding its term that it was irrevocable save for default which has not occurred.”
Decision
I. 1988 Indenture
78. Counsel for Dunnes took issue at the hearing of this appeal on 5th July, 2017 with the Landlord placing reliance on the terms of the 1988 Indenture, asserting that the terms of the 1988 Indenture had not been opened to the High Court. It would appear that a main objection is to the reliance which the Landlord now places in clause 21 of the 1988 Indenture.
79. A perusal of the transcript of the hearing before the High Court suggests that the 1988 Indenture was in fact opened to the trial judge on behalf of the Landlord. For example, in the transcript of day one, at page 26, counsel for the Landlord makes reference the 1988 Indenture. The said Indenture is further referenced on day six of the hearing at page 15 of the transcript. Indeed, it is noteworthy that counsel for Dunnes makes reference to the 1988 Indenture at page 90 of the High Court transcript, day six when discussing the agreed chronology of title with the trial judge:-
“We then agreed the title documents on page 4, which is the Lease of 8th September, which is known as the 1988 Indenture – and in that is the 1988 licence, which is of central importance the Indenture of assignment and transfer of 1st August, 1989, which has the mirror image licence, as Mr. Ralston has referred to it, as the 1988 Indenture and just how that transpired.”
80. In the course of his judgment in the High Court, Barrett J. considered the 1988 Indenture and quoted from its provisions at paragraph 37 and 38 thereof. It is clear that he considered the 1988 Indenture in reaching aspects of his determination. This is to be expected since the Indenture is an important muniment of title and indeed the Landlord’s Leasehold root of title. I note too that in the 1989 Lease, the 1988 Indenture is expressly referred to and therein described as constituting “the Superior Lease”. No valid reason has been advanced that would justify disregarding the 1988 Indenture. To do so is unwarranted and, in my view, should not be acceded to.
81. Accordingly, it is appropriate to have regard to the Leasehold root of title document as being 1988 Indenture. It is substantially similar to the 1989 Indenture. However, I am satisfied that even if the 1988 Indenture is disregarded, the outcome of this appeal remains unchanged in all material respects.
82. In the operative part of the 1988 deed, three separate licences are granted as follows:-
“In consideration of the Lessee undertaking and covenanting to construct and complete the covenanted works pursuant to the covenant in that behalf hereinafter contained at clause D hereof in accordance with the terms and provisions of the Fourth Schedule hereto and in consideration also of the covenants and conditions on the part of the Lessee therein contained the Corporation and the Council as to their respective estates rights titles and interests in the licensed lands hereby grant to the Lessee as appurtenant to the demised lands the licenses in accordance with the provisions contained in the First, Second and Third, Parts of the Third Schedule hereto upon the terms and conditions therein contained.”
83. In the 1988 Indenture the Lessee covenanted with Dublin Corporation, inter alia:-
XXI. “To permit the Corporation at any time during the said term to execute works and make erections upon or erect rebuild or alter any buildings or erections on the lands of the Corporation or their successors in title adjoining or near to the lands hereby demised and to use and develop their adjoining or neighbouring lands in such manner as they may think fit notwithstanding that the access of light or air for the time being appertaining to the Approved Development or any part thereof or any building for the time being on the demised lands may thereby be interfered with AND to permit the Corporation its servants and agents at all times to have access to any sewer, drain or other service ducts in or under the Approved Development or the demised lands for the purpose of utilising the same in connection with any future development by the Corporation its successors and assigns in the vicinity of the demised land, PROVIDED ALWAYS that in carrying out any such works the Corporation shall take into consideration the Current Dublin County Council development plan and all matters and requirements in connection therewith the trading, business and activity of the Town Centre and its occupiers.”
84. National Asset Property Management DAC is successor in title to the Corporation.
85. Secondly, the licences granted over the “call back lands” as appurtenant to the demised lands are set forth in Part Two of the Third Schedule as follows:-
“1. The Corporation hereby licences the Lessee to enter upon the lands to which outlined and hatched and cross hatched blue on Map Index Number 10489/13 annexed hereto reserved by the Corporation for future building development but which the Lessee shall be permitted to lay out as car parking facilities (but excluding the laying of any underground pipes or other services) on a temporary basis pending its been required by the Corporation or its successors or assigns for building purposes or otherwise subject as hereinafter appears. In the event of the Corporation so requiring the said lands or any part thereof, the Lessee shall be given at least four calendar months notice in writing (expiring on any day) of the intention so to require the said lands or any portion or portions thereof and the Lessee shall at the expiry of the said notice period yield up and vacate the lands or the portion or portions thereof so required and remove all structures erected thereon (whether pursuant to the consent of the Corporation or otherwise).”
86. The licence granted in Part III of the Third Schedule as appurtenant to the demised lands are granted in the following terms:-
“The Corporation and the Council as to their respective estates rights titles and interests hereby licensed the Lessee to enter upon the lands hatched yellow on Map Index Number 10489/13 annexed hereto for the purpose of constructing, maintaining and servicing the car parking facilities, service roads, pedestrian malls, footpaths, kerbs, lighting, adequate landscaping and necessary drainage facilities and all other works as provided for in the Fourth Schedule hereto to be constructed at the Lessee’s expense and for no other purpose without the prior written consent of the Corporation or the Council as the case may be. Any car parking provided in the area hereby licensed shall be available for use by the Corporation its successors and assigns licensees and invitees and in particular for the users of all buildings constructed on the lands shown outlined and hatched and cross hatched blue on Map Index Number 10489/13.”
87. In Part III, 2 (a), the licence is expressed to be irrevocable subject only to the proviso that it may be revoked in whole or in part in the event of the lessee breaching or suffering or permitting a breach of its terms for such breach remains on remedies for a period of one month after notice is served. The following further provisions are of note:-
“(c) Nothing in this agreement or in the licence hereby granted should constitute or be deemed to constitute a Tenancy in favour of the Lessee or otherwise.
(d) The Licence hereby to be granted is personal to the lessee.
(e) …
(f)The licence is not deemed to confer exclusive possession on the licensee.”
88. The licences created mirror those granted in the 1989 Indenture. In each case the licences granted are expressly appurtenant to the leasehold interest granted.
II. Construction of a Deed
89. Wylie & Woods, Irish Conveyancing Law (3rd ed., 2005) outlines the general principles which govern construction of conveyances in the following terms:-
“[17.15] The overriding rule of construction of a deed is to give effect to the intention of the parties as expressed in the deed. It is important to note that this does not justify the ignoring of the express words in pursuance of what is otherwise conceived to be the intention of the parties. The essential question is what is the meaning of the words actually used by the parties, not what did the parties mean to say and, perhaps, fail to make clear by the words they used. As Ball J. put it in O’Donnell v. Ryan (1854) 4 I.C.L.R. 44:
“The very plain and well-established principle is, that in construing legal instruments, we are not at liberty either to transpose language or to reject words out of the instrument, or to import them into it, unless it becomes necessary to do so in order to carry out the manifest intention of the parties, appearing by the language they have used. I say the manifest intention apparent on the instrument; for it would be obviously a vicious construction to transpose, or reject, or supply words, in order to give effect to an intention not manifested by the parties, but only conjectured by the court, that is, an intention which, in the mind of the court, the parties may have entertained, but which the language of the instrument did not clearly import that they did. To reject words having a definite signification, and treat them as insensible, or to import into the instrument words which the parties themselves have not thought fit to use, or to transpose words so as to alter the meaning of a legal instrument, would be manifestly to take such a liberty with it as neither law nor reason could justify, unless it be absolutely necessary to do so for the purpose of preventing the defeat of the object which the parties have clearly shown they had in view.”
The meaning of a deed must be gained from reading it as a whole, and where the transaction is effected by two or more documents these should be construed together.”
90. At 17. 16, the authors continue as follows:-
“In determining the meaning of the words used in the conveyance, the general rule is that the “grammatical and ordinary” sense of the words is to be taken, unless this would lead to some absurdity, repugnance or inconsistency with the rest of the deed.”
91. With regard to recitals, the authors state at para. 18.38:-
“A narrative recital explains the entitlement of the grantor to make the conveyance in question.”
92. At 18.40, they proceed to state as follows:-
“An introductory recital links the narrative recital or recitals with the rest of the deed. It does this by explaining the intended operation of the current deed, e.g. that it is to give effect to a contract for sale entered into by the parties.”
93. In my view, the above excerpts represent a correct statement of the key principles of interpretation governing the construction of deeds and Indentures in this jurisdiction. I apply same to resolve the construction issues arising on this appeal.
94. In its essential features, as relevant to the net issues arising in the construction of the deeds under consideration in this appeal, it does not appear to me that the trial judge’s approach actually deviated substantially from the principles set out above. In my view, Barrett J. sought to give effect to the intentions of the parties as expressed in the deeds under consideration.
95. It is noteworthy that the relationship of landlord and tenant is based on contract by virtue of section 3 of Deasy’s Act 1860.
96. After the within appeals were lodged, O’Donnell J. delivered the majority judgment of the Supreme Court in The Law Society of Ireland v. MIBI [2017] IESC 31 where he stated:-
“7. Both parties and all the judges are in agreement that the operative principles are those set out at pages 114-115 in the decision in the judgment of Lord Hoffman in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 All ER 98, and which has been adopted with approval in the Irish courts:
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings 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 common sense 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… :
“. . . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.””
8. These principles represent a significant staging point in the development of what might be described as a modern approach to the interpretation of contracts, a development which, as the principles recognise, has not necessarily reached its terminus.”
97. It is noteworthy that in his partly dissenting judgment McMenamin J. in the same case when considering Arnold v. Britton [2015] UKSC 36 (a judgment concerning the construction of clauses in leases which may signify a possible recalibration of judicial approach by the UK Supreme Court away from Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 WLR 896) had this to say:-
“17. In the neighbouring jurisdiction the contextual approach was applied in a number of cases after I.C.S. (see Attorney General for Belize v. Belize Telecom [2009] UK PC 10; Transfield Shipping Inc. v. Mercator Shipping Inc. [2008] UK HL 48). But there is evidence that Lord Hoffman’s views have been the subject of some reassessment in the United Kingdom (see Arnold v. Britton [2015] UK SC; Marks and Spencer plc v. BNP Paribas Securities Services Trust Co. (Jersey) Ltd. [2015] UK SC 72.
(…)
19. At the minimum, this revisiting of the criteria raises a question as to the extent to which the courts in the neighbouring jurisdiction now see the I.C.S. judgment as the last word in this evolving area of law. It raises the question whether the same approach should unquestioningly be adopted in our courts with possibly far reaching consequences in the future.”
98. Lewison, Woodfall: Landlord and Tenant, (Volume 1, 1994) states at 11.007:-
“General approach to construction
The object to be achieved in construing any contract is to ascertain what the mutual intentions of the parties were as to the legal obligations which each assumed by the contractual words in which they sought to express them. For this purpose, however, the intention of the parties must be objectively ascertained, and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties. The actual intention of the parties is irrelevant; a court of construction can only give effect to what is perceived as the actual intention of the parties “if that intention appears from a fair interpretation of the words which they have used against the factual background known to them at or before the date of the lease, including its genesis and objective aim”.”
99. Woodfall cites Melanesian Mission Trust Board v. Australian Mutual Providence Society [1997] 2 EGLR 128 in the Privy Council where Lord Hope stated:-
“The approach which must be taken to the construction of a clause in a formal document of this kind is well settled. The intention of the parties is to be discovered from the words used in the document. Where ordinary words have been used they must be taken to have been used according to the ordinary meaning of these words. If their meaning is clear and unambiguous, effect must be given to them because that is what the parties are taken to have agreed to by their contract. Various rules may be invoked to assist interpretation in the event that there is an ambiguity. But it is not the function of the court, when construing a document, to search for an ambiguity. Nor should the rules which exist to resolve an ambiguity create an ambiguity which, according to the ordinary meaning of the words, is not there.”
100. This authority and the approach to construction outlined therein by the Privy Council was subsequently considered in JIS (1974) Limited v. MCP Investment Nominees I Limited (2003) EWCA Civ.721 where Lord Justice Carnwath, delivering the judgment of the Court of Appeal of England and Wales, cited Lord Hope in Melanesian with approval and stated at paragraph 10 of the judgment:-
“The starting point must be the wording of the contract. The [High Court] judge referred to some extracts from recent authorities about the admissibility and relevance of evidence as to the background of the contract. (…) I do not see any need to review those cases, because, whatever the limits of admissible background information, it is only of assistance insofar as it may throw light on the meaning of the language is used by the parties.”
101. Lord Carnwath proceeded to consider whether any material difference in the approach to the construction of a deed could be gleaned from the evolving body of jurisprudence on the interpretation of contracts emanating from the UK House of Lords. O’Donnell J. recently characterised this in The Law Society of Ireland v. MIBI as “a modern approach to the interpretation of contracts, a development which, as the principles recognise, has not necessarily reached its terminus”. Lord Carnwath having cited Lord Hope in Melanesian, stated:-
“I do not see any material difference between that and the recent statements in, for example, BCCI v. Ali [2002] 1 AC 251, where Lord Bing ham said (para 8):-
“To ascertain the intention of the parties the court reads the terms of the contract as a whole giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as is known to the parties.”
Lord Hoffmann, having referred to his own speech in ICS v. West Bromwich BS [1998] 1 WLR 896 at 913 said:
“But the primary source for understanding what the parties meant is their language interpreted in accordance with conventional usage…”
102. Having reviewed further authorities, Lord Carnwath concludes on the issue of construction at para. 19:-
“The task of interpretation does not allow the court to rewrite the contract.”
103. In my view, it is significant in the instant case that neither party seeks rectification of any Indenture or deed. Hence, construction of the provisions of the Indentures at issue in this appeal must follow the strict approach in this jurisdiction which rigorously excludes the use of pre-contractual negotiations as evidence of intention.
104. In his judgment, Barrett J., whilst referencing the key judgments in relation to contractual interpretation, did not in fact deviate from the language that the parties had agreed upon in the deeds as providing the primary foundation for his hypothetical reconstruction of their intentions. At no point does he free the construction of the deeds from the shackles of their language or attempt to replace them with some broader notion of subjective intent in the manner of Lord Hoffmann.
105. Barrett J. did have regard to the factual matrix and in doing so adopted an approach entirely in keeping with the jurisprudence emanating from the Supreme Court as exemplified by Igote Limited v. Badsey Limited [2001] 4 IR 511 and the principles set out in Wylie and Woods supra.
106. At page 518 of Igote, Murphy J, delivering the judgment of the court, stated:-
“The intention of the parties may be gleaned only from the document ultimately concluded by them, albeit construing it in the light of surrounding circumstances but not ascertain their intentions from such circumstances. Such a process would be justified only when one or other of the parties claimed rectification of the document executed by him: that is not the present case.”
107. I am satisfied that this represents a correct statement of the law as regards the approach to be adopted and relevance and weight to be attached to the surrounding circumstances at the time the parties enter into a deed or agreement in construing the meaning of language in a deed.
108. Indeed, in the recent judgment of the Supreme Court in The Law Society of Ireland v. MIBI, referred to above, O’Donnell J. eloquently and succinctly puts the approach thus:-
“12. Legal agreements are not poetry intended to have nuances and layers of meaning which reveal themselves only on repeated and perhaps contestable readings. Agreements are intended to express in a clear and functional manner what the parties have agreed upon in respect of their relationship, and the agreements often do so in a manner which gives rise to no dispute. But language, and the business of communication is complex, particularly when addressed to the future, which may throw up issues not anticipated or precisely considered at the time when an agreement was made. It is not merely therefore a question of analysing the words used, but rather it is the function of the court to try and understand from all the available information, including the words used, what it is that the parties agreed, what it is a reasonable person would consider they had agreed. In that regard, the Court must consider not just the words used, but also the specific context, the broader context, the background law, any prior agreements, the other terms of this Agreement, other provisions drafted at the same time informing part of the same transaction, and what might be described as the logic, commercial or otherwise, of the agreement. All these are features which pointed towards the interpretation of the agreement, and in complex cases, court must consider all of the factors, and the weight to be attributed to each.”
109. In that case the document under consideration was the MIBI Agreement, an administrative arrangement between the Government and the motor insurance industry.
110. The UK Supreme Court in Arnold v. Britton [2015] UKSC 36 considered the construction of provisions regarding service charge contributions contained in certain lease instruments. Lord Neuberger firstly summarised the current legal position:-
“15. When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Limited v. Persimmon [2009] UKHL 38, para 14. And it does so by focussing on the meaning of the relevant words, (…) in their documentary, factual and commercial context. That meaning is to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.”
111. In considering the 1988 and 1989 Indentures as with the E & G Lease, the F Lease and the 1991 Indenture, it is axiomatic that what the court is seeking in each case is to identify and declare the intention of the parties to each Indenture as expressed therein. This, in turn, depends primarily on the particular language used, as duly interpreted having regard to the context provided by the entire of the Indenture and the matrix of material surrounding circumstances, whilst acknowledging that the particular language used will always be of paramount importance.
III. Appurtenant
112. In the 1988 Indenture, as stated above, the licenses are granted on the following terms:-
“…..the Corporation and the Council as to their respective estate’s rights titles and interests in the licensed lands hereby grant to the Lessee as appurtenant to the demised lands the licenses in accordance with the provisions contained in the First, Second and Third Parts of the Third Schedule hereto upon the terms and conditions therein contained.”
113. In the operative part of the 1989 Deed, it likewise provides:-
“…the Lessor with the consent and by the direction of the Corporation and the Council as to its estate, right, title and interest in the Licensed Lands and the Corporation and the Council respectively as to all their estates, rights titles and interests in the Licensed Lands hereby grant to the Lessee as appurtenant to the demised lands for the term of this Lease the benefit of the licences in accordance with the provisions contained in the First, Second and Third Parts of the Third Schedule hereto upon the terms and conditions therein contained. “
IV. Licence Coupled with an Interest
114. The appurtenant nature of the licences created in the 1989 Indenture is a key to identifying their true legal nature. Wylie, Irish Land Law, (5th ed., 2013) 20.02 characterises a licence as:-
“… permission to do something in relation to the land which would otherwise be a trespass. At common law, it seems to have been regarded as nothing more than that and certainly was not regarded as capable of creating an interest in land affecting third parties. Usually it does not confer on the licensee any exclusive right to possession of land, as a lease or tenancy agreement does, though there may be a limited right of occupation necessary to the enjoyment of the licence.… However, there is a danger of generalising in this area of law, because there are several different kinds of licences which may be created and they may have quite different characteristics.”
115. In my view, on a true construction of the 1989 Indenture, the licences thereby granted constitute licences coupled with an interest since they were expressly created as appurtenant to the demised lands and included in the grant of a proprietary Leasehold interest over same. The licences lack the capacity to exist in gross or otherwise independently of the proprietary leasehold interests. They are wholly and necessarily required for the beneficial enjoyment of the sub demise having regard to the purposes for which it was granted as specified in the 1989 Indenture namely the carrying out of the “Approved Development” and the construction of the shopping centre.
116. The use of the word “appurtenant” was correctly identified by the trial judge as being of central importance since it clearly connotes that the licences being granted were in each case annexed to the land being demised so as to operate for its benefit. On a true construction of the two Indentures, it is clear that the licences granted are accessorial to the enjoyment of the demise. It is clear from the language in the 1988 and 1989 Indentures that the licences created and granted were never intended to exist in gross but rather were created for the purposes of benefiting the demised lands in each case. Accordingly, only the lands the subject matter of the demise can benefit from the licences granted. It is clear from the language of both Indentures that the licences granted in each deed were solely for the benefit of the lands demised by the said instrument. Given the appurtenant nature of the licences they are restricted by the character and the needs of the demised lands and in each case it is the Leasehold interest granted by the same deed which governs the nature and extent of the appurtenant licence. The appurtenant nature of the licences thus circumscribe their ambit. Hence, in my view, in the case of the 1989 Indenture, the licences granted are coupled with an interest, namely, the Leasehold interest in the said Indenture granted by way of sub demise.
V. Estoppel by Deed
117. Dunnes assert that the first named respondent is estopped from denying the validity and effectiveness of the 1991 Indenture by virtue of the doctrine of estoppel by deed. In Greer v. Kettle [1938] A.C.156, Lord Maugham stated:-
“Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between the parties and privies and therefore as not admitting of any contradictory proof.”
Lord Maugham reviewed earlier jurisprudence including Stroughill v. Buck [1850] 14 Q.B.781 and approved the dictum in that case where it was held:-
“When a recital is intended to be a statement which all the parties to the deed have mutually agreed to admit as true, it is an estoppel upon all. But, when it is intended to be the statement of one party only, the estoppel is confined to that party, and the intention is to be gathered from construing the instrument.”
118. Halsbury’s “Laws of England” volume 12, 1021 states:-
“An estoppel by deed is said to arise where there is a statement of fact in a deed made between parties. If upon the true construction of the deed the statement is that of both or all the parties, the estoppel is binding on each party; if otherwise, it is binding only on the party making it….. Estoppel by deed is based on the principle that, when a person has entered into a solemn engagement by deed as to certain facts, he will not be permitted to deny any matter which he has so asserted. It is a rule of evidence according to which certain evidence is taken to be of so high and conclusive a nature as to admit of no contradictory proof. The averment relied upon to work an estoppel must be “certain to every intent” without any ambiguity, but may be contained in the recital or in any part of the deed.”
119. Wylie & Woods, Irish Conveyancing Law, (3rd ed., 2005) states at 18.32:-
“…it is settled that a recital in a deed may operate by way of estoppel against the party making it in any action relating to that deed. It is, however, crucial to recognise the limitations to this doctrine, whereby, in effect, what is untrue may nevertheless be held to have the effect of the truth. First, an estoppel will arise only in respect of a party who, on a proper construction of the deed, can be regarded as making the statement in the recital and those claiming through him. It will not bind parties who do not claim through him; nor, of course, will it operate in his favour. Secondly, an estoppel will not operate in favour of all the world, but only in favour of those persons who are intended to and do act on the faith of the statement in question, e.g. successors in title of one of the original parties to the deed containing the recital. Thirdly, an estoppel can be raised only in an action on the deed in question and not in relation to some matter collateral to the deed. Fourthly, for a recital to raise an estoppel, it must contain a clear and definite statement of fact, or, as Chatterton V.-C. once put it, it must be a “ clear and unequivocal representation”. A “general” recital or one which is vague or uncertain is not enough to justify a court in holding that a party or his successor is bound by the statement. The court will exercise caution in this regard.”
120. In Goodtitle v. Bailey (1777) 2 Cowp.597, Lord Mansfield CJ said at 600:-
“It shall never lie in [the grantor’s] mouth to dispute the title of the party to whom he has so undertaken; no more than it shall be permitted to a mortgagor to dispute the title of his mortgagee. No man shall be allowed to dispute his own solemn deed.”
121. Accordingly, the Landlords are estopped by the execution of the 1991 Indenture from purporting to contend that it was at all times null, void and of no effect. It is a fundamental principle of the common law that a grantor is precluded from disputing the validity of his own grant. The estoppel is not excluded by the fact that any want of title appears from the face of the deed itself and, indeed, it is clear that there are a number of drafting deficits in the 1991 Indenture. The Landlords are not entitled to rely on any such deficiency for the purposes of disclaiming the said Indenture.
122. However, this does not preclude the Landlords from advancing arguments as to the precise nature and extent of the rights which were actually granted by virtue of the terms of the 1991 Indenture. Neither would the respondents have been prevented from relying on defences such as non est factum, fraud, illegality or incapacity had there been a legal basis for doing so. It is clear from the authorities that in such cases the facts may be pleaded in order to defeat the deed even though they may contradict statements made on the face of the instrument.
123. Further it is not open to the Landlord to set up the variation as between the respective terms of the 1991 Indenture and the 1989 Indenture as rendering the 1991 Indenture null and void. Since the term granted by the 1991 Indenture is greater than the term of the E & G Lease the licence lapses at the determination of the interest with which it is coupled.
VI. Veto
124. At the hearing of the appeal, Hogan J. probed the boundaries of Dunnes’ claim regarding the effect of the 1991 Indenture in the following exchange with Mr. Gardiner S.C., commencing transcript page 33 line 26:-
Mr Justice Hogan “… can you just clarify: If you have the benefit of the 1989 licence, which I know you say you do, but let’s assume in your favour for the moment you do, ….. is the gist of your argument that no development of this car parking space is thereby permitted?”
Mr Gardiner SC: “Yes, yeah. Now, obviously we can consent to development of the car parking space.”
Mr Justice Hogan: “yes”
Mr Gardiner SC: “But development of the car parking space is not permitted under the terms of that licence. So that is the argument that we put forward.”
Mr Justice Hogan:” And, therefore,….the arguments that were given and the evidence that was given in the High Court… as to whether it will or it won’t interfere with you or whether there’s suitable alternatives and so on, all of that is irrelevant?”
Mr Gardiner SC: “Yes.”
Mr Justice Hogan:” You essentially have a veto over any development in respect of what one could term the licensed area?”
Mr Gardiner SC: “Correct, that is the submission and the manner in which the matter ran in the High Court potentially obscured that proposition because what occurred, as I mentioned earlier, is witness statements were put in on an issue in the case. An issue in the case was the loss of amenity. That issue in the case arose in considering clause 6 of the Lease. It didn’t arise in any other part of the case. So we then had 4 days of evidence dealing with that issue, which has nothing to do with this issue. So the natural run of things, I suppose, that obscures actually some fairly narrow and central propositions. So the evidence of Mr Millward which is lengthy, only went to this right under the Lease to develop and nobody says there isn’t a right to develop under the Lease. There is a right to develop under the Lease as long as the development does not result in permanent interference.…… Dunnes does have a veto under the Indenture over the car park lands and that is, I respectfully submit, unsurprising in the context of what occurred at the Centre because Dunnes paid £500,000 in effect towards the development of the centre and its units because it took this long Lease for which it paid a significant amount of money and in respect of which it identified it wanted car parking as essential for that business.”
125. Ingenious as the argument of Mr. Gardiner SC was, I cannot accept it for a number of reasons nor, in my view, does the 1991 Indenture support it.
VII. Construction of 1991 Indenture
126. As outlined above, to ascertain the objective meaning of the language in the 1991 Indenture it is appropriate that the court have regard an objective basis to the surrounding circumstances that obtained at the time of execution of the 1991 Indenture. The approach of Lord Wilberforce in Prenn v. Simmonds and in the later decision of Reardon Smith Line Ltd v. Yngvar has been approved by the Supreme Court, as outlined above in Igote Limited v. Badsey Limited. and most recently incorporated in the Law Society of Ireland v. MIBI.
127. Applying the above principles to the 1991 Indenture the following emerges; two significant transactions occurred in the year 1990 that appear to have led directly to the execution of the 1991 Indenture. Firstly, Dunnes entered into the E & G Lease on 11th June, 1990 and thereby became a tenant in the shopping centre for the term of 9, 980 years from 1st March, 1990. That transaction is manifest from the recitals and terms of the 1991 Indenture itself. Dunnes is described throughout as “the Tenant”. The contract for the E & G Lease is recited. The acquisition of the said Lease is specified in the habendum as the consideration for the assignment of the benefit of the Licence.
128. Secondly, by Common Parts Transfer & Assignment dated 19th October, 1990 Guardian Assurance and L & C, as beneficial and registered owners respectively, granted, signed and transferred to the First Landlord, Square: (i) the common areas of the Shopping Centre together with the reversions expectant in the retail units in the Centre for the residue of the terms of the 1988 Indenture of Lease and the 1989 Indenture of sublease; the Licences specified in the First, Second and Third Parts of the Third Schedules to1988 and 1989 Indentures respectively.
129. From a conveyancing perspective, it must have been a matter of concern to the purchaser of a long Lease, as Dunnes was in 1990, that neither Dublin Corporation nor Dublin County Council joined in or executed Transfer & Assignment of the Common Parts Indenture dated 19th October, 1990.
130. The operative part of the 1991 Indenture is important in identifying the ambit of its effect:-
“NOW THIS INDENTURE WITNESSETH that in pursuance of the said Agreement and in consideration of Dunnes Stores Dublin Company acquiring the unit from L & C, L & C and the Square hereby assign the benefit of the Licence more particularly specified in the hereinbefore recited Indenture of Sub – Lease and Licence, Assigns, Licensees, Tenants, Under – Tenants, Invitees and all other persons authorised by the Tenant TO THE INTENT that the said Licences shall endure for the term of 9,980 years from 15th day March, 1990.”
131. Notwithstanding some errors in the drafting, including omission of specific reference to the tenant in the operative part of the deed, I am satisfied that on its true construction this Indenture is a licence coupled with a recognised interest in property, namely, the E & G Lease of 11th June, 1990. The acquisition of the said interest is expressed in the operative part of this deed as constituting the consideration for the grant itself.
132. “The Law of Real Property” Megarry and Wade, 8th edition and 34 – 005 provides:-
“At common law such a licence is both irrevocable and assignable, but only as an adjunct of the interest with which it is coupled. It therefore has no independent existence merely as a licence.”
133. It is demonstrable from the operative part of the 1991 Indenture that the rights purported to be granted by it could have no independent existence merely as a licence.
134. Wylie, Irish Land Law, (5th ed., 2013) at 22.04 states:-
“Often a licence is included in a grant of a proprietary interest in land and, in this sense, it may acquire the characteristics of an interest in land. Thus such a licence is irrevocable by the licensor so long as the proprietary interest lasts and may be assigned to a third party along with the interest in land.”
135. Ultimately, in my view, the benefit of the licence created by the 1991 Indenture operates as a licence coupled with an interest, being the E & G Lease and the F Lease respectively and takes effect subject to the respective terms of those Leases and, in particular, subject to clause 6 of the Third Part of the First Schedule of each. It follows, therefore, that the terms of the licence created by the 1991 Indenture cannot be interpreted in vacuo – as Dunnes in effect to seek to do – but must rather be read in accordance with and subject to the express provisions of the respective First Schedule contained in each Lease.
136. The practical consequence is that Dunnes has no rights over the lands the subject of the 1991 Indenture beyond the rights expressly provided for in the E & G Lease and the F Lease. Nothing contained in the 1991 Indenture entitles Dunnes to interfere with the proposed development works.
VIII. The “call back lands”
137. It is important to bear in mind that at the date of execution of the E & G Lease, the F Lease and the 1991 Indenture, Dublin Corporation maintained substantial rights over its lands adjoining or near to the demised lands and over in particular the so-called “call back lands” being the three parcels of land in the title of the Corporation and subsequently in the title of Dublin County Council and which comprise part of the Northern Car Parking Area.
IX. Clause 6
138. The E & G Lease excepts and reserves in Section II, for the benefit of the Landlord as follows “ EXCEPTING AND RESERVING unto the Landlord and his Lessees, Servants and Licensees the rights and easements specified in the Third Part of the said Schedule.”
139. The exceptions and reservations are more particularly specified in the First Schedule, Third Part:-
“6. Subject to the conditions for reinstatement herein contained full and free right and liberty to alter and/or redevelop (by way of improvement, development, renovation, refurbishment or otherwise) or carry out modifications or extensions or additions to or at the Centre including the Common Areas and to authorise any present or future owner or occupier of nearby or adjoining premises (within or outside the Centre) to demolish, build or rebuild, alter or develop the building or buildings thereon or use the same in any manner notwithstanding that any such demolition, building, rebuilding, alteration, development or user as aforesaid may affect or interfere with or diminish the light coming to the Demise Premises or may temporarily interfere with the occupation, use or amenity or engagement of the Demised Premises.”
140. The Fourth Part of the E & G Lease grants the following licence to the tenant:-
“Subject to the provisions of the Third Part of this Schedule the right of the Tenant, its permitted Successors, Assigns, Licensees and invitees to use the car parking spaces as designated for such use by the Landlord during the term hereby granted.”
141. “The Common Areas” are defined in the Lease to mean:-
“the entire of the Centre including, … carparks ….… and which do not form part of the Lettable Premises PROVIDED ALWAYS that if the Landlord shall cause or permit any alterations in the buildings, built or erected or hereinafter to be built or erected on the Centre or shall in any way alter the area or location of the Common Areas or any part thereof then the definition of “common areas” shall as and when necessary be modified accordingly.”
142. At issue is whether the proposed development is permitted by the terms of Clause 6 of the Third Part of the First Schedule to the E & G and F Leases or whether it constitutes a permanent interference with an amenity enjoyed by the demised units.
143. Clause 6 must be construed having due regard to the provisions of the Leases in their entirety. In particular, the licence granted in the Fourth part of the First Schedule for Dunnes to use the car parking spaces as designated for such use during the term, significantly modifies the rights of Dunnes under clause 6. The right is expressly subject to the provisions of the Third Part of the First Schedule
144. The operative words in Clause 6 are clear. In their natural meaning they constitute an express reservation for the benefit of the lessor, to alter and/or redevelop the common areas during the term of the demise- being 9,980 years from 1st March, 1990. This provision is designed to ensure that the lessor is free to deal with the property adjacent to the demised premises to the extent expressly provided. In my view there was no ambiguity in the scope of this provision. According to the natural language of clause 6 it would have been apparent to the parties, or certainly by a reasonable person in the position of the parties, as at the date of execution of the Lease, that it reserved to the Landlord the right to carry out modifications or extensions or additions to or at the Centre including the common areas throughout the term of 9,980 years. It is self-evident that such works of development, extensions, additions demolition, building or rebuilding would, in general, require as a pre-requisite the obtaining of a grant of planning permission and hence upon their execution would be permanent in nature.
145. A purposive construction of clause 6 requires that it be considered and construed in light of the other relevant provisions contained in the Lease including, inter alia, the covenant on the part of the lessee at 3. (15) to maintain the covenants in the superior Lease being the 1989 Indenture. This covenant, in turn, imports the relevant covenants contained in the 1988 Indenture permitting the carrying out of developments on the lands. Dunnes have a continuing obligation pursuant to covenant 3.2 (15) to “perform and observe the covenants, conditions and provisions in the Superior Lease insofar as same apply to the Demise Premises.”
146. Laffoy J.in Conneran v. Corbett & Is [2004] IEHC 2047, considered the effect of Clauses in a Lease permitting development. At page 2062 there is the following excerpt from Gale on Easements which she cites with approval:-
“The effect of clauses permitting development is specifically considered in Gale on Easements, 16th edition, at p. 472 in the following passage: –
“It is quite common, particularly in Leases, to find the grant of an easement qualified by a reservation of a right to develop or alter the servient tenement in such manner as the servient owner shall think fit, notwithstanding that the access of light or air to the dominant tenement and (sometimes) any other easement appurtenant to the dominant tenement may be obstructed or interfered with. The effect of such a provision is a matter of construction in each case but the court will lean against a construction which would entitle the servient owner to deprive the dominant tenement of all access of light and air or the whole benefit of any other easement such as a right of access. Such a provision may however, permit acts which would otherwise amount to an unjustified obstruction to or interference with an easement and would otherwise be an actionable nuisance but not acts which would for practical purposes destroy the easement. In that case the servient owner can obstruct or interfere with a dominant owner’s rights, provided the dominant owner is left with the reasonable enjoyment of them, though not necessarily in so convenient a manner or to such an extent as at the date of grant. So, where Leases of flats contained in a grant of rights of access over the forecourt but also such a provision as is under discussion, and the Landlord wished to delineate parking spaces on the forecourt with lockable posts and grant exclusive licences of the spaces, it was held that he was entitled to do so, despite the fact that the scheme proposed would substantially interfere with the rights of access granted by the Leases and otherwise amount to an actionable nuisance.”
147. The facts in Conneran are distinguishable in that on the evidence before the court in that case the Landlord had caused a total permanent obstruction of the plaintiffs’ use of the car park delivery doors.
148. Having due regard to the above principles and the language of the Lease and considering Clause 6 in its entirety, as a matter of construction, in my view, the following observations can be made regarding same, when considered in conjunction with the other terms, licenses and provisions in the said Leases:
i) It permits the Landlord to carry out development at the Centre and on Common Areas.
ii) It permits the Landlord to carry out development which requires a grant of planning permission.
iii) It permits structures of a permanent nature to be constructed on the Common Areas and at the Centre.
iv) The Landlord is entitled throughout the term of the demise to alter, reconfigure and vary the existing layout and designation of the areas in use as car parking spaces.
149. It is clear from the terms of the E & G Lease including the definitions and terms above referred to that the extension, development, and in additions to the centre, including the alteration by development of the Common Areas was expressly contemplated by the terms of this Lease. There are similar provisions in the F Lease.
150. An express term should, if possible, be construed so as to be consistent with what Hart J. in Petra Investments Limited v. Geoffrey Rogers plc (2000) L & TR 451 at 471 called “ the irreducible minimum” implicit in the grant itself. This approach found favour with Neuberger J. in Platt v. London Underground Limited (2001) 2 EGLR 121.
151. I am satisfied that it would have been apparent to a reasonable party at the time of execution of the E & G Lease and the F Lease that the provisions subject to which the licence to use the car parking spaces was been granted in the Fourth Part of the First Schedule rendered the said licence subject to the provisions regarding development and the carrying out of additions, modifications and extensions and so forth as specified in Clause 6.
152. The construction now ingeniously contended for on behalf of Dunnes is inconsistent with the reserved right of the Landlord to alter and redevelop the Shopping centre including the Common Areas as expressly provided for in clause 6.
153. The gravamen of Dunnes’ argument is that any alteration as might lead to the slightest diminution in the existing number of 289 surface car parking spaces as are now available in their current location in the Northern Car Park Area and, in particular, the reconfiguration contemplated by the proposed development, amounts to a permanent interference with the occupation, use or amenity or engagement of the Demised Premises which breaches clause 6.
154. However, it is clear from the terms of the planning permission that the Landlords do not intend to permanently obstruct, impede inhibit, restrict or hinder Dunnes in the enjoyment of their demise or in regard to the availability for use of car parking spaces in the common areas for the benefit of the Demised Premises. Rather the development proposed will reconfigure (and increase the number of ) the car parking spaces available under the licence granted to Dunnes pursuant to the Fourth Part of the First schedule
155. This approach accords with a purposive construction of the language contained in clause 6. Further, this approach accords with commercial common sense and commercial logic having due regard to the fact that the parties entered into, under the terms of the E & G Lease, for a letting of a unit in the shopping centre for a term of 9,980 years. The variation of the configuration of the car parking spaces from surface parking for 289 spaces to provision of a multi-storey car park for a very substantially greater number of vehicles whilst retaining a reduced but still significant number of surface level parking spaces on the Northern Car Park Area does not amount to a permanent interference with the occupation, use or amenity or engagement of the Demised Premises, having due regard to the provisions of the Leases in their entirety.
156. The existing 289 car parking spaces “at grade” do not constitute an immutable amenity for the benefit of Dunnes units.
157. There is no reasonable construction of clause 6 which would support a contention, such as Mr. Gardiner S.C. eloquently argued for, that what the parties had in mind when they entered into same was that, in effect, it would operate to sterilise the common areas and effectively preclude any development or alteration of the Centre or the common areas as was otherwise than temporary in nature.
158. As Lord Sumption put it in delivering the Harris Society annual lecture at Keble College, Oxford on 8th May, 2017:-
“The common law has never , since the modern law of contract was developed in the nineteenth century, adopted literalism as a canon of construction. It has always recognised that language is imprecise, that context may modify its meaning, and that words may be used in a special sense.”
X. Revocation
159. A licence coupled with an interest is irrevocable by the licensor for so long as the proprietary interest with which it is coupled lasts. Accordingly, the licence created by virtue of the 1991 Indenture remains operative only for the term of the E & G Lease.
160. The context surrounding the sending of the letter of 29th October, 2015, to Dunnes on behalf of the Landlords is relevant. On 6th March, 2015, Dunnes claimed in correspondence:-
“…you are and have at all times been aware of our claim in respect of property rights at the Centre”.
161. Despite been requested to clarify this claim by letter dated 23rd March, 2015:-
“Please set out clearly within the next 14 days what property rights you are claiming to enjoy and how they are relevant to the Notice and the proposed redevelopment.”
Dunnes failed to identify what “property rights” it was claiming at the centre.
162. The letter of 29th October, 2015 states:-
“Notwithstanding the said letter dated 23 March 2015, you have failed, refused and/or neglected to specify the nature of the alleged property rights claimed by you or how they are said to arise.
Our clients deny that you enjoy any property rights as a purported basis to seek to prevent, obstruct, delay or call into question the proposed redevelopment of the Centre.”
163. The Notice of Revocation embodied in this letter provides:-
“If and insofar as it is asserted that you have any right to use lands at the Centre (whether for car parking or otherwise) beyond the rights expressly provided for in your Lease dated 11 June 1990 (which assertion is not admitted), for the avoidance of doubt any such purported rights are hereby revoked with effect from 1 July 2016 and this letter should be treated as notice of such revocation.”
164. As set out above I have found that the rights created by the 1991 Indenture constitute a Licence coupled with an interest being the Leasehold interests arising under the E & G Lease and the F Lease. Accordingly, the 1991 Indenture could not create property rights in favour of Dunnes at the Centre. In the course of this appeal Dunnes have maintained a contention that the 1991 Indenture created a contractual licence which assigned the benefit of the 1989 licence in its entirety not stripped of the contractual terms of the licence. They assert that the 1991 Indenture confers “property rights” upon them wholly independent of the E & G and F Leases capable of preventing the Landlords from carrying out development on the Northern Car Park Area.
165. The “property rights” contended for by Dunnes in March 2015 do not exist. As determined above, the licences arising under the 1991 Indenture will continue only so long as the proprietary interests in the units in question continues under the E & G Lease and/or the F Lease and subject to the terms of the said Leases. A licence does not create an interest in land.
166. However, the Notice of Revocation was inoperative insofar as it purported to revoke the 1991 Indenture. The Licence thereby created is irrevocable for the duration of the term of the “ Leasehold interests“ with which it is coupled.
167. Accordingly, it follows that the Respondents’ cross appeal must be dismissed.
Summary
168. The reconfiguration of car parking by virtue of the construction of a multi-storey car park does not constitute interference with the “occupation, use or amenity or engagement “ of the Demised Premises.
169. The carrying out of the works the subject of the grant of planning permission does not constitute a permanent interference with the occupation, use or amenity or engagement of the Demised Premises.
170. The words “notwithstanding that any such demolition, building, rebuilding, alteration, development or user as aforesaid……may temporarily interfere with the occupation, use or amenity or engagement of the Demise Premises.”, in Clause 6, are directed towards the period of time during which the actual development works are being carried out at the Centre and the Common Areas. Any other construction would give rise to an absurdity.
171. Whilst the availability of car parking at the Centre is an amenity of Dunnes units , nothing in the Leases entitles Dunnes to insist on the availability of surface car parking or any specific number of car parking spaces available at surface level.
172. The reconfiguration of the car parking facilities at the Northern Area Car Park as contemplated by the proposed development does not interfere with an amenity of the demised premises so as to constitute a permanent interference with “ the occupation or use or amenity or engagement “ of the demised premises.
173. The Leases do not provide for an amenity of “… the most convenient car Park…” in the manner as contended for by Dunnes.
174. The Leases do not entitle Dunnes to insist on the maintenance of 289 car parking spaces at grade as an amenity of the demised premises.
175. Dunnes has no entitlement under the terms of its Leases to insist that the current layout and configuration of car parking at the Northern Car Park Area is immutable.
176. Dunnes has no entitlement to exercise a veto over the proposed development whether under the terms of the Lease or the Licence with which is coupled.
177. When Clause 6 is considered in light of the evidence at trial regarding the current available parking facilities of the Northern Area Car Park and the increase and enhancement in parking facilities contemplated by the terms of the grant of planning permission, there is no permanent interference with the express rights enjoyed by Dunnes under the Leases.
178. Contrary to Dunnes contentions, the number of car parking spaces that will be available for the benefit of Dunnes and other occupiers of units at the Centre following the completion of the proposed development (823) is relevant. It is a material consideration in evaluating whether there has been a derogation from grant on the part of the Landlords or otherwise a breach of the covenant for quiet enjoyment. It represents a significant increase over the current numbers (289), albeit laid out over a multi-storey configuration. The proposed development does not constitute a derogation from grant nor breach of any covenant contained in the Leases.
Conclusions
179. In respect of Orders 5 and 6 above, I would dismiss grounds 1 and 2 of the appellant’s appeal.
180. With regard to the contention in ground 3 that the trial judge erred in law and fact in holding that the 1991 Indenture sought to effect a bare assignment of a licence coupled with an interest, I would accept that this is well founded. I find that the 1991 Indenture created a licence coupled with an interest being the leasehold interests created by the E&G Lease and the F Lease. However, this finding does not alter the conclusions regarding the central issue in this appeal.
181. In relation to ground 4, I would dismiss it since it is predicated on Dunnes succeeding in their claim to have a proprietary interest in the lands outlined in blue. I have already found that Dunnes’ proprietary rights are confined to those created or arising pursuant to the E & G Lease and the F Lease respectively and not otherwise. The 1991 Indenture creates a licence coupled with an interest and as such does not create any proprietary rights in favour of Dunnes.
182. In regard to Dunnes’ claim that the trial judge erred in law in failing to find that the first named respondent, being a party to the 1991 Indenture, could not disclaim it by reason of the doctrine of estoppel by deed this ground of appeal is upheld. However, this finding does not alter the conclusions regarding the central issue in this appeal. Further, the respondents were estopped from claiming that the deed, this was null and void but not from asserting that it did not create property rights in favour of Dunnes.
183. Turning to Dunnes’ claim that the trial judge erred in law in holding that principles of contractual interpretation were to be applied to the interpretation of deeds, I would dismiss this ground of appeal.
184. In respect of Order 7 made by the trial judge dismissing all of Dunnes’ counterclaim, Dunnes have appealed the refusal of the declarations sought. I would dismiss these grounds save and except as follows:-
– I would grant the declaration that the said licence is irrevocable save in the circumstances provided for in clause 2 (a) of Part III.
– I would also grant the declaration that the letter from the Plaintiffs’ solicitors dated 29 October 2015 did not have the effect of revoking the said licence.
185. However, it should be noted that these findings do not alter the conclusions regarding the central issue in this appeal.
186. All other grounds of appeal are dismissed.
187. I would also dismiss the cross appeal.
Irish Shell & BP Ltd v John Costello Ltd
Supreme Court
21 December 1984
[1985] I.L.R.M. 554
(O’Higgins CJ, Henchy and McCarthy JJ)
O’HIGGINS CJ
delivered his judgment on 21 December 1984 saying: The question which arises for determination on this appeal is whether the defendants have any rights, and if so, what rights, in relation to a petrol service station known as Friarsland Service Station, Roebuck Road, Dublin, the property of the plaintiffs. This station has been occupied by John Costello, and later by the defendants, for the purpose of carrying on a petrol service and general garage business therein under a succession of agreements made with the plaintiffs, commencing in 1967 and ending in 1974. The 1974 agreement was made on 14 February on that year and was for a period of six months from 1 January 1974. This agreement was followed by discussions and negotiations between the parties which, if successful, would have led to the conclusion of a further agreement. In fact these negotiations broke down in relation to Sunday opening hours and no further agreement was concluded. On 5 November 1974 the plaintiffs gave notice to the defendants that they required possession of the premises by 14 November 1974. Possession having been refused the plaintiffs have brought these proceedings claiming possession and mesne rates.
The nature and effect of the agreement of 1974 has already been the subject of examination in this Court. This took place at a previous stage in these proceedings and the result appears in [1984] ILRM 66. The court’s decision was pronounced in the judgment of Griffin J (with whom I agreed) and it was to the effect that the agreement of 1974, although expressed to confer on the defendants a mere licence to use the premises for the purpose of their business, in fact created a relationship of landlord and tenant between them and the plaintiffs. The court was not asked to, and did not, decide what relationship, if any, existed between the parties following the termination of the 1974 agreement on 30 June. It is that issue which must now be decided.
It appears that, following the expiration of the 1974 agreement, the defendants stayed on in occupation of the petrol station paying the monthly payments which had been provided for in the expired agreement. They did so while discussions and negotiations as to the terms of the new agreement were proceeding. It is clear that they continued to occupy the premises with the concurrence of the plaintiffs. Their occupation was the same as that of the previous six months under the expired agreement and the payments they made were similar. The reason that they so continued in occupation was the fact that negotiations for a new agreement were proceeding. If in the previous six months they held under a tenancy, it is difficult to accept that their continued occupation, with the plaintiffs concurrence, changed in character from that of a tenancy into a mere licence, as the plaintiffs now contend. In my view the defendants continued in occupation in a landlord and tenant relation *556 ship, but their tenancy was merely a tenancy at will. I think this had to be so, during the period of transition between the expiration of the previous agreement and the conclusion of a fresh one. While tenancies at will are not inferred as frequently now as formerly was the case, I believe that they should readily be inferred where there is continued exclusive possession during such a transition as appeared to exist in this case. In this regard I think it well to recall the clear words of Scarman LJ in Heslop v Burns [1974] 1 WLR 1241, when he said at p. 1253:
It may be that the tenancy at will can now serve only one legal purpose, and that is to protect the interests of an occupier during a period of transition. If one looks to the classic cases in which tenancies at will continue to be inferred, namely, the case of someone who goes into possession prior to a contract of purchase, or of someone who, with the consent of the landlord, holds over after the expiry of his lease, one sees that in each there is a transitional period during which negotiations are being conducted touching the estate or interest in the land that has to be protected, and the tenancy at will is an apt legal mechanism to protect the occupier during such a period of transition; he is there and can keep out trespassers; he is there with the consent of the landlord and can keep out the landlord as long as that consent is maintained.
In my view, this is what happened in this case. The defendants held on as tenants at will for so long, and no longer, as the plaintiffs consented and agreed. In my view, the letter of 5 November 1974 was effective to withdraw the plaintiffs’ consent to the continued occupation of the premises by the defendants and accordingly the tenancy at will terminated. Following the failure to give such possession the defendants have been trespassers of the plaintiffs and are liable for mesne rates. I would agree with Henchy J, whose judgment I have read, that the proper figure for mesne rates is £1,500 per year.
I would order accordingly.
HENCHY J:
These proceedings were begun in the High Court in December 1974. Now, ten years later, they are still wending their way through the courts. What should have been a reasonably straightforward ejectment action has developed into a marathon. It would be pointless to attempt at this stage to apportion blame for the delays that have dragged out this litigation. It is perhaps enough to say that those delays seem to have been largely unnecessary.
The action concerns a petrol service station known as Friarsland Service Station, situate at Roebuck Road, Dublin. By an agreement of 14 February 1974 the plaintiffs purported to hire to the defendants certain garage equipment and to license the defendants to occupy Friarsland Service Station for the use there of that equipment. The agreement was for the period of six months from 1 January 1974, the defendants agreeing to pay the plaintiffs for the hire of the equipment the sum of £625 by monthly instalments of £111.20 (inclusive of VAT) payable on the first day of each month.
This agreement was subject to detailed analysis in this Court in 1981 after the High Court had held in favour of the plaintiffs’ claim to be entitled to possession and after an appeal had been taken by the defendants from that *557 order. In the High Court it had been held that the agreement of February 1974 created only a licence to use the premises for six months from 1 January 1974 and that the licence had been terminated by a demand for possession made on 14 November 1974. Allowing the defendants’ appeal, this Court held [1981] ILRM 66 that the true construction of the February 1974 agreement was that it created the relationship of landlord and tenant and not that of licensor and licensee — that in effect it gave the defendants a lease of the premises for six months from 1 January 1974.
The parties were then allowed by this Court to amend their pleadings in the light of that decision and the matter was remitted to the High Court for determination on the basis of the amended pleadings. After a full rehearing in the High Court, it has now been ruled that the tenancy created by the February 1974 agreement had been terminated before the coming into operation of the Landlord and Tenant (Amendment) Act 1980 and that there was due from the defendants to the plaintiffs mesne profits from 5 November 1974 to 8 September 1980 at the rate of £1,750 per annum. Both parties have now appealed, on different grounds, against that order.
As I have stated, this Court held in effect in 1981 that the February 1974 agreement gave the defendants a lease of the premises for six months from 1 January 1974 at the specified rent. The plaintiffs, of course, were under the impression that all they had granted was a licence to occupy the premises for those six months. When that period of six months expired on 30 June 1974, the plaintiffs offered the defendants a ‘licence’ for a further term on specified conditions, and a letter of 19 August 1974 offering that lease stated that if those conditions were not accepted within 14 days immediate possession would be required.
In the event, no new agreement was negotiated. On 5 November 1974 the plaintiffs wrote to the defendants withdrawing what they considered to be a licence and stating that their representative would call on 14 November to take over the service station. An oral demand for possession was made on 12 November 1974, but to no effect. The defendants continued to pay the plaintiffs the monthly sum of £111.20 until the end of October 1974. The present proceedings were commenced in December 1974.
I am satisfied that if, following the expiration of the written agreement on 30 June 1974, the defendants had continued in possession unequivocally paying a monthly sum as rent, there could have arisen by implication a monthly tenancy. If that had been the case, the defendants would now be entitled to say that such monthly tenancy has never been terminated (because no notice to quit was served) and that accordingly neither mesne profits nor a new tenancy could arise for consideration. The rent payable under that tenancy would still be £111.20, for it would be repugnant to the concept of a tenancy as a contract for the courts to impose a rent other than that agreed by the parties.
However, I am satisfied that a tenancy is not to be inferred. It is true that this Court construed the ‘licence’ of 14 February 1974 as a tenancy (or a lease as defined by Deasy’s Act), but it expressed no opinion as to the relationship between the parties when that agreement expired on 30 June 1974. Notwith *558 standing that the defendants paid and the plaintiffs accepted the monthly sum of £111.20 for four months after the expiration of the agreement, such sum was expressly accepted by the plaintiffs as a ‘licence fee’. The terms of the written agreement (which were the main reason why this Court held that the agreement created the relationship of landlord and tenant) were no longer in operation. I construe the four payments made as part of a tentative and interim arrangement while the parties were negotiating a new agreement.
In the course of his evidence in the High Court, John Costello (the principal shareholder in the defendant company), when asked why he stayed on in the premises after the written agreement had expired, said: ‘I stayed on in the belief that I would ultimately be able to negotiate a satisfactory mutual agreement with the company’. The letters that passed between the parties at the time bear out that they were engaged in negotiation and that the four monthly payments were only a temporary expedient, such as happened on previous occasions between the ending of one written agreement and the signing of a new one. The evidence was that those payments were not treated as founding a new tenancy or licence.
On 26 September 1974 the defendants’ solicitors wrote as follows: ‘In order to have the licence finalised our client would be prepared to agree to paying a rent of £1,500 on condition that for your part the Irish Shell and B.P. Company will rectify the flooding in the workshop forthwith’. However, the negotiations ended in failure to reach agreement and a formal demand for possession was made on behalf of the plaintiffs on 12 November 1974.
A new tenancy may be inferred where the tenant remains in possession after the termination of his tenancy, paying the rent reserved under the expired tenancy. The acceptance of the rent does not of itself create a new tenancy, but it is evidence from which a new tenancy may be presumed as being the intention of the parties. Thus, if in a particular case, on a consideration of all the evidence, it is shown that the payments made were not intended to be paid as rent, or to be received as rent, the presumption of a tenancy will be rebutted. In all cases it is a question of what the parties intended, and it is not permissible to apply an objective test which would impute to the parties an intention which they never had. It is open to either party to give evidence as to the true circumstances of the payments. Thus, if it were shown that such payments as were made by the tenant were merely provisional and in the expectation that a new tenancy would be expressly granted, the payments would not be treated as supporting the presumption of a new tenancy, for to do so would be to impute to the parties an agreement which in fact they had never reached: see, for example, Marcroft Wagons Ltd v Smith [1951] 2 KB 496.
I find it impossible to infer a tenancy from the acceptance by the defendants of four monthly payments. It would be repugnant to the motives and wishes of the parties, as these are to be gathered from letters written at the time and from the oral evidence given in the High Court, to say that by the mere acceptance of £111.20 for each of the months of July, August, September and October 1974, the plaintiffs granted a monthly tenancy. Nothing was further from the minds of those acting on behalf of the plaintiffs. They were merely following the precedent of earlier occasions when such payments were made in the interval *559 between the expiration of one written agreement and the making of another, when those payments were not treated as rent.
The letters written at the time on behalf of the defendants are inconsistent with an implied monthly tenancy. Indeed, although the relations between the parties were fully explored in the earlier hearings in the High Court and in this Court, and although the parties were given liberty to amend their pleadings, the defendants have never even pleaded such a tenancy. In my opinion, they could not have credibly done so in view of the attitude they and their advisers took up at the time.
As for the defendants, their contemporary comments on the relations between the parties excludes the possibility of an implied tenancy founded on the four payments. For example, on 6 September 1974 they wrote: ‘Strictly speaking, the site should have been surrendered to the company on the 1st July. However, the company have allowed you to continue as the site operator to facilitate the negotiations for a new licence’.
Not alone did the letters written at the time by the defendants and their advisers not contradict that interpretation of the situation, but they bear it out fully. I therefore feel compelled to rule out an implied tenancy.
My conclusion is that the legal relationship of the parties after 30 June 1974 was that of licensor and licensee and that when the licence was terminated on 12 November 1974 the defendants became trespassers. In line with the approach adopted in the judgments in Heslop v Burns [1974] 1 WLR 1241, I consider that the circumstances were such as to negative an intention to create a tenancy rather than a licence.
On the termination of the licence on 12 November 1974 the defendants as trespassers became liable to the plaintiffs for mesne profits. It is clear from the quotation I have given from the letter of 26 September 1974 that a ‘licence’ for an annual sum of £1,500 was then all but negotiated by the parties. Having regard to this fact and to the other evidence given in the High Court, I would hold that from 12 November 1974 to date the defendants are liable to the plaintiffs for mesne profits at the rate of £1,500 a year.
Since in my view the defendants have been trespassers since 12 November 1974, the premises did not constitute a ‘tenement’ for the purposes of the Landlord and Tenant Act, 1931, or the Landlord and Tenant (Amendment) Act, 1980, so the possibility that the defendants could have acquired a right to a new tenancy under either of those Acts does not arise.
In accordance with the foregoing findings I would hold that: (1) such tenancy as existed between the parties terminated on 30 June 1974; (2) from 30 June 1974 to 12 November 1974 the defendants had a licence to occupy the premises; (3) since 12 November 1974 the defendants have been trespassers on the premises and as such are liable to the plaintiffs for mesne profits at the rate of £1,500 a year; (4) because the premises have not been a ‘tenement’ at the relevant time, no question of a new tenancy arises; (5) the plaintiffs are entitled to possession.
McCARTHY J:
The plaintiffs (‘Shell’) have, for many years, owned a filling *560 station known as Friarsland Service Station, Roebuck Road, Dublin where, pursuant to a series of written agreements made with Shell, John Costello Ltd or its predecessor (Costello) have carried on business trading in Shell products. These agreements have been analysed in the judgment of Griffin J (with whom O’Higgins CJ agreed) in an earlier appeal in this case [1981] ILRM 66 in which judgment was delivered on 10 April 1981. The dates and periods of effectiveness of these agreements may be stated and summarised as follows:
1. 1967 — for part of the year 1967.
2. 18 July 1968 — for one year from 1 July 1968.
3. 18 July 1968 (the same agreement) — permitted to continue until the end of the year 1971).
4. 29 November 1971 — for one year from 1 January 1972.
5. 28 March 1973 — for one year from 1 January 1973.
6. 14 February 1974 — for six months from 1 January 1974.
It may be of some significance that in the latter two instances the agreement proper was not executed until a significant period after the expiration of the immediately preceding agreement.
I turn now to part of the narrative contained in the judgment of Griffin J [1981] ILRM 66, at pp. 69 and 71:
No further agreement was entered into between the parties, as a dispute broke out in relation to the hours of Sunday opening, and negotiations between them were broken off. The plaintiffs gave notice to the defendants that they would require possession of the premises and equipment on 5 November 1974. [ I will return to the wording of this letter of 5 November 1974 ]. Possession was demanded of the premises on 12 November 1974, but as this was refused the plaintiffs instituted these proceedings claiming an injunction to restrain the defendants from trespassing and continuing to trespass on the said premises. The learned High Court judge granted an injunction restraining them, their servants and agents from further trespassing onto the said service station.
The question for determination on this appeal is a net one. The plaintiffs submit that what is given to the defendants under the 1974 agreement is a personal privilege and that they ‘occupy’ the site as licensees. They say that the agreement was nothing more nor less than a contract of hire of the equipment set out in the agreement for a given term, with a licence to enter the site and use it only for the use of the equipment. They point to clause 4 (g) as being central to the whole agreement and as revealing the purpose of the agreement — namely to sell petrol distributed by the plaintiffs. The defendants on the other hand submit that whilst the documents purport to create a hiring of equipment, with an ancillary right to use the equipment on the premises, whatever may have been the situation prior to the erection of the workshop and the making of the agreement of 29 November 1971, that agreement and the two subsequent agreements in effect granted an interest in land, and had more of the attributes of a tenancy than a licence, and that a tenancy results (at pp. 69–70).
… In all the circumstances of this case, although some of the provisions of the agreement appear to be personal in their nature (e.g. that in relation to the sale of the. plaintiffs’ products), in my opinion, what was given to the defendants went far beyond a personal privilege given to the occupier of the site, and was in the nature of a tenancy of the site.
In the course of the argument, it was submitted on behalf of the plaintiffs that a tenancy could not subsist having regard to the provisions of s. 3 of the Landlord and Tenant Act (Ireland) 1860. This section provides that the relation of landlord and tenant shall be deemed to be founded on the express or implied contract of the parties, and that the relation shall be deemed to subsist in all cases in which there is an agreement by one party *561 to hold land from or under another in consideration of any rent. The plaintiffs say that since there was no ‘rent’ provided for in the agreement, there could not be a tenancy. Whilst it is correct to say that the agreement did not provide for the payment of any ‘rent’ as such for the premises, when the true nature of the agreement is considered the reality of the position is that the periodic payments made by the defendants were in fact rent, although cloaked under the guise or under the label of payment for hire of the equipment.
In my judgment, therefore, looking at the transaction as a whole, the agreements between the parties, all three of which were made after the workshop was erected, created the relationship of landlord and tenant and not that of licensors and licensees, between the plaintiffs and the defendants. In the result, the plaintiffs’ claim in this action therefore fails and I would accordingly allow the appeal. The rights, if any, to which the defendants may be entitled under the Landlord and Tenant Acts are not a matter for determination in this action (at p. 71).
The original claim in this action had been for an injunction restraining trespass; following the judgment of the Supreme Court, the claim was amended to seek an order for possession and damages by way of mesne profits from 14 November 1974 to the date of the actual recovery of possession of the premises. The date of 14 November 1974 is an echo of the letter of 5 November to which Griffin J referred and which read:
Dear Sir
We refer to our letter to you of the 6th September 1974.
As we have not by the appointed day received the licence agreement executed by you we have no alternative but to inform you that the company must withdraw from you all leave and licences in respect of the company’s property at Friarsland. Take notice, therefore, that our representative will call at 9 o’clock or thereabouts on Thursday the 14th day of November and we should be obliged if you would make yourself then available to account to him for the company’s property and to hand over all responsibility in respect of it to him and any relevant keys and documents you may have.
Yours faithfully,
Irish Shell and B.P. Limited.
N. G. F. O’Connell,
Retail Manager.
This letter was addressed to Mr John Costello and John Costello Ltd. In fact, demand for possession was made by a representative of Shell on 12 November 1974. The thrust of the defence as pleaded in para. 3 of the formal defence is that Costello holds the premises as tenant to Shell and that that tenancy has not been lawfully determined either by the letter of 5 November or otherwise. If so, it is contended, Shell is not entitled to possession of the premises or indeed to mesne rates but, presumably, would be entitled to such rent as is ascertainable as arising under the alleged tenancy. Shell, on the other hand, says that whatever tenancy there was terminated on the expiration of the 1974 agreement — 30 June 1974 — and that whatever relationship existed thereafter was ended by the letter of 5 November expiring on 14 November 1974 or by the demand for possession on 12 November 1974.
Whilst the judgment of the Supreme Court in the first appeal scarcely sent a shiver through the offices of the multinational oil companies, it is quite certain that the construction placed upon the agreement was not one that Shell ever envisaged — that it would be saddled with a tenant who might acquire *562 statutory rights. Indeed I doubt if Mr Costello ever held such a view. It was never in contest that Shell did not intend to create a tenancy but, as explained in the judgment of Griffin J, the law looks to the reality of the situation — to the substance rather than the form. The substance was the relationship of landlord and tenant, however much Shell might have wished to avoid it. Clearly that relationship existed up to 30 June 1974. Is it to be said that it ended on that day? Such an argument necessarily involved the contention that this factor — the relative position of Costello and Shell from 30 June 1974 to 10 April 1981 (the date of judgment in the Supreme Court) — was overlooked by both the Chief Justice and Griffin J despite the observations made at the end of the majority judgment. That judgment denied the claim by Shell to restrain Costello from being upon Shell’s property — whether it was as of the date of the hearing in the High Court — June 1975 — delivery of judgment in the High Court — 28 March 1980 — or delivery of judgment in the Supreme Court — 10 April 1981.
Assuming, but by no means deciding, that it is still open to debate, it is clear to me that an examination of the correspondence in 1974 demonstrates that the legal relationship that existed as of 30 June continued, with necessary changes, thereafter. The necessary change is that it was no longer for a term certain. After that date Costello continued to pay the monthly sum due under the 1974 agreement; he continued in occupation; the monthly sum was demanded of him and, of particular significance, Shell sought to hold Costello to the conditions of the 1974 agreement — by the very letter of 6 September 1974 that is referred to in that of 5 November:
3. Stocking and display of competitors’ oils. Despite the expiration of your licence agreement on 30 June, you are still subject to the conditions contained therein. Strictly speaking, the site should have been surrendered to the company on 1 July. However, the company have allowed you to continue as the site operator to facilitate the negotiations on the new licence. We assume from your reply that you now fully accept that on the signing of any new agreement the sale of competitors’ oils must cease forthwith.
The ‘new agreement’ was intended to operate from 1 September 1974 and was in terms akin to the previous three agreements. As Shell believed that the earlier agreements had been no more than hiring agreements but found that the substance of the relationship of landlord and tenant prevailed, so also did they believe that what was being discussed in correspondence and intended in the draft agreement from 1 September 1974 were no more than similar arrangements to hire equipment and, in like manner, now find they had entered into a fresh landlord and tenant relationship, continuing from that which expired on 30 June 1974.
During Mr Gaffney’s argument, I postulated the view that the case he was making now could have been made to the Supreme Court in 1981 — that if the pleadings had been amended then, he could have sought an order for possession and for mesne rates. Mr Gaffney agreed with this proposition, categorised by counsel for Costello as seeking a second bite of the cherry. In effect, Shell are seeking to contend that, whilst they must bear the result of their *563 mistaken understanding of the earlier agreements, they are entitled to make a new case after 30 June 1974, although all the surrounding circumstances were, essentially, the same. They are not so entitled.
When then is the nature of the tenancy? Shell say it is a tenancy at will and, therefore, subject to termination without notice or that the notice of 5 November or the demand of 12 November were adequate notice. A tenancy at will is somewhat of a misnomer if one gives to the cognate word ‘tenant’ the ordinary meaning rather than its limited source meaning of ‘holder’. In truth a tenant at will is a person with a licence, and no more than a licence, to occupy. The nature of a tenancy at will is to be found in the judgments delivered in Bellew v Bellew [1982] IR 447 at pp. 450 and 453 and it is something far different from the relationship that exists between Shell and Costello. It may be difficult to define the nature of a tenancy at will; I find no difficulty in identifying where it does not exist. Such is the case here. In the result, Costello is a tenant to Shell in the ordinary meaning of the word tenant, but under what term — monthly tenant, or yearly tenant or otherwise? Whilst there is authority, statutory and otherwise, for the proposition that a tenant holding over after the expiration of a term of years, which may include one year certain, becomes a tenant from year to year, in my judgment, the true construction of the events that occurred after 30 June 1974, is that Costello holds the premises as tenant from month to month, such tenancy commencing on the first day of the month. No notice to quit purporting to terminate such tenancy having been served he is entitled to retain possession against all comers, and the claim in this action for recovery of possession must be dismissed. Logically, the judgment for mesne rates in the court below should have followed upon an order for possession but this matter does not appear to have been adverted to there.
The claim for damages by way of mesne rates
In his judgment in the High Court, the learned trial judge concluded that some payment continued to accrue and to be due and payable by Costello to Shell in the nature of mesne profits but only assessed that sum from 14 November 1974 until the date of coming into operation of the Landlord and Tenant (Amendment) Act 1980 — the latter date because of an argument addressed under s. 29 of the 1980 Act. Suffice it to say that, having regard to the conclusion which I have reached in respect of the continuing tenancy, the 1980 Act has nothing to do with the case. The trial judge concluded that a sum of £1,750 per annum was an approximation to a fair average to cover the period in question. There was a considerable body of evidence that demonstrated that the present day equivalent of what was called the rent in 1974 would be in excess of £5,000 per annum. On its face, there being a tenancy at a rent fixed in the 1974 agreement, that rent — £1,250 per annum — should continue until the agreement is determined. It is, however, clear that both parties intended that their relationship after 30 June 1974 should be reflected in a payment of £1,500 per annum. In my view, this latter sum is the annual figure to which Shell are entitled from 30 June 1974 up to date and continuing unless and until the current tenancy is terminated.
This sum is not by way of mesne rates or mesne profits — it is rent. The learned trial judge proceeded on an incorrect assumption and that part of his order which measured mesne profits should be discharged as, of course, so also should the finding that a tenancy had terminated. I would confine the order to a dismiss of the action.
The reference to the 1980 Act is, of itself, a signal indication of the delay that has bedevilled this case, originally heard in June 1975 but in which judgment was not delivered until May 1980. In money terms this has benefitted Costello although the owners of the company have no doubt been under considerable strain; it has clearly caused an injustice to Shell — an injustice for which, in my view, there is no remedy.
Dublin Corporation v. Burke
[2001] IESC 81
JUDGMENT of Mr. Justice Geoghegan delivered the 9th day of October 2001 [Nem. Diss.]
1. This is an appeal from an order of the High Court (Smyth J.) made the 9th of July 2001 whereby a number of interlocutory injunctions were granted relating to the appellant’s occupation of portion of St. Helena’s Shopping Centre, Finglas in the city of Dublin, the property of the respondent. This court has already determined the appeal by allowing it but ruled that judgments would be given at a later date. It was the unanimous view of the court that the appeal should be allowed and in this judgment I am setting out my reasons for arriving at that conclusion.
2. The factual background to this case is that the respondent on the appeal, Dublin Corporation, purchased St. Helena’s Shopping Centre in Finglas from the previous owners Frimley Developments Limited, but following on the closing of the sale the appellant, Mr. Burke, was found to be in purported occupation of portion of the property and was hindering the Corporation’s intended development project for housing purposes. The Corporation instituted proceedings by way of plenary summons on the 15th of May, 2001 seeking appropriate injunctions and damages and followed that up by a motion to the High Court for interlocutory injunctions. I think it important to set out in full the interlocutory injunctions granted by the High Court. They read as follows:-
1. That the defendant, his servants or agents do on or before 2.00 p.m. on Friday the 13th day of July, 2001 remove himself and his property from the site formerly known as St. Helena’s Shopping Centre, Finglas in the city of Dublin being the property more particularly described in the Schedule to the General Endorsement of Claim in the plenary summons.
2. That the defendant, his servants or agents be restrained until after the trial of this action or until further order of this court from entering upon or occupying the said site.
3. That the defendant, his servants or agents be restrained until after the trial of this action or until further order of this court from occupying or otherwise using for any purpose whatsoever a container which the defendant has placed upon the said site on its northern boundary (the defendant to be allowed until 6.00 p.m. on Friday the 13th day of July, 2001 to remove his stock from the said container).
4. That the defendant, his servants or agents be restrained until after the trial of this action or until further order of this court from obstructing or in any other way interfering with building and other works carried out by the plaintiff on the said site.
3. In addition, the order of the High Court gave liberty to the plaintiff to take such steps as might be necessary to remove the container in the event of it not being removed by the fixed date. Different considerations apply to the third of the injunctions than apply to the other three and I will, therefore, separate my treatment of them and deal with the third injunction later on in the judgment.
4. The initial case of the Corporation was quite simply put in the grounding affidavit of Bartholomew Courtney, a senior staff officer of the development department of the Corporation. He claimed that the Corporation had acquired vacant possession of the entire site upon completion of the sale. The property was registered land and there was a transfer which was executed and lodged in the Land Registry but registration on foot of it was not yet effected. The kernel of the complaint was set out in paragraph 8 of the affidavit which read as follows:-
“On or about the 5th day of April, 2001, contractors employed by the Corporation moved on to the site in order to secure it by the erection of a palisade fence and to demolish the old shopping centre. The contractors were unsuccessful in carrying out their work in so far as they were confronted by the defendant who climbed on to the roof of a unit from which he appears to have previously traded thereby making it unsafe and dangerous for the Corporation’s contractors to complete its work.
It would appear that the defendant has also brought on site and located adjacent to the said unit a freight container from which he is currently trading without the consent or authority of the plaintiff.”
5. Mr. Courtney went on to aver that despite requests neither the defendant nor his solicitors had produced any evidence of entitlement to occupy or use any part of the site. That grounding affidavit did not adequately disclose the information available to the Corporation and, particularly, to its law agentrelating to Mr. Burke’s claims. Legitimate criticism of this was voiced in the High Court on his behalf but the learned High Court judge took the view that as he was dealing with a motion for an interlocutory injunction and not an ex parte application for an interim injunction he did not have to concern himself with this aspect of the matter. No argument has been made in relation to this ruling in the Supreme Court and I, therefore, do not propose to express any view on it.
6. Prior to the purchase from Frimley a compulsory purchase acquisition had been considered and there was a public inquiry for that purpose. It is clear from the evidence given at that inquiry that Mr. Burke had a shop on the site. He expressed concern and there was concern expressed on his behalf that if the compulsory acquisition went ahead he would be given a tenancy in a shop when the new development was completed. Mr. Burke himself explained in evidence that his family had a shop on the site for eleven years and that he personally had run it for five years. He said that he supported his family including his mother from the shop. The Corporation was, therefore, put on notice of quite lengthy occupation of a shop on the site and the carrying on of business therein by Mr.Burke, and putting it at its very least, the natural assumption must have been that he was a tenant of the predecessor in title. It seems clear, however, from Mr. Courtney’s grounding affidavit that the Corporation considered they had vacant possession once they were assured bythe vendor that they had it and, of course, they had got those assurances in the form of replies to requisitions on title. As the law agent for the Corporation would have well known, such assurances and replies to requisitions are not of any assistance to a purchaser if in fact there is a person in occupation and they are even of less assistance if that person has some kind of right or title to occupy. The vendor in this case transferred ” as beneficial owner” and, therefore, the Corporation would have the benefit of the covenants as to title implied by the Conveyancing Act, 1881. If they found there was a clog on their title with vacant possession they would, no doubt, have recourse by way of action for damages against the vendor, but all of that is res inter alios acta and this court is not concerned with it. S. 72 of the Registration of Title Act, 1964 sets out the burdens which are without registration to affect registered land. Two of them are relevant to this case. They are at (i) and paragraph (j) and read as follows:-
“(i) Tenancies created for any term not exceeding twenty-one years or for any less estate or interest, in cases where there is an occupation under such tenancies;
(j) the rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where upon inquiry made of such person, the rights are not disclosed;”
7. Strictly speaking the title which the Corporation has pending registration is an “unregistered right” and, therefore, in a sense the question of section 72 burdens does not yet arise. But if Mr. Burke has any tenancy on the site it is perfectly clear that the Corporation’s unregistered right would be subject to it.
8. It would be most unusual if, not unique, for a court to injunct an alleged tenant from entering the premises of the alleged tenancy in a case where the claim to such tenancy was perfectly stateable and arguable and this would be particularly so where the removal of the alleged tenant from the alleged tenanted property might adversely affect potential rights under the Landlord and Tenant Act, 1980.
9. It is important, therefore, next to consider what the appellant had to say in his replying affidavit. In it he pointed out that Unit 7 in the Shopping Centre which was the site referred to in Mr. Courtney’s affidavit was also the subject matter of related proceedings in which Mr.Burke was plaintiff and the Corporation defendant. He said that in those proceedings he had clearly set out that he was a tenant in the property known as Unit 7, that he had carried on business there as a general store for upwards of seven years and that he had always paid rent in the sum of£260 per month to his landlord, Frimley Developments Limited, as it fell due and that, furthermore, he had paid rates to Dublin Corporation which were collected from week to week. In paragraph 3 of the affidavit he says the following:-
“I say that my lease with my landlord Frimley Developments Limited was never terminated by court order or otherwise. I further say that since the issuing of these proceedings the Corporation has refused to accept my rent and more recently my rates have not been collected; but my solicitor has indicated to them that he holds the same in trust on my behalf.”
10. He then refers to a letter from his solicitors dated the 13th of February, 2001 which is from Michael J. Staines and Co., solicitors for Mr. Burke and addressed to Mr. Courtney of Dublin Corporation. That letter reads as follows:-
“Your letter dated the 2nd inst. to Mr. Burke has been referred to us for our attention. As you are aware, Mr. Burke is the occupier of the shop premises at Unit 7, St. Helena’s Shopping Centre. Mr. Burke took over the leasehold interest in the premises a number of years ago and has held the tenancy for in excess of five years. At all times Mr. Burke dealt with a Mr. Raymond Stokes and a Mr. Martin Egan who acted on behalf of the landlord, Frimley Developments Limited. Mr. Burke signed a written lease and paid rent of £260 per month directly to a bank account for the benefit of Frimley Developments Limited. The lease is extant and has not been terminated by court order or otherwise.
Since in or about March of 2000 Mr. Burke began to experience difficulty with his shop premises. The locks and doors of his premises were damaged; they were welded together, the premises were set alight destroying all of the stock; a window was forced open and concrete poured inside so as to make it impossible to trade. Mr.Burke was forced to purchase a container in order to carry on business from outside his shop premises. The various incidents were reported to the gardaí in Finglas and the investigation is ongoing.
Following the conveyance of the shopping centre to Dublin Corporation in November last a number of Corporation workers called to our client’s shop premises and drilled holes in the roof with the deliberate intention of making it impossible for him to trade. Mr.Burke continues to pay rates to Dublin Corporation on a weekly basis. We hereby call upon the Corporation to enter into arrangements with Mr. Burke to accept the rent of £260 per month. In the event of the Corporation failing to put forward proposals for acceptance of rent this office shall hold the rent of £260 per month on trust for our client pending instructions as to where to pay the rent.
It is clear from our instructions that Dublin Corporation is in breach of our client’s rights as a tenant in the shop premises. As a consequence of the action of the Corporation our client has suffered and continues to suffer loss, damage and expense by way of full use and benefit of the premises and loss of profits continuing by reason of having to trade elsewhere.
Please note that should we fail to hear from you within fourteen days of the date hereof with your proposals to compensate our client we have strict instructions to institute proceedings without further notice to you.
We await hearing from you.
Yours faithfully,”.
11. From the evidence given at the inquiry supplemented by that letter in particular it should have been perfectly clear to the Corporation that Mr. Burke was claiming a tenancy and that if the facts, as set out in the letter, were even close to the truth he almost certainly did have a tenancy. There are other parts of Mr. Burke’s affidavit to which I will be referring later but at this stage I would move to the replying affidavit of Mr. Courtney, sworn the 4th of July, 2001. On the title issue Mr. Courtney essentially makes the case in that affidavit that there is no written evidence of a tenancy. In reply to a letter for particulars sent by the law agent of the Corporation and dated the 27th of June 2001, Michael J. Staines and Company in a letter of the 6th of July, 2001, set out further particulars relating to the tenancy. Neither this letter nor the contents thereof appear to have been incorporated in an affidavit but for the purposes of considering whether interlocutory injunctions should be granted it is of relevance in indicating the more precise nature of Mr. Burke’s claim. It is not necessary to set out the letter for particulars in full. It is essentially looking for particulars of the alleged tenancy and any documentary proof thereof, but I think it worthwhile to set out in full the reply of the 6th of July, 2001. This reads as follows:-
“Re: The High Court
Record No. 7114P/2001
Dublin Corporation v. Thomas Burke
Injunction for hearing 9th of July 2001
Dear Sirs
We refer to the above mentioned matter and in particular your correspondence of the 27th ult. Please find following replies to your particulars:
1. In or about April 1990 the defendant took over the business premises the subject matter of these proceedings, from his brother Brian Burke. The landlord at that time was McMullan and Gillen Limited. In or about the month of July 1990 following a verbal agreement with McMullan and Gillen Limited the tenancy in the said business premises was formally transferred to the defendant. McMullan and Gillen Limited were the predecessors in title of Frimley Developments Limited who subsequently sold the premises to Dublin Corporation. In or about November 1996 the premises was sold by McMullan and Gillen Limited to Frimley Developments Limited. Martin Egan and Raymond Stokes on behalf of Frimley Developments Limited in or about November 1996 entered into a formal written agreement in respect of the said shop premises with the defendant. The said agreement was made between the defendant and Frimley Developments Limited. The rent agreed was £260 per calendar month in respect of the shop premises known as 4 St. Helena’s Drive, Finglas.
2. As set out above the tenancy was reduced to writing in November 1996 and the defendant’s copy of this agreement was subsequently destroyed in the fire which is described at paragraph 6 of the defendant’s affidavit sworn on the 15th day of June 2001.
3. The parties to the tenancy were Frimley Developments Limited and Thomas Burke, the property the subject matter of the tenancy was 4 St. Helena’s Drive, Finglas, the period of the tenancy was one year and a verbal renewal thereafter, the rent was £260 per calendar month and the tenancy commenced in April 1990 and was subsequently reduced to writing in November 1996.
4. As set out above the tenancy agreement was destroyed in the fire. The only other documents in the defendant’s possession are in relation to payment of rent. Rent was paid from July 1990 into a bank account with Allied Irish Bank in Finglas, Account No. 31343523, Account name McMullan and Gillen Limited until November 1996. From November 1996 rent was paid by lodgment of funds into Frimley Developments Limited bank account with Bank of Ireland, Dunshaughlin, Co. Meath. Subsequently, the arrangement for the payment of rent was changed at the request of Frimley Developments Limited and was paid directly by the defendant to the agents of Frimley Developments Limited who called to 4 St. Helena’s Drive, Finglas and collected each monthly payment when a receipt was handed to the defendant for each payment. The defendant has some record of these payments but these records are not complete, such records as the defendant has managed to gather as of the date hereof covering the period January 1998 to May 1999 are enclosed herewith. The rent was paid up to and including December 1999. ThereafterFrimley Developments Limited ceased calling to collect rent. In due course an application will be made for third party discovery of the bank accounts of McMullan and Gillen Limited and Frimley Developments Limited to show these payments.
5. As set out above the tenancy was reduced to writing in November 1996 and was subsequently destroyed in the fire described at paragraph 6 of the defendant’s affidavit sworn on the 15th day of June 2001.
6. At the time of Thomas Burke’s evidence to the public inquiry he was as the plaintiff well knew, a tenant of Frimley Developments Limited and his statement referred to the position he would hope to have in any new development proposed by Dublin Corporation.
Yours faithfully”.
12. If the facts as set out in that letter prove correct it would seem likely that Mr. Burke would be held to have been a tenant from month to month of the unit which he occupied. If so, it is not suggested that that tenancy has ever been terminated. As long as it has not been terminated and assuming that the tenancy exists, Mr. Burke is entitled to occupy the unit in whatever form he wishes and irrespective of whether Landlord and Tenant Act rights would arise or not upon termination by notice to quit. But given the possibility of rights under the Landlord and Tenant Act, there can be no doubt, in my view, that if the position is to be viewed on the basis of balance of convenience, the balance of convenience can only be in favour of refusing an injunction in so far at least as it relates to the unit the subject matter of the alleged tenancy. It would be extremely speculative and difficult to assess damages and given that asolid property right might effectively be lost on foot of an interlocutory injunction I would not consider that damages could be an adequate remedy. But even before one comes to consider the balance of convenience, I am extremely doubtful that there would even be a prima facie case for an injunction where a defendant with some back-up evidence (if ultimately accepted) is alleging an actual tenancy in the premises and the plaintiff is for all practical purposes merely sceptical of the truth of the allegation.
13. There is still another important matter to be considered. I mentioned at an earlier stage of this judgment that I was initially going to deal only with the first, second and fourth injunctions granted by the High Court and leave over the question of the third injunction. It follows that the views I have expressed so far relate to those three injunctions. I now turn to the third injunction and to explaining why it is in a different position. In order to do so, I intend to goback to other parts of the affidavit of Mr. Burke. In particular I would refer to paragraph 6 which reads as follows:-
“I say that prior to and after the purchase of the said lands by Dublin Corporation I suffered very great disruption and distress in the course of running my business. On or about the 26th of March 2000 I was locked out of the premises by my former landlord, MarkEgan of Frimley Developments Limited when the locks were welded up. I broke the locks and moved back in to continue trading. Then my premises were destroyed by fire on the 26th of October 2000 and my stock was destroyed. I cleared up the premises as best I could and bought fresh stock to continue trading. Thereafter, the windows of my shop were forced open and concrete poured into the premises to stop me trading. I could not use the premises and so I bought one large container and placed it directly outside my premises and continued to trade there out of necessity. My container was then stolen but later recovered by thegardaí and located in the City Pound and the gardaí helped me to recover it. The foregoing matters are currently being investigated by the gardaí at Finglas Garda Station. I say that Mr. Bartholomew Courtney was always aware of the trouble I was having as set out herein and he agreed to my placing the said container and using it to trade directly in front of my burned out shop until the shop was refurbished….”
14. Mr. Burke goes on to describe in the affidavit how following on the transfer to the Corporation a number of Corporation workers called to his shop premises and drilled holes in the roof allowing the rain to penetrate and thereby making it impossible for him to trade from that premises. He then goes on toadmit that he climbed on the roof of the container which he had brought in in an effort to save the shop. Mr. Courtney has disputed the facts in so far as they relate to him in the replying affidavit. Even on the appellant’s own case, however, what emerges is that Mr. Burke, by necessity, had to bring in a container and place that container on territory which was not part of his alleged ” take” and trade from there. He claims that he did this with the permission of Mr. Courtney which is denied. But if all the facts as alleged by Mr. Burke prove to be true, questions would arise as to the nature of the interest which Mr. Burke had in the territory covered by the container and above all the occupation of the territory covered by the container could, on the peculiar facts of this case, prove relevant on the landlord and tenant application, if there was one. At this stage Mr.Burke on his own case has made out a prima facie right to remain for the time being at least in the area covered by the container, and it would be wrong for this court to consider any further what the legal position might ultimately be. But it seems obvious that it is highly desirable that the status quo be retained pending the hearing of the action and, therefore, the third injunction ought not to have been granted notwithstanding that it related to territory which strictly speaking is outside of the original alleged tenancy ” take”. These are my reasons for favouring the allowing of the appeal in full.
March and Clibborn v Wilson
Queen’s Bench Division.
28 October 1895
[1895] 29 I.L.T.R 133
Sir Peter, O’Brien Bart. C.J., O’Brien, Johnson, Gibson JJ.
Sir Peter O’Brien, Bart, C.J.
The question, in my opinion, entirely turns on the agreement—what the true construction of these documents is. We do not derive any assistance from the other cases that have been cited. What is the agreement? [Reads from the first document from the words “I do agree” to “the case may be.”] These words are quite appropriate to create a tenancy from year to year, and this is the more important clause, the other is annexed only to it. Now, is that clause complete in itself, or is it modified by the superadded clause in the other document? [Reads.] In my judgment, this superadded clause does not go beyond what it says, and it does not modify the six mouths’ notice on either side, and does not support the contention of Dr. Houston that the right of serving a notice to quit in the event of unpunctual payment of rent is enlarged. It does nothing more than what it actually purports to say. The sheet anchor of the plaintiffs is the case of Wood v. Davis, but, as was pointed out, there is no such stipulation at all in Wood v. Davis as we have here, “six months’ notice on either side, as case may be,” and further, in the operative part of that case you have the words, “so long as the rent for which he has *133 stipulated is paid, and so long as I am in possession of the premises myself.” That was clearly quite a different case, and the whole agreement was one continual act unlike what we have here.
O’Brien, J.
I do not rest my judgment in any view upon the fact of the separation of the documents, and my view of the case would be the same had this additional clause been contained in the first document. Were the contention of Dr. Houston correct, then upon the death of the lessee the tenancy would have entirely failed, and I do not think that on the plain construction of the contract the parties ever could have intended such a result.
Johnson, J., and Gibson, J., concurred.
Reynolds v Moore
[1898] 32 I.L.T.R 168
Sir Peter O’Brien Bart., L.C.J. O’Brien, Andrews JJ.
Feb. 10, 11; April, 1898
Sir Peter O’Brien, Bart., L.C.J.
There can, I think, be no doubt that the reservation in the lease of 1792, and in the grant of 1891, operated as a re-grant of a profit à prendre, a right of sporting, and the main question before us is the character and limit of that right, which is admitted to be a concurrent right. It was the grant of a profit à prendre in fee simple, limited to the grantee in fee simple, his attendants, gamekeepers, and servants—that is to say, the taking of the profit was limited to the grantee or his heirs if it has descended to him, or his assigns if it has been assigned with his or their gamekeepers and attendants.
The owner of the profit à prendre for the time being may take the game by himself, or his attendants and gamekeepers, or his servants may, according to Wickham v. Hawker and Hudson v. Foot, take the game, provided they do so with the authority and for the benefit of the owner in fee. I think Wickham v. Hawker clearly decides that the liberty to take game operated as a profit à prendre, and I do not feel at liberty to question the authority of that case. It could not be denied that the right of sporting was a concurrent right, as it was not a reservation of all the game, nor of the exclusive right to take game, nor was it a reservation of a right to take game by all such persons as the grantee of the right should authorise. Cooke could not grant permission to a stranger to take game, and if his servants took game in his absence this could only be justified by showing that the game was taken for his benefit by his authority. Mr. Henry contended that the letter from Cooke to Moore operated as an assignment pro tanto of Cooke’s right. This was clearly not so; he got what he asked, permission to shoot for a season. That letter gave a mere licence, and as it was a licence to a stranger it was wholly unauthorised, and the verdict must stand. I have dealt with the case as if a Landed Estates Court conveyance had been actually executed to Cooke when he gave the licence, but I do not decide that a person who has been declared a purchaser in the Landed Estates Court is in the same position as a person to whom a conveyance has been executed.
Andrews, J.
A number of questions have been discussed, but from the view I take it is not necessary for me to decide them all. I assume that Cooke by his purchase became owner in equity of what he bought—viz., the rent and right of sporting reserved by the lease of 1792 and the grant of 1891, and that he could lawfully have exercised the right of sporting he so purchased, although he had not obtained his conveyance. The real question is as to the nature and extent of the reserved right of sporting. It is, in my opinion, well settled that such a reservation as this is neither a servitude annexed to any dominant tenement, nor an exception, nor a reservation, but is a profit à prendre, arising from what, although in terms a reservation, is, in fact, a grant by the lessee or grantee to the lessor or grantor of the demised or granted lands (Doe v. Lode, 2 A. & E. 743; Wickham v. Hawker; Ewart v. Graham). It is not an exclusive right, but only a concurrent right of sporting. By the combined effect of the lease of 1792 and the grant of 1891 the profit a prendre in question has become an incorporeal hereditament in fee simple, but the nature of the right remains the same. It can be exercised by the person in whom it is for the time being vested with his attendants, gamekeepers, and servants, and the authorities show that it can be exercised for him and on his behalf by his servants in his absence (Wickham v. Hawker; Hudson v. Foot), but no case that I am aware of goes the length of deciding that under such a reservation as this the owner of the profit à prendre has the right to authorise third persons to exercise the right on their own behalf. It would amount to an indefinite power in the grantee to authorise these persons to an extent to which it is difficult to assign any limit to enter on the grantor’s lands, and which might be so used as to seriously infringe upon his own concurrent rights. It is not reasonable to construe the limited words of the present reservation in such an indefinitely enlarged sense, and I do not think they will bear such a construction. Taking the letters of authority by Cooke it is a mere licence which neither transfers the right to exercise the profit à prendre nor any estate therein. I apply the words of Vaughan, J., in Thomas v. Sorrell, Vaughan 350—“A dispensation or licence properly passeth no interest, nor alters or transfers property in anything, but only makes an action lawful” (in a case in which the licence is valid), “which without it would have been unlawful.” As the reservation in question did not enable the owner of the right thereby created to authorise third persons to exercise it on their own behalf, I think defendant’s justification under the letters of 8th Oct., 1897, failed, and verdict and judgment ought not to be disturbed.
O’Brien, J., delivered judgment to the same effect.
Malone and Others v Manton
[1879] 13 I.L.T.R 144
Morris C.J., Lawson J.
Morris, C.J.
[If there is any objection to the deed, would not the practice in chancery be to file a cross-bill to reform it?]
Yes; if there be fraud, or reasonable evidence to show that it did not express the intentions of the parties. In Mostyn v. West Mostyn Iron Coal Company, 1 C. P. D. 145, it was decided that the Common Law Division of the High Court of Justice may give effect to any equities so far as incidental to relief sought. There not being a year’s rent due, this case does not come within the Statutes regulating ejectment for non-pay *145 ment of rent. The court should now grant such relief as the Court of Chancery would have given formerly, before the passing of these Statutes. If the defence be bad, the counter-claim entitles us to the relief sought. They also cited King v. King-Harman, I. R. 7 Eq. 446.
Morris, C.J.—We shall make an order in the terms of the notice of motion.
White and others v Tyndall and others
House of Lords.
19 March 1888
[1888] 22 I.L.T.R 37
Lord Halsbury C., Lords Watson, Fitzgerald, Herschell
e covenants.
Per Lord Halsbury, C.
If two persons covenant generally for themselves without any words of severance, or that they, or one of them, shall do such a thing, a joint charge is created, which shows the necessity of adding words of severalty where the covenantor’s liability is to be confined to his own acts.
Per Lord Fitzgerald.
The meaning of the covenants being plain and unambiguous, the fact of the limitation of the demise being to the lessees as tenants in common, could not prevail, so as to override the express provisions of the covenants creating a liability joint only.
Appeal from the judgment of the Court of Appeal, reversing the decision of the Common Pleas Division, overruling the plaintiff’s demurrer to the statement of defence. The plaintiffs claimed upon certain covenants in a lease, dated the 21st Jan., 1842, whereby Richard Pope demised certain premises in the city of Waterford to George White and Albert White for a term of sixty-eight years, at a rental of £150. The plaintiffs were the assignees of Richard Pope, and the defendants were Albert White, one of the original lessees, and the executors of George White his co-lessee, who died in 1883. The claim was for the rent for the year ending 29th Sept., 1885, and for breach of the covenant to keep in repair. The defendant, Albert White, allowed judgment to go by default, and the other defendants, the executors of George White, put in (inter alia) a defence denying their liability for any breaches of covenant occurring subsequently to the death of their testator; to this the plaintiffs demurred, on the ground that the covenants in the lease were several as well as joint. The covenants were as follows:—
“The said George White and Albert White do hereby for themselves, their executors, administrators, and assigns, covenant, promise, and agree to and with the said Richard Pope, his executors, administrators, and assigns, in manner and form following—that is to say, that they the said George White and Albert White, or some or one of them, their executors, administrators, or assigns, shall and will, from time to time, and at all times during the term hereby demised, well and sufficiently satisfy, content, and pay unto the said Richard Pope, his executors, administrators, or assigns, the said hereinbefore reserved yearly rent upon the days and times herein reserved for the payment thereof, clear above all taxes as aforesaid (quit-rent and crown rent only excepted), according to the true intent and meaning of these presents, and shall and will during the continuance of the term hereby demised well and sufficiently support, maintain, and keep the said premises, hereby demised, and all improvements made, and to be made thereon in good and sufficient tenantable order, repair, and condition, and at the end, expiration, or other sooner determination of this demise, shall and will so leave and yield up the same in the like good and sufficient tenantable order, repair, and condition.”
The plaintiff’s demurrer was, in the first instance, heard by the Common Pleas Division, when the judgment of the Court (Morris, C.J., and Harrison, J.) was pronounced by the Chief Justice overruling the demurrer, on the ground that the covenants in the lease were not several, and consequently that George White’s liability on those covenants ceased upon his death. The plaintiffs appealed, and the Court of Appeal (Lord Ashbourne, C., Fitzgibbon and Barry, L.JJ.) reversed the decision of the Common Pleas Division, holding that the covenants were several as well as joint. *37
The defendants having appealed:
Sir H. Davey, Q C., Finlay, Q.C., and M. J. Druitt for the appellants.—The covenant here is unambiguous and creates a joint obligation only, not a several obligation; therefore, on the death of one of the joint covenantors, the survivor becomes solely liable to fulfil the terms of the covenant. Where there is no antecedent separate liability, but the obligation exists only by virtue of a joint covenant, the extent of its operation is measured by the words used: Levy v. Sale, 37 L. T. N. S. 709. Here the words used clearly express a joint covenant, and the only arguments relied upon by the respondents to the contrary are, first, that the estate given to the original lessees was given to them as tenants in common, thereby severing the estate in case of survivorship; and secondly, that the word “they” and “their,” introduced into the covenants, are to be read distributively. But neither of these arguments is sufficient to prevail against the express phraseology of the covenants. The covenant, by the two lessees, is to pay one single rent, although, in certain events, the title in the property is to be severed.
They cited Platt on Covenants, p. 117; Sheppard’s Touch, chap. 7, p. 166; Slingsby’s case, Coke’s Rep., Pt. V., 18 b; Eccleston v. Clipsham, 1 Saund. 153; Clarke v. Bickers, 14 Sim. 639; Bradburne v. Bosfield, 14 M. & W. 559; May v. Woodward, Free. Rep. 247; Robinson v. Walker, 1 Salk. 393.
Meadows White, Q.C., and G. R. Price (of the Irish Bar) for the respondents.—The language of those covenants cannot be said to be unambiguous since “their” is a word which may signify that the executors of each lessee are to be liable. In such case the covenant is to be “measured and moulded according to the interests of the covenantees” (Platt on Covenants, p. 123). Here it would be a grievous hardship on the lessor if he were not to have his remedies on the covenants against both covenantors, as the representatives of each are entitled to half the estate on the death of the other. A covenant is to be construed as joint or several, according to the interests of the parties appearing upon the face of the deed: Sorsbie v. Park, 12 M. & W. 158. Here the interests are several, and therefore the obligation should be.
They also cited Primrose v. Bromley, 1 Atk. 89; Webb v. Plumer, 2 B. & Ald. 746; Tippins v. Coates, 18 Beav. 401; Hellier v. Gasbard, Siderfin, 266.
Lord Halsbury, C.
My Lords, I have had an opportunity of reading the opinion which is about to be delivered by my noble and learned friend on my right (Lord Fitzgerald). I entirely concur in it, and have but a very few words of my own to add. In this case the whole question turns upon whether the language of the covenant on the part of the lessees of a holding to pay rent and keep in repair is joint or several, and no question has been raised, or indeed can be, that following one unbroken series of authorities the language used would make a joint covenant. The late Mr. Platt, on p. 117 of his work on covenants, published more than half a century ago, puts the proposition in words that have never been questioned, as far as I am aware, since his time. “With respect to the form,” he says, “no particular words are necessary to constitute a covenant of either kind” (that is to say, either joint or several). “If two covenant generally for themselves without any words of severance, or that they, or one of them, shall do such a thing a joint charge is created, which shows the necessity of adding words of severalty where the covenantor’s liability is to be confined to his own acts” (see May v. Woodward, Freeman’s K. B. Rep. 247; Robinson v. Walker, 1 Salk. 393. Lord Justice FitzGibbon does not, as I understand, doubt that the language of the covenant would undoubtedly show a joint covenant but for the fact that the demise was to the two lessees as tenants in common. But I confess I am unable to follow the distinction which the learned judge draws to the conclusion at which he arrives. It is true that the parties to whom the demise is made are to hold it as tenants in common, but what they covenant to do is to pay one rent, not two rents, and not each to pay half a rent, but one rent. The same answer may, I think, be given to Lord Justice Barry’s somewhat quaint illustration. To the argument implied in his illustration1 the answer is obvious, the wigs are many, but here the rent is one. I think it is hardly accurate to say that the word “their” is an ambiguous word. Its grammatical force is of course like that of other pronouns, and its application must be ascertained from the contract. I am, therefore, of opinion that the judgment of the Court of Common Pleas should be restored, and the judgment of the Court of Appeal reversed, and I move your lordships accordingly.
Lord Watson.
My Lords, I am also of opinion that the order appealed from must be reversed. I think it is a mistake to say that the language of those covenants is ambiguous. Taken by themselves they plainly import joint and not several liability. No doubt the contract might be such as to impose upon them a meaning which they do not prima facie bear, but there is nothing to suggest the several liability of the lessees except the fact that in order to prevent either of them taking the whole by survivorship it is declared in the habendum that they are to hold as tenants in common. That is an interest which is just as consistent with a joint as with a several liability to pay one undivided rent and to execute all necessary repairs. In these circumstances the authorities relied on by the Court of Appeal appear to me to have no application. I have had the advantage of considering the judgment about to be delivered by my noble and learned friend opposite, in which I entirely concur, and I do not consider it necessary to say more.
Lord Fitzgerald.
My Lords, this appeal is from an order of the Court of Appeal in Ireland of the 21st February, 1887, reversing a decision of the Common Pleas Division. The action was on covenants contained in a lease, dated the 21st January, 1842, made by Richard Pope to George White and Albert White of a corn store and premises in the Liberties of the City of Waterford for a term of sixty-eight years at a rent of £150. The plaintiffs in the action were Tyndall and several others to whom the estate and reversion of Pope had come, and the defendants were Albert White, the surviving lessee, and the executors of George, his co-lessee, who had died in January, 1883. The writ of summons was issued on the 18th Dec., 1885. Therent claimed by the plaintiffs was for the year ending 29th Sept., 1885. The plaintiffs also claimed a considerable sum on the covenant for keeping in repair. The defendant Albert White did not defend the action. The other defendants (executors of George, the deceased lessee) put in several defences to each portion of the demand of the plaintiffs to which there was a reply and a demurrer. It is not necessary to refer further to the pleadings as eventually the question which arose was whether the statement of claim disclosed a cause of action against the defendants (executors of George) for breaches of covenant occurring after his death. The question is whether the covenants of the lessees were joint covenants only, or were the several covenants of each of the lessees with the lessor. The plaintiffs allege that the covenants were to be interpreted as several. The executors maintain the contrary.
The question thus raised is one of construction of the covenants; but in considering that question we have to look at and consider the whole instrument. The judg *38 ment of the Court of Common Pleas, as delivered by Chief Justice Morris, is very short, and goes directly to the real point. The Lord Chief Justice states his view that the words of the covenant, in clear and unambiguous language, expressed a joint covenant, and he adds: “In Levy v. Sale (37 L. T. N. S. 709), where it was argued that a similar covenant, though in form joint only, should be construed according to the rules of equity, as joint and several, Mr. Justice Lush says: ‘The authorities, I find, are uniform in holding that where there was no antecedent separate liability, but the obligation exists only by virtue of a joint covenant, the extent of its operation is measured by the words used, and the construction is the same in equity as at law.’ That case would be identical with the present, except that here the demise is to the two lessees as tenants in common. But the covenant to pay rent, if plainly a joint covenant only, cannot be treated as several by reason of the interest taken by the lessees. The covenant is, in my opinion, a joint covenant. The demurrer must therefore be overruled.” That judgment came before the Court of Appeal and was reversed, the Lord Chancellor of Ireland, who presided, observing that “in the case of Sorsbie v. Park (12 M. & W. 158) Baron Parke thus stated the rule—‘A covenant will be construed to be joint or several according to the interest of the parties appearing upon the face of the deed if the words are capable of that construction, not that it will be construed to be several by reason of several interests if it be expressly joint.’ I do not think that the words of the covenant here are so clear and unambiguous as to exclude regard being had to the interest of the covenantors in the property. If, in the words of Baron Parke, the covenant was ‘expressly joint’ it should be so construed, but I do not hold the words of the covenant to be clear in the present case. Therefore, recognising the rule to the fullest extent, I apply it differently from the method adopted in the Common Pleas Division. I accordingly, although not without doubt, construe the covenant as a several as well as a joint covenant, and the executors of the deceased covenantor remain liable to pay the rent and to repair.” We should find much difficulty in concurring in that judgment. The case, and the numerous authorities cited, were discussed by Lord Justice FitzGibbon very learnedly, but we do not think it necessary to follow the criticisms of the learned judge. He concludes thus, after reading the language of Mr. Justice Lush in Levy v. Sale (ubi sup.):—“A proposition which we do not question, but the observation of the Lord Chief Justice upon that case in the judgment appealed from shows exactly the error of the decision, for he says—‘That case would be identical with the present, except that here the demise is to the two lessees as tenants in common. ’ That is the very distinction which makes all the difference and requires us to hold that, the covenant following the interests of the parties, the demurrer must be allowed.” The reasons for the decision of the Court of Appeal were, therefore, as it appears:—1st That the language of the covenant was ambiguous; and 2nd, That in such case the demise to the lessees “as tenants in common” made all the difference and established error in the Court of Common Pleas. I now proceed to examine the language and provisions of the lease which we have to construe. We may dismiss at once the supposition that the lessees were co-partners in trade and acquired the leasehold as such. It may have been so, but that it was so is mere conjecture. Nor can we give any weight to the argument drawn from the use of the word “their” in the reservation of the right of way to the lessor. The inference from the lease is that the lessor was sole owner, and entitled to a single reversion in the whole, and as it does not appear that the lessees had any previous connection with the premises, there is no ground to suppose that there was any antecedent liability. The habendum is “to the said George White and Albert White, their executors, administrators, and assigns, as tenants in common and not as joint tenants;” and the reddendum is, “yielding and paying therefor and thereout yearly, and every year during the term, to the lessor, his executors, administrators, or assigns, the yearly rent of £150.” It may be observed that if an action had been instituted on the reddendum it should, prima facie, have been against the two jointly or the survivor. The rent then so reserved and payable is a single rent, payable to one individual (the lessor) in one sum by the two lessees. In case of any part of the rent being in arrear, the lessor’s right of distress and power to re-enter fasten on the whole premises. There are other provisions in the lease to which it is not necessary to refer, and which may be passed by with one observation, that they all import, or at least are consistent with, a single obligation by the lessor to both lessees, a joint obligation on the part of the lessees towards the lessor. The covenants in question are as follows:—“The said George White and Albert White do hereby for themselves, their executors, administrators, and assigns, covenant, promise, and agree to and with the said Richard Pope, his executors, administrators, and assigns, in manner and form following, that is to say—that they, the said George White and Albert White, or some or one of them, their executors, administrators, or assigns, shall and will from time to time, and at all times during the term hereby demised, well and sufficiently satisfy, content, and pay unto the said Richard Pope, his executors, administrators, or assigns, the said hereinbefore reserved yearly rent upon the days and times herein reserved for the payment thereof, clear above all taxes as aforesaid (quit rent and Crown rent only excepted), according to the true intent and meaning of these presents, and shall and will during the continuance of the term hereby demised well and sufficiently support, maintain, and keep the said premises hereby demised and all improvements made and to be made therein in good and sufficient tenantable order, repair, and condition, and at the end, expiration, or other sooner determination of this demise, shall and will so leave and yield up the same in the like good and sufficient tenantable order, repair, and condition.” The language of these covenants as well as the words of obligation unquestionably import joint covenants, and it was not contended that the words “or some or one of them” could have the effect of making obligations several which without them would be joint. The authorities are all the other way. It has not been made apparent to us that there was any ambiguity in the language of these covenants, and indeed the counsel for the respondent admitted that if these covenants stood alone and uncontrolled by anything else in the instrument they were free from ambiguity, and were in form joint obligations and should be so interpreted, and being asked on what he relied as coercing us to depart from the words of the instrument, and interpret that which was in form and language the joint covenant of the two lessees as being the separate covenant of each, in reply he pointed to the words of the habendum —“as tenants in common and not as joint tenants”—as giving the undivided interest to the lessees coupled with unity of possession. The question we have to consider is whether that provision, inserted in the habendum with the apparent purpose of preventing what might be the evil of survivorship as between the lessees, has or ought to have the effect of converting a covenant made by the lessees jointly with the lessor into the separate covenant of each. The grant was in form joint, and though the words “as tenants in common and not as joint tenants” are found in the tenendum they are immediately followed by a reddendum joint in form and creating, prima facie, a joint obligation. No authority was cited on the effect of these words as determining or affecting any right of the lessor, but it was suggested that their effect as between the lessees was to prevent, inter se, the right of survivorship, and that therefore we should construe the covenants though in terms expressly joint as the several *39 covenants of each. The current of modern decision has been, as we think it ought to be, to adhere to the very words of the contract when they are plain and unambiguous, and not to depart from them on grounds of hardship or inconvenience. The contract in such cases represents in its language the intention of the parties, and if they intended otherwise they should have said so. We ought to hold ourselves bound by this express and unambiguous covenant before us unless coerced by authority to put on it a different construction from that which its words import. The argument was that we should mould the covenant of the lessees because of their separate interests in the subject-matter of the grant, but no decision has been cited going so far. The passage cited from Platt (p. 123) is expressed—“shall be measured and moulded according to the interests of the covenantees.” No decision to which we were referred goes beyond that. Slingsby’s case (Coke’s Reports, Pt. V., 18b) dealt with the several interests of the covenantees, and the illustration put by the Court to some extent shows the reason of the rule in the case of covenantees, and so the rule in Eccleston v. Clipsham (1 Saund. 153) is confined to the interest of the covenantees, and the paragraph in Sheppard’s Touchstone, chap. 7, p. 166 (Atherley’s edition), founded on Slingsby’s case, is to the same effect. There are reasons for the rule applicable to separate interests in the covenantees as regulating the right and the form of suit on the covenant, but no authority has been brought under our notice that the rule was applicable to the case of separate interests in covenantors. The counsel for the appellants was asked whether he had been able to find any decision applying the rule to the latter case, and he informed us he had not. We do not mean to say that there may not arise cases in which the entirely separate interests of the lessees would render it necessary in the interests of all parties to interpret covenants differently from their express words. This is not such a case. The argument of hardship on the plaintiffs if the covenants in question are to be considered as joint only was of course urged. It probably is the case that the advantages which a joint covenant originally afforded to the lessor are now more than counterbalanced by the disadvantages which under altered circumstances now beset the assignees of his estate, but that cannot affect our decision, and the plaintiffs are not without remedies. They may distrain, and they may evict. Their rights as reversioners are only interfered with as to an action on the covenants in question. My Lords, I have on the whole come to the conclusion that the covenants in question are free from ambiguity, and are in their language and form joint and not several, that there is nothing on the face of the instrument to warrant us in putting on the covenants any other construction than that which their language imports, and consequently that the decision of the Court of Appeal should be reversed and the judgment of the Court of Common Pleas restored.
Lord Herschell.
My Lords, I concur in the opinion which has been expressed, and have but little to add. I take it to be clear that where several persons covenant with another in terms which import without ambiguity a joint and not a several obligation the covenant must be held to be a joint one. Where the terms are ambiguous, and may import either a joint or a several obligation, you may no doubt look at the other parts of the deed, the interests of the covenantors, and indeed any other circumstances appearing on the face of the instrument which will aid in the determination of the intention of the parties. In the present case it appears to me to be free from doubt that the covenant is in form joint. I can see nothing to indicate any several obligation, and if it be free from ambiguity it must, as I have said, be held to be a joint covenant. The only ambiguity which has been suggested, as far as I have heard, has been in the use of the word “their” preceding the words “executors, administrators, and assigns.” An examination of the other parts of the deed indicates, it has been said, that the word “their” is used distributively, as referring to each of the persons named. My Lords, I think that this may be admitted without in the least interfering with the view which I have put before your lordships that this is a joint covenant. If the word “jointly” were introduced into the covenant you would still, I apprehend, find the words as you find them in the covenant as expressed, “do hereby for themselves, their executors, administrators, and assigns.” In truth, the word “their” in such a collocation must always be read distributively because the parties do not apprehend that they will have the same executors, administrators, and assigns, which could only happen in very exceptional cases. Arriving, therefore, as I have, at the conclusion that this is an ordinary form of joint covenant with nothing to suggest a several obligation, it appears to me to follow that the decision of the Court below cannot stand. It has, no doubt, been held that where the interests of covenantees are several a covenant which in form is joint may be moulded according to those several interests, but that, I take it, is only in the case where, to use the language of Lord Coke, “the covenant is to several for the performance of several duties to each of them.” Now, in the first place, I would say say that I know of no authority for extending such a doctrine to the case of covenantors. It has always, so far as I am aware, been limited to covenantees, and in the present case the covenant is certainly not one by the covenantors for the performance by each of them of several obligations, inasmuch as the covenant to pay rent (to take that as an example) is a covenant to pay one single rent and not a several rent in respect of his several interest by each of the joint tenants. Lord Justice FitzGibbon, in his judgment in the Court below, said—“What could be more unjust than to construe the words here as creating a joint liability only? We are entitled to insert the definition of the interest in the covenant and to read it as equivalent to ‘the lessees as and being tenants in common, covenant that they, or some or one of them, will pay the rent.’ What could be more unnatural than that if one of these tenants in common became insolvent and the other died wealthy the executors of the latter could remain in possession of half the demised premises free from all the liability upon the covenant.” I apprehend that if the executors of one of these tenants in common remained in possession of the demised premises the lessor would not be without his remedy. There would then be privity of estate which would enable him to enforce obligations upon the executors of the deceased lessee by reason of their remaining in possession of the premises. But in the present case the executors have assigned all their interest, and have discharged all obligations down to the time of such assignment, and of course the assignee who is in possession is liable by reason of privity of estate for the performance of all the obligations of the lease. The only question is, not whether some one can be made liable for the performance of the covenant, but, whether the covenant is a several personal covenant so that the representatives of a deceased covenantor may be made liable upon the contract so entered into. I am unable to see that there would be any injustice in holding that during their joint lives neither could be made severally answerable for the rent, it being a single entire rent in respect of the whole of the premises, and therefore affecting the interests of both the tenants in common. On the contrary, indeed, it would seem to me to be more unjust that each of them should be liable for the whole of the rent than to hold that they should be only jointly liable for the whole of the rent as long as the two were living. My Lords, for these reasons I concur in the motion which has been made.
Mr. Finlay. —My Lords, the appellants have paid, under the order of the Court of Appeal in Ireland, to *40 the respondents the costs there. I should ask that it may be part of your Lordships’ order that these costs be returned.
The Lord Chancellor.
Certainly, they ought to be returned. Was there an undertaking to return them?
Mr. Finlay. —Yes, there was an undertaking to return them.
The Lord Chancellor.—Then you do not require an order.
Mr. Finlay. —I am not quite certain.
The Lord Chancellor.—However, the order will be made.
Mr. Finlay. —If your Lordship pleases. It may be necessary. It depends upon the form of the undertaking which I have not before me.
North Quay Developments Ltd v Carty
[2014] IEHC 444
Hogan J., 15 October 2014
1. Is a lease which is delivered into escrow pending the subsequent fulfilment of a conditions precedent binding on the parties once that condition has been fulfilled, even though the lease itself was never subsequently delivered to the other party in a manner which would thereby have formally released the lease from that escrow? In my judgment, absent special circumstances which would render the enforcement of that lease inequitable, this question must be answered in the affirmative. The present case may accordingly be said to represent a classic exemplification of two separate, but overlapping, equitable principles, namely, that an agreement for a lease is as good as a lease in accordance with the rule in Walsh v. Lonsdale and that equity regards as done what ought to be done.
2. These proceedings arise from an agreement originally arrived at in February 2007 whereby a company called Iverwell Ltd. (“Iverwell”) entered into possession of retail premises at the Bridgewater Centre, Arklow, Co. Wicklow. The premises were the property of the landlord, North Quay Developments Ltd. (“North Quay”). It was contemplated by the parties at the time that Iverwell (which traded under the name Vienna Shoes) would fit out the premises as a shoe shop. A combination of high rents and a lack of consumer demand following the banking collapse of late 2008 meant that the business ultimately foundered. Iverwell ultimately went into liquidation in June, 2012.
3. In these proceedings the plaintiff, North Quay, now claims to be entitled to summary judgment against the defendant in the sum of €156,888 under the terms of a lease which was agreed in February 2007, but which was immediately held in escrow. (The background to the escrow agreement will be presently described.) Iverwell agreed to discharge the rent by quarterly payments.
4. Mr. Carty was also a party to this lease and he had guaranteed the performance of these payments obligations by Iverwell of which company he was also the principal director. It follows, therefore, that for this purpose at least, he stands in the shoes of Iverwell and that if the company is bound by the terms of the lease, he is also so bound.
5. It is not in dispute but that Iverwell defaulted on its obligations to pay the rent. Clause 9.1 of the lease stated that the guarantor covenanted with the landlord as a primary obligation that “the tenant and the guarantor shall at all times during the currency of this agreement”. Clause 9.2 provided for joint and several liability. Clause 10.4.2 provided that the tenant and the guarantor:
“shall be liable to observe and perform covenants and agreements equivalent to the covenants agreements on the tenant’s part to be contained in the lease, including without limitation the liability to pay to the landlord from the rent commencement day by way of licence fee without set off deduction a counterclaim a sum equal to and payable in the same manner as the yearly rents which would have been payable under the lease had been granted and delivered…”
6. As Iverwell incurred debts in the sum now claimed by North Quay against Mr. Carty as guarantor, the issue now is whether the lease was actually effective to create such an obligation. The defendant’s response is to say that the lease was simply executed in escrow and that Iverwell instead entered possession pursuant to an agreement described as an agreement for an occupational lease. This latter agreement terminated in December, 2008 when an architect’s certificate of compliance with the Building Regulations following the fit-out of the retails premises as a shoe shop was supplied to the plaintiff. In essence, the defendant’s case is that there was never an effective lease supplied by the plaintiff which would serve to release that lease from its provisional status in escrow. In these circumstances – or so the argument runs – the defendant cannot be held liable under the guarantee which is admittedly contained in the lease and in respect of which he would otherwise be liable to North Quay qua surety following the default of Iverwell.
7. The defendant maintains that this is not a purely technical defence on the part of the surety, but that this failure to deliver the actual lease to Iverwell has had practical consequences as well. Specifically, Mr. Carty contends that the absence of an executed lease meant that the liquidator appointed to the company was thereby precluded from selling what might under other circumstances have been the principal asset of Iverwell, namely, the lease of the premises. It also meant that North Quay could take re-enter possession of the premises at a moment’s notice following the liquidation since it was not otherwise encumbered by a lease. It had the further consequence that North Quay could take the benefit of the elaborate and costly fit out of the premises which Iverwell had undertaken without the encumbrance of an actual lease.
8. North Quay in turn says that this particular line of argument has no relation to reality in that following his appointment the liquidator disclaimed the lease pursuant to s. 290 of the Companies Act 1963, as an onerous contract. This latter contention is borne out by the terms of the liquidator’s letter of 5th July, 2012.
9. How, then, did this situation come about where there was confusion as to whether Iverwell held under an agreement for an occupational lease or an actual lease? What appears to have happened is that in February, 2007 two separate documents were signed by the parties, an agreement for an occupational lease and the actual lease itself. It seems clear that it was the intention of the parties that the agreement for the occupational lease would be supplanted by the actual lease once the architect’s certificate of compliance was furnished by Iverwell to North Quay’s solicitors. It appears that following the fulfilment of this condition precedent to the coming into effect of the lease itself, the obligation to supply Iverwell with a duly executed version of the lease was subsequently overlooked. The question, accordingly, is whether this failure means that Mr. Carty cannot be sued on foot of the guarantee contained in that lease.
10. At one point, the objection was taken that neither document was stamped, but this objection has now been overtaken by events inasmuch as both documents have now been stamped.
The Application of the Rule in Walsh v. Lonsdale
11. The only remaining objection is one to which the courts have given a consistent answer for the best part of 130 years, namely, that since the enactment of the Supreme Court of Judicature (Ireland) Act 1877 (and its earlier English counterpart), an agreement for a lease is as good as a lease. This is illustrated by Walsh v. Lonsdale (1882) 21 Ch. D. 9 itself.
12. In that case the plaintiff had been allowed into possession of a mill under an agreement for a lease, even though the lease itself was never executed. While the plaintiff had previously being paying rent quarterly, the defendant subsequently demanded payment of a year’s rent in advance under the terms of the (unexecuted) lease and he sought to re-enter the premises when such payment was not forthcoming. As the actual lease itself contained such a clause allowing the defendant to demand such payment in advance, the English Court of Appeal held that the plaintiff was bound in equity by the terms of the lease, even though it had never formally been executed by the parties.
13. As Jessel M.R. famously stated ((1882) 21 Ch. D. 9, 14-15):
“There is an agreement for a lease under which possession has been given. Now since the Judicature Act the possession is held under the agreement. There are not two estates as there were formerly, one estate at common law by reason of the payment of the rent from year to year, and an estate in equity under the agreement. There is only one Court, and the equity rules prevail in it. The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted, it being a case in which both parties admit that relief is capable of being given by specific performance. That being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted; he cannot be turned out by six months’ notice as a tenant from year to year. He has a right to say, ‘I have a lease in equity, and you can only re-enter if I have committed such a breach of covenant as would if a lease had been granted have entitled you to re-enter according to the terms of a proper proviso for re-entry.’ That being so, it appears to me that being a lessee in equity he cannot complain of the exercise of the right of distress merely because the actual parchment has not been signed and sealed.”
14. This is the effectively the position in the present case, because even if no actual lease was formally delivered following the release of the lease from the suspensive form in which it was held in escrow, equity treats as done what ought to have been done. Once the certificate of compliance was furnished to the plaintiff’s solicitors the pre-condition to the operation of the lease was satisfied and the lease – which ought, admittedly, at that point to have been formally released from escrow and delivered to Iverwell – took effect in equity. Adapting freely the words of Jessel M.R., one might say that the defendant cannot object to the terms of an agreement (namely, the actual lease) once the condition precedent to its effective operation has been satisfied, even if “the actual parchment” was not formally handed over to Iverwell, the company whose obligations he guaranteed under the terms of that lease.
15. There are, admittedly, limitations to the rule in Walsh v. Lonsdale: there may, for example, be circumstances in which the enforcement of the agreement for a lease would be inequitable. Nor is an agreement for a lease an actual lease, so that, for example, third parties might not be so bound. Depending, moreover, on the particular statutory context, it may be that references in certain statutory provisions would not apply to a mere agreement for a lease as distinct from a lease itself.
16. None of these limitations apply in the present case. Iverwell (and, by extension, Mr. Carty) continued in possession as if the lease had been duly delivered following its release from escrow. It follows that the defendant is bound by its terms. Of course, the situation might have been otherwise had Iverwell been so prejudiced by the failure to deliver the actual lease that its enforcement at the hands of North Quay might now have been held to be inequitable. This might, for example, have occurred had the liquidator wished to sell the lease to a third party but the sale fell through for want of an actual lease. This, however, was not the case here, as it is perfectly clear from the liquidator’s letter of 5th July, 2012, that he had no use for the lease and that he wished to disclaim it under s. 290 of the 1963 Act as an onerous contract. Nor, for the reasons already set out, can the defendant qua guarantor be regarded as if he were third party with no knowledge of or interest in the terms of the lease.
17. An argument to the effect that the credit raising capacity of Iverwell was prejudiced by the failure to grant an actual lease was also advanced as a defence. This might possibly have amounted to real prejudice of the kind I just mentioned had, for example, Iverwell or the defendant been able to point to correspondence with a bank to the effect that the failure to deliver an actual lease prejudiced their respective ability to raise a loan. In the present case, however, there is little more than a generalised averment to the effect that there was or might have been such prejudice. In the light of the comments of McKechnie J. in Harrisgrange Ltd. v. Duncan [2003] 4 IR 1, 8 I cannot think that a “mere assertion” of this kind is in itself sufficient to raise a tenable defence in a claim for summary judgment in respect of a liquidated sum.
Conclusions
18. In summary, therefore, it is clear that the February, 2007 lease became binding and operative once the condition precedent for the operation of that lease was fulfilled. This occurred in December 2008 when Iverwell’s architect supplied a certificate of compliance with the Building Regulations following the fit-out of the shop. At that point, the actual lease ought to have been formally delivered up to Iverwell and it is agreed that this did not happen.
19. Iverwell are nonetheless bound by that lease in equity as if the lease had in fact been formally delivered up to them. Iverwell suffered no prejudice as a result of this failure and, accordingly, it would not be inequitable to give effect to the lease in such circumstances. It follows, therefore, that by virtue of the application of the rule in Walsh v. Lonsdale, the defendant, qua guarantor of the lease, is bound by its terms.
20. In these circumstances, as the defendant cannot establish any realistic or arguable defence to the plaintiff’s claim, I find myself obliged to give summary judgment for the sums claimed by plaintiff.
Biggs v Brennan
Circuit Court
14 March 1907
[1907] 41 I.L.T.R 60
FitzGibbon L.J.
FitzGibbon, L.J.
The writing in this case is not a formal document, but consists of correspondence. There is, therefore, some difficulty in seeing whether the writing satisfies the statute. It is necessary to look at all the letters and telegrams. Is the date of the tenancy referred to by express words or by reasonable implication? Blare v. Sutton is distinguishable, inasmuch as in that case it was not attempted to make out the material terms of the agreement by implication from the writing, but by parol evidence. Now, the letter of Feb. 13 gives the terms of the agreement. It settles the rent, duration of the tenancy, and that the rent was to be payable in advance, and ends by saying “we will do all we can during the coming two weeks.” Seeing that the first quarter was payable in advance, and considering the subsequent correspondence and telegrams, it can easily be seen what that date meant. Thus the letter of Feb. 13 means, “we will do all we can during the coming two weeks; on the expiration of that period yo
u are to come in.” The decree will, therefore, be affirmed with costs.
Gray v Cathcart
Circuit Court
19 March 1898
[1899] 33 I.L.T.R 35
Johnson J.
Johnson, J.
Everyone commits a misdemeanour who does any act forbidden by a statute; accordingly when these parties entered into the agreement to occupy a house which had been condemned it was a contract to do that which the statute says that you could not do. It was a contract to do an illegal thing, and, though the parties might go through the form, yet such a contract is not binding, and cannot be sued upon.
Dismiss affirmed.
Gaffney v Duffy
[1953] 87 I.L.T.R 92
Judge Shannon
Judge Shannon, in delivering judgment, stated that the present application was for a new tenancy in respect of premises which were, undoubtedly, used during the whole of the three years next preceding the termination of the tenancy for the purpose of carrying on a business. The question to be decided was whether the applicant had remained in occupation of the premises as the tenant for the time being thereof, after he had admitted two partners into the ownership of the business and, in effect, allowed them to manage the business without his active assistance. His Lordship was satisfied that the applicant had remained the occupier of the premises and the tenant for the time being thereof, after he had entered into the partnership agreement Accordingly, the application would be granted, the terms of the new tenancy to be fixed at a later date.
Sylvester William Riordan and Derek O. Mulligan v Terry Carroll trading as Wyvern Gallery
[1996] 2 I.L.R.M. 263
(Kinlen J)
28 July 1995
KINLEN J
delivered his judgment on 28 July 1995 saying: The plaintiffs’ claim is for possession of all that and those the hereditaments and premises known as 2, Temple Lane South, Temple Bar, Dublin. The defendant held the property under an indenture of lease dated 1 August 1993 for a period of 35 years from that date subject to a yearly rent of £12,000 payable quarterly and subject to yearly payments in respect of insurance. The lease contained the usual provision for re-entry if the rent be unpaid for 14 days after any of the days appointed for payment. The civil bill also claimed arrears of rent and of insurance premiums, mesne rates and interest. The civil bill was issued 9 July 1994. A motion for summary judgment was brought to the Circuit Court by motion paper dated 29 July 1994. The original developer and lessor was Temple Bar Properties Ltd. It waived the rents due by the defendant in respect of the premises for the months of February and March 1994. Accordingly, the plaintiffs’ claim as successors in title to Temple Bar Properties Ltd was for rent since 1 April 1994. The lease contained specific covenants on behalf of the lessee to pay the rent or the increased rent on the days and in the manner prescribed without any deductions and to pay to the lessor from time to time on demand without any deductions or abatements the amount or amounts expended by the lessor on foot of keeping up the insurance of the building. She also covenanted to pay interest on the rent and insurance premium if same remained unpaid at a rate as specified in paragraph 3 of the lease.
The defendant states that she has owned and operated an independent art gallery in the Temple Bar area since January 1990. After protracted negotiations she entered into the lease already mentioned. She was assured by Eoin Hickey, property director of Temple Bar Properties Ltd, that she would have an option to purchase the premises at a break-even price and that the lease would not affect this option. This option was to be exercised in 1996 when Temple Bar Properties Ltd expected to complete its operations in the Temple Bar area or at the time of the five year rent review date set out in the lease. She noticed shortly after she went into occupation that there was damp and also cracks and that some paintings were damaged and Temple Bar Properties Ltd apparently gave her a credit against the rent due, to repair them. Because of the continuous development in the area with part of the street in front of her premises being blocked and turned into a builder’s yard and with noise, demolition, dust, and cement mixing vibrations she alleges that patrons could not gain access to her gallery. There were some discussions between herself and a representative of Temple *267 Bar Properties Ltd but they do not concern these present proceedings. They may well arise in the proceedings which she is maintaining against Temple Bar Properties Ltd and others. The architects called by both sides basically agree that there is some evidence of dampness, particularly the walls of the kitchenette and toilet. The walls below the floor level show high damp readings but there is no evidence of dampness in the party walls overhead. There seems definitely to be a problem at the rear wall. Heating and possibly a de-humidifier would have accelerated the drying-out process. A Super-Ser heater on the top floor may, in fact, have actually emitted moisture and certainly would not have been conducive to removing the damp.
The defendant, by motion dated 10 November 1994, applied to the Circuit Court to join Temple Bar Properties Ltd in the proceedings. The President of the Circuit Court, on 18 November 1994, struck out the plaintiffs’ motion for summary judgment, directed that the defendant lodge into court within ten days of 18 November 1994 the sum of £3,000 pending determination of the proceedings, extended the time for filing the defendant’s defence for ten days from the date of lodgment as aforesaid and joined Temple Bar Properties Ltd as a third party in the proceedings. The defence was delivered on 25 November 1994 and was a traverse with a counterclaim alleging that prior to the entering into the lease agreement it was an express and/or implied representation that the newly constructed art gallery to be provided for the defendant would be suitable for the purpose for which it was built, that all work would be done in a good and workman-like manner, that good and proper materials would be used in the construction thereof and that the building would be reasonably fit for human habitation. It was an express and/or implied term of the said lease that the purpose-built premises would be suitable for the purpose for which it was designed. The defendant alleged that because of continued dampness on the wall and cracks which had appeared, none of which were remedied, she suffered loss and damage. She also alleged that the plaintiffs were in breach of the covenant under the lease for quiet enjoyment and that the defendant had been subjected to a number of interferences including the constant blocking of the street on which the defendant’s premises stands by construction vehicles of every description, including cement mixing machines, lorries, articulated trucks carrying construction materials and equipment, cranes, tankers, large debris skips, and scaffolding trucks, and, further, by the erection of pedestrian barriers at both ends of the street preventing access by the general public; and by the obtaining of road closure orders; and, by the setting off of alarms, and, by the general disruption to the defendant’s business due to excessive dust and vibrations caused by the extensive construction, demolition and excavation works. She claimed loss of profits from 1 August 1993 to 31 July 1994.
However, it was clear that all of these alleged interferences with access to her premises were not caused by the plaintiffs in the present proceedings. They *268 are matters for determination in the proceedings which she is taking against Temple Bar Properties Ltd and others.
On 25 November 1994 the defendant lodged the £3,000 without admission of liability in pursuance of the order of the President of the Circuit Court. By a plenary summons dated 16 September 1994, the defendant herein brought proceedings against Temple Bar Properties Ltd and G. & T. Crampton Ltd and McGill Brothers Ltd as defendants. An application was brought before Barron J on 21 October 1994 in those proceedings for an interlocutory injunction and by consent it was ordered that the motion and action as against the third named defendant be struck out with no order as to costs and certain recited undertakings being given by Messrs G. & T. Crampton Ltd, that no order be made on the motion as against the first named defendant and provision was made for further pleadings.
The third party in the Circuit Court proceedings namely, Temple Bar Properties Ltd, appealed to the High Court from the whole of the judgment of Judge Spain, President of the Circuit Court, given on 18 November 1994. Keane J on 6 March 1995 allowed the appeal and directed that the third party notice be set aside. He had been urged to allow the entire proceedings to be consolidated but, by the said order, refused that application.
The present proceedings came before Judge Buchanan on 13 March 1995 and he ordered that the plaintiffs recover possession and the sum of £15,252.82 together with the costs of the proceedings, including the costs of a motion for summary judgment and he dismissed the counterclaim with no order as to costs and that the sum of £3,000 lodged by the defendant in court be retained in court for the time being and granted a stay of ten days pending an appeal and if there were an appeal such stay to continue pending the determination of such appeal. The defendant duly served a notice of appeal dated 21 March, 1995.
The plaintiffs appealed to the High Court by a motion dated 28 April 1995 from that part of the order of Judge Buchanan made on 13 March 1995 which granted a stay of execution. The matter came before Morris J on 22 May 1995 who varied the Circuit Court order by providing that the stay of execution do continue pending the determination of the appeal only on condition that the defendant do pay into court within two weeks of 22 May 1995 to the credit of the appeal the sum of £12,252.82 (the court taking account of the payment into the Circuit Court already made in the sum of £3,000). The plaintiffs have been anxious to get this case to hearing as they are not in receipt of any rent or mesne rates and have been obliged to meet their mortgage obligations. On 24 May 1995 the matter came before Barr J who ordered that the appeal be heard on 14 June 1995. The appeal commenced on that day in this Court. There was considerable oral evidence and volumes of discovery documents and affidavits and written and oral legal submissions. In the course of the evidence it was alleged that the defendant had sub-let the premises or part thereof which was prohibited by the *269 lease. She says it was a licence. The lease is a very comprehensive document. The defendant executed it with the advice of her solicitor. The defendant is not pursuing her option claim. The monies directed by Morris J to be lodged in court have not been lodged and there is no reply to a notice for particulars dated 15 February 1995.
The second named plaintiff, Derek Mulligan, stated that shortly before 30 March he became aware of disagreement between residents of Temple Bar and Temple Bar Properties Ltd. However, the plaintiffs were assured they were minor matters and that the Temple Bar Properties Ltd architects would deal with them and this allayed their fears. They took the lease from 31 March 1994. They called on the defendant and she showed them cracks and dampness. It was agreed that a man could deal with it in two days or perhaps a day and a half. She was expecting Temple Bar Properties Ltd to do it.
The plaintiffs were aware of the suspension of rent prior to their taking an effective assignment of the lessor’s interest. A letter from Messrs P.F. O’Reilly & Co., solicitors for Temple Bar Properties Ltd dated 6 April 1994 had been sent to the plaintiffs’ solicitors stating that Temple Bar Properties had waived the rent due by the tenant as and from 1 February 1994 to the date of closing and that therefore the rent is deemed to be paid up to 31 March 1994.
Shortly after the hearing commenced in this Court, the defendant sought to rely on a document which had been discovered but which had not been discussed or its implications considered in the Circuit Court. It had not been raised in the pleadings. This document was in the handwriting of Mr Eoin Hickey, who is a chartered surveyor and a barrister-at-law, and a property director with Temple Bar Properties Ltd. He was called by the defendant. He had been aware of her complaints.
The document reads as follows:
The meeting 3.30 11/11/1993. Wyvern Gal.
(1) Cheque £2,000 in full settlement of second quarter rent.
(2) I will commission a full report on damp walls problem from P. Twamley to be circulated to you and TBP.
(3) TBP will act on recommendations in report.
(4) Subject to action on (3) you to renew standing order at £3,000 per quarter.
(5) On receipt of third quarter rent of £3,000 I will furnish (?) letter re reviews.
(Paragraph 5 proved impossible to decipher).
This document was not signed by either of the parties. It was alleged that this was a collateral agreement and was binding on the plaintiffs herein as landlords without notice. The evidence of Mr Hickey (called on behalf of the defendant) was that he had anticipated that the repairs would be effected within a month and then the normal rent would be paid but £1,000 deducted was not specific. *270 However, no money came to TBP (Temple Bar Properties) from the standing order. He stated that on 11 November or the next day he gave orders to implement the report of Mr Twamley. Mr Twamley had reported to TBP by letter of 21 October and again by a letter of 25 November 1993. He had advised and had verbally instructed the defendant that extract ventilation be kept on at all times, at least during opening hours, that opening window sashes and terraced doors be kept slightly open for a number of hours during the day, that storage heater systems be installed and used from the beginning of September at the earliest and that kettles should not be allowed to steam in the tea-station and that no art work should be hung on the rear ground floor wall and that sensitive water colour art works be hung on dry surfaces and where this was inconvenient, that small spacers be fixed to the back of frames to separate them physically from damp surfaces. He states that the building work was carried out in the short period of twelve weeks to assist the tenant but allowing very little time for actual drying out. He states in his report to TBP dated 21 October:
What has arisen in the meantime is as follows:
(a) The tenant has objected to us installing the opening sashes over the front doors.
(b) The ventilation system has not been kept operational.
(c) Windows and doors have not been kept open as instructed.
(d) No storage heaters have been installed or used.
He was concerned that the condition would continue unless action was taken on day to day heating and ventilation and suggested that a de-humidifier should be rented and used on each floor to achieve faster results. In his report of 25 November, he states that there was only a small plug-in heater on the ground floor and that no storage heaters had been installed. He also states, as already mentioned, that there was a Super-Ser heater on the top floor which, if used, would have a severely negative effect on drying out as these heaters actually emit moisture. He says that to rectify the dampness continuous heating is required for say a two month period initially and subsequently at least at a background level throughout the season. He says that the provision of two or three plug-in domestic de-humidifiers is also recommended and that these require to be kept operational and to be emptied consistently when full, for say a one month period. Mr Hickey swore that what the developer had to do to comply with the requirements of Mr Twamley had been done but certain things were to be done by the tenant. She had not done them and that is why the damp continued. He stated that the building requires ventilators and heaters in order to dry out properly and this was not done. He also stated that storage heaters were provided by the landlord although they were the tenant’s responsibility.
It seems to the court that the tenant did not comply with the reasonable *271 suggestions of Mr Twamley. There seems little doubt that on occasions she suffered from disruption of her business. However, basically the questions here are (a) whether she is entitled to refuse to pay rent, (b) whether the unsigned memo is a collateral agreement which is binding on the purchaser for value of the lessor’s interest without notice and (c) whether a counterclaim can be maintained in an action for ejectment for non-payment of rent. The court required assistance from the barristers-at-law who prepared very full and detailed written submissions. They subsequently expanded on these. The defendant’s argument was that the plaintiffs purchased the premises of which the defendant was a tenant. At the time of this purchase the plaintiffs were appraised of an ongoing and continuing dispute between the defendant and Temple Bar Properties Ltd. The result of this dispute was that the defendant had been and continued to be grossly affected in terms of her business trading. Obviously this had a direct influence on the defendant’s ability to pay the commercial rent. Purchasing in this knowledge, the plaintiffs are bound to accept both the burdens and the benefits of the covenants and implied covenants and any variations thereto. When the court enquired as to why they had not executed for the £12,000 directed by Morris J to be paid into court, they felt that the matter was sub judice in this Court and it might not be correct to execute while this Court had seisin of the appeal.
The first question is whether evidence of an agreement of 11 November 1993 contended for by the defendant should be excluded from consideration by the court. As already indicated, this agreement was not pleaded by the defendant. It was not raised in the defendant’s replying affidavit of 18 April 1994 responding to the plaintiff’s motion for summary judgment. It was not raised in the defendant’s grounding affidavit dated 10 November 1994 in support of her motion to join Temple Bar Properties Ltd as a third party. The agreement was not raised at the plenary hearing in the Circuit Court. It was not raised by the defendant’s counsel at the hearing of the plaintiff’s motion to remove or vary the stay on execution of the Circuit Court order heard in the High Court on 22 May 1995.
The plaintiffs were not notified of the defendant’s intention to rely on the agreement prior to the hearing of the appeal. The defendant announced her intention after the commencement of the plaintiffs’ opening of the appeal in this Court. However, the document was revealed in discovery but neither side adverted to it until the appeal was part heard here. The plaintiff of course would have no right of appeal against a finding of fact in relation to the agreement. The White Book (Supreme Court Practice, 1988) states as follows in relation to appeals to the Court of Appeal:
59/10/7 Power to receive further evidence . After there has been a trial or hearing on the merits, fresh evidence will not be admitted in the Court of Appeal unless *272 the conditions laid down in Ladd v. Marshall (below) are satisfied. A strict approach is adopted.
When a litigant has obtained a judgment in a court of justice, he is by law entitled not to be deprived of that judgment without very solid grounds (Brown v. Dean [1910] AC 373 at p. 374) per Lord Loreburn LC who adds that the maxim ‘ interest reipublicae ut finis sit litium ’ is applicable. If it is sought to deprive him of judgment by further evidence, three conditions must be satisfied before it can be received:
First, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the results of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or, in other words it must be apparently credible though it need not be incontrovertible (Ladd v. Marshall [1954] 1 WLR 1489 per Denning LJ at p. 1491 approved in Skone v. Skone [1971] 1 WLR 812 and Roe v. Robert McGregor and Sons Ltd [1968] 1 WLR 925).
Moreover, evidence not called at the trial is necessarily regarded with caution. It may be prompted or coloured by knowledge of what happened in the court below and in any case it is the duty of the party ‘to bring forward his whole case at once and not to bring it forward piecemeal as he found out objections in his way’In re New York Exchange Ltd (1888) 79 Ch D 415 at p. 420.
This Court was referred to Dalton v. Minister for Finance [1989] IR 269; [1989] ILRM 519 and Balkanbank v. Taher Supreme Court 1992 No. 155, 1994 No. 186, 19 January 1995 where the statement of claim in the High Court was amended following the hearing so as to allow the plaintiffs’ claim to be treated as a derivative action on the basis of an exception to the rule in Foss v. Harbottle. The plaintiffs originally claimed fraud and by amending were claiming fraud on a power or equitable fraud. The defendants appealed, inter alia, against the amendments and the consequent judgment against the defendants. This was not the case of a minor amendment but an amendment which completely changed the nature of Balkanbank’s claim and the defendants were seriously prejudiced thereby. See also Superwood v. Sun Alliance Supreme Court 1991 No. 348, 27 June 1995 where the Supreme Court reversed the trial judge’s finding that the respondents were entitled to rely on a clause in an insurance policy which had not been pleaded or notified by letter to the appellants. This was on the basis of estoppel and constitutional justice.
Both sides had made discovery on 8 March 1995 which was the day before the trial in the Circuit Court. Constitutional imperative is fair procedure. If the court were to find on this collateral agreement, thereby depriving the plaintiffs of the right to appeal, it would be unfair. However, this Court thought it proper *273 to allow the matter to proceed on the basis that this evidence had been available on discovery and that it should be discussed and not arbitrarily barred. Under O. 61, r.8 of the Rules of the Superior Courts, the admission of additional evidence is a discretionary matter which, of course, has to be based on judicial criteria. However, it was further argued that this agreement does not avail the defendant at all. It is unsupported by fresh consideration from the defendant. The rule in Pinnel’s case (1602) 5 Co Rep 117a affirmed in Foakes v. Beer (1884) 9 App Cas 605 is that when a party to a contract gives up a right under the contract, he is not bound by the waiver unless he has been given consideration for it. The headnote in Foakes v. Beer states:
An agreement between judgment debtor and creditor that in consideration of the debtor paying down part of the judgment debt and costs and on condition of his paying to the creditor or his nominee the residue by instalments, the creditor will not take any proceedings on the judgment. It is nudum pactum being without consideration and does not prevent the creditor after payment of the whole debt and costs from proceeding to enforce payment of the interest upon the judgment so held affirming the decision of the Court of Appeal.
Past consideration is no consideration. In Provincial Bank of Ireland v. O’Donnell [1934] NI 33, a guarantee to pay premiums on an insurance policy taken out as security for an existing overdraft was held unenforceable as no new consideration was given to it. In Fitzgerald v. Portarlington (Irish Exchequer) (1835) 1 Jon 838, an agreement by a landlord to reduce the rental was held not to be enforceable by the tenant because he had provided no consideration.
This alleged collateral agreement makes no reference to rent. At best the defendant may contend she is not obliged to have in place a standing order. The written agreement does not evidence a waiver of the obligation to pay rent. The evidence from Eoin Hickey, called on behalf of the defendant, indicates that the former landlord performed its obligations under any agreement contended for. Accordingly, on the evidence adduced by her, the defendant is obliged to pay rent. There was no intention to create legal relations and/or to suspend the defendant’s obligation to pay rent, since at no time before the commencement of this appeal had the defendant indicated otherwise. Any damp that remains (and it is not great) is due to the defendant’s own defaults. It was the defendant who was in breach of agreements which she contends were made prior to the lease. In any event, any agreements prior to the lease contended for are now merged in the lease. However, it is contended that this unsigned agreement which was after the lease was collateral and is enforceable. While this Court allowed this document to be presented to the court de bene esse, I think it should not be allowed as evidence in view of the law as stated in the previous paragraphs. I am also aware of a judgment of Haugh J in McCormick v. Cosgrave [1947] Ir Jur Rep 5 which provides as follows:
*274
When in a claim and counterclaim in the same action in the Circuit Court the claim is dismissed by reason of the non-appearance of the plaintiff at the hearing and the counterclaim succeeds, evidence being adduced in support of it, an appeal lies to the High Court in respect only of the counterclaim, for, there having been no hearing of the claim in the Circuit Court, an appeal from the order dismissing the claim could not be determined by way of a re-hearing in the High Court as required by s. 37 of the Courts of Justice Act 1936. Fitzpatrick v. Powell [1946] IR 320 applied.
The above case was not cited in argument. By analogy with that case, I feel it would be unjust to the plaintiffs to allow it to be pleaded at this late stage. However, if I am wrong in that decision, I am quite satisfied from the evidence before me that there was no consideration for the document and while I want to retain the defendant’s right to pursue the original lessor and the contractor, on the evidence in this Court it seems that the dampness there, could have been eradicated by the use of heaters and de-humidifiers. However, I realise that this finding in this case does not in any way preclude another High Court judge from finding contra-facts if the evidence is available in the defendant’s pending action. Mr Hughes argued that in view of the High Trees case there was an equitable estoppel, even though in writing and with no clear consideration. However, in view of the findings of fact which I have just made, I do not think it necessary to deal with this point. The argument that an assignee of a lessor’s interest is not bound by a collateral agreement of which he has no notice is countered by an argument that the lessee has a valuable property being a 35-year lease and that she could lose it by a lessor assigning the lease to a person who is not aware of these collateral agreements. That argument does not seem logical. In the present case, she is obliged under her lease to pay rent. The alleged agreement of 11 November 1993 and the subsequent letter from the solicitor for Temple Bar Properties Ltd that all rent was payable up to 1 April are evidence merely of those facts. In this case, the plaintiffs are suing for rent due since that time. Any collateral contract contended for, including any building contract, was not entered into by the plaintiffs. There was no privity of contract between the parties. S. 13 of Deasy’s Act 1860 provides:
Every tenant of any lands shall have the same action and remedy against the landlord and the assignee of his estate or interest, or their respective heirs, executors, or administrators, in respect of the agreements contained or implied in the lease or other contract concerning the lands, as the original tenant might have had against the original landlord, or his heir or personal representative respectively; and the heir or personal representative of such tenant, on whom his estate or interest shall devolve or should have devolved, shall have the like action and remedy against the landlord and the assignee of his estate or interest, and their respective heirs and personal representatives, for any damage done to *275 the said estate or interest of such tenant by reason of the breach of any agreement contained or implied in the lease or other contract of tenancy in the lifetime of the tenant, as such tenant might have had.
Oddly enough, the only authority quoted by Wylie in Irish Land Law at para. 15.17 that ‘the general rule is that [the tenant] is not entitled to withhold rent for breach of the landlord’s repairing obligation’ is in Corkerry v. Stack (1947) 82 ILTR 60 which is a decision of His Honour Judge Art O’Connor in the Cork Circuit Court. However, Wylie states (at p. 423):
However, we saw earlier that [the tenant] may be able to invoke a right of set-off in respect of expenses he has incurred by doing the repairs himself.
In relation to s. 48 of Deasy’s Act, Wylie states in Irish Landlord and Tenant Law at p. 363:
The right of set-off exists in respects of ‘all just debts’ which suggests a very wide scope. However, it is doubtful whether it is as wide as might be suggested. Thus it would appear that the right can be invoked in respect of a liquidated claim only . This point arose in MacCausland v. Carroll (1938) 72 ILTR 158 where, in an action for rent against the tenant’s sureties, the latter sought to claim by way of set-off an unliquidated amount arising out of the breach by the landlord of his repairing covenant.
Maguire P rejected counsel’s arguments that ‘just debts’ included unliquidated sums in these terms:
It seems to me that O. 7, r.6 of the Circuit Court Rules 1930 [now see O. 12, r.7 of the Rules of the Circuit Court 1950] taken with the wording of s. 48 of the Landlord and Tenant Law Amendment Act, Ireland 1860 makes it clear that the right to an action for rent is limited to where a liquidated sum is due by the landlord. That that is so appears clear from the wording of the rule and it seems that it is only a claim for a liquidated amount that can be set-off as the rules say that the defendant must lodge money in court at the time of entering his defence. Therefore the tenant in the herein proceedings for rent would not be allowed to set-off any counterclaim for damages for breach of contract based on the failure of the landlord to carry out the repairs.
In an action to recover possession of land for non-payment of rent, a counterclaim cannot be made, Fitzgerald v. Day 6 LRG 326.
The defendant alleges in paragraph 9 of the defence that:
The plaintiffs are in breach of the implied covenant under the lease for quiet enjoyment of the above premises.
*276
The defendant says that an alleged nuisance caused by building works are the plaintiffs’ responsibility under s. 41 of the Deasy’s Act 1860. A great deal of time was spent on this section. It provides:
Every lease of lands or tenements made after the commencement of this Act shall (unless otherwise expressly provided by such lease) imply an agreement on the part of the landlord making such lease, his heirs, executors, administrators, and assigns, with the tenant thereof for the time being, that the said landlord has good title to make such lease, and that the tenant shall have the quiet and peaceable enjoyment of the said lands or tenements without the interruption of the landlord or any person whomsoever during the term contracted for, so long as the tenant shall pay the rent and perform the agreements contained in the lease to be observed on the part of the tenant.
It was argued that the landlord was liable under the phrase ‘any person whomsoever’ for what was being done on the street allegedly by the developer and his contractor. Apparently there has never been a satisfactory interpretation of what those words mean exactly. However, it does not fall for consideration in the present case as the tenant was not paying the rent and was not performing the agreement in relation to insurance premiums and therefore this implied covenant does not arise.
Therefore, in the view of this Court the alleged collateral agreement does not arise because it requires an amendment at too late a stage. Also there is no consideration for it and (although this point was not fully argued), it may not comply with the Statute of Frauds as applied to Ireland. The court holds that the claim herein is for unliquidated damages and therefore is not the proper subject of set-off or counterclaim in the present proceedings. The court also holds that the defendant is not entitled to the implied covenant under s. 41 of Deasy’s Act as she is in breach of covenant. Accordingly, the court doth affirm the order of the learned Circuit Court judge. It was argued by the plaintiffs that there were covenants covering quiet enjoyment and they referred to specific provisions in the lease for access for specific acts such as maintaining services, specific repairs and alterations. However, quiet enjoyment is surely more encompassing than simply specific provisions. Another case on which the plaintiffs relied was Whelan v. Madigan [1978] ILRM 136. But in that case Kenny J held that the first named plaintiff, Ms Whelan, was in arrears of rent and therefore could not rely on a purported covenant for quiet enjoyment. The defendant also contended that a scenario could always be manufactured by a landlord where, as a result of constant breaches of quiet enjoyment, the tenant was unable to pay rent and once the tenant was in arrears the landlord could then assign the property and the new landlord could then effect ejectment without the tenant being able to avail of a remedy for breach of quiet enjoyment which was ongoing and *277 continuing. It was argued on her behalf that the operative date for purposes of the implied covenant for quiet enjoyment was in or around September 1993 not simply when the lessor’s interest was assigned on 1 April 1994 or any later date. However, this argument is entirely inconsistent with s. 14 of Deasy’s Act and is contra to the pleadings in this case which chose a date to suit pending proceedings of the defendant against Temple Bar Properties Ltd.
I was also referred to the Law Reform Commission Working Paper No. 1 of 1977, being the law relating to the liability of builders, vendors and lessors for the quality and fitness of the premises where it says ‘the landlord in making a lease is under no general obligation to ensure that the premises are suitable or fit for habitation’. In this case the tenant is in much the same position as the purchaser of real property: caveat emptor (or more properly in this case caveat lessee) applies and he must look out for himself. Moreover, the law will not normally inject into the lease implied terms in favour of the tenant relating to the quality of the premises unless there is an express provision in the lease. Therefore the tenant cannot recover for injury or damage caused by defects in the premises, Chambers v. Cork Corporation (1953) ILTR 45; Deale on the Law of Landlord in the Republic of Ireland , p. 214; see also Davitt P in Brown v. Norton [1954] IR 34 at pp. 44–45. There are, however, some instances where terms are implied into certain leases either by the court or by statute and these may be considered as exceptions to the general rule stated above. However, the court has dealt with these alleged implied terms in this judgment.
In this circumstances, the court affirms the orders of the learned Circuit Court judge.
Gatien Motor Co. Ltd v Continental Oil Co
GATIEN MOTOR CO. LTD. V. CONTINENTAL OIL COMPANY OF IRELAND LTD.
The respondent landlord let a certain tenement to a third party for three years from the 6th February, 1970, and the third party used the tenement for the purposes of his business during that period. Before the expiration of that term of years, the third party sought a renewal of his tenancy from the respondent, but the latter was unwilling to grant a renewal unless the third party surrendered possession of the tenement for a week. The third party was unwilling to vacate the premises for such week since he believed that such surrender would damage the goodwill of his business. Ultimately, it was agreed that the third party would remain ‘in possession’ of the tenement from 6th – 12th February, 1973, as a caretaker for the respondent and not as a tenant, without payment of rent, and that the respondent would grant to the applicant company (formed by the third party) a new tenancy for three years from the 12th February, 1973. The third party was aware that such a compromise was designed to prevent the tenant of the tenement from acquiring a statutory right to a new tenancy under the Act of 1931. The appropriate caretaker’s agreement and new tenancy agreement were executed by the relevant parties, and the applicant used the tenement for business purposes as tenant.
On the expiration of the new tenancy on the 12th February, 1976, the applicant claimed to be entitled to a new tenancy under the Act of 1931 and contended that the third party had been in possession of the tenement as a tenant from 6th – 12th February, 1973, and that, accordingly, the tenement had been used by the tenant for the time being thereof for the entire of the three years and three months immediately preceding the 12th February, 1976. At the hearing of an appeal from an order of the Circuit Court declaring the applicant to be entitled to a new tenancy in the tenement under the Act of 1931, the High Court stated a case for the opinion of the Supreme Court and asked that court whether the caretaker’s agreement had created a tenancy and, if not, whether that agreement was void under s. 42 of the Act of 1931 on the ground that it indirectly deprived the applicant of a right to a new tenancy under that Act.
At all material times the respondents were the owners of the garage known as Gatien Service Station, Rathfarnham, in the city of Dublin, where the well-known petrol known as ‘Jet’ was sold. By a lease dated the 15th October, 1970, the respondents let the said premises to Leo Gerard Coady, together with the equip ment listed in the third schedule to the lease, for the term of three years from the 6th February, 1970, subject to the rent of £1,500 p.a. and to the covenants contained in that lease. The term of the lease of 1970 was intentionally and specifically limited to the period of three years so as to ensure that Coady would not acquire a right to a new tenancy under the Landlord and Tenant Act, 1931.
From the 6th February, 1970, to the 5th February, 1973, inclusive, Coady carried on the business of a service station in the premises. He was anxious to obtain a new lease of the premises and, for that purpose, he had discussions with the respon dents’ representatives towards the end of 1972. His solicitors were in correspond ence with the respondents’ solicitors and it was made quite clear to him, and to his solicitors, that the respondents would not consider granting a new lease unless he vacated the premises for the period of one week at the termination of the term of three years. As the respondents were pot prepared to agree the terms of any new lease until after Coady had vacated t11e premises, and he was concerned that the goodwill of the business being carried on by him in the premises would be endangered if he had to vacate the premises, it was agreed between the parties, at the request of Coady and his solicito s; that at the expiration of the said term Coady should be permitted to remain in the premises as a caretaker only.
A caretaker’s agreement dated the 6th February, 1973 (but signed by Coady on the 5th February, 1973) was duly entered into by Coady in pursuance of the aforesaid arrangement, and by that agreement he acknowledged that on the 6th February, 1973 he had been put into possession of the premises as a caretaker by and for the respondents and that he was in possession of the said premises and equipment solely as such caretaker of and for the respondents and not under any contract of tenancy. He further acknowledged that he had undertaken and agreed and that he thereby undertook and agreed with the respondents (inter alia) to take care of the premises and equipment for the respondents and to deliver up the possession thereof to the respondents when required so to do. Before entering into the caretaker’s agreement Coady knew, and had been so advised by his own solicitors, that he would not be granted a new lease of the premises unless he entered into that agreement and that it was being required in order to prevent him from acquiring rights to relief under the provisions of the Act of 1931; he knew that it was not a tenancy and that under it he was merely a caretaker.
The terms of a new lease were agreed on the 10th February, 1973, whereby the premises and equipment were to be let for a period of three years from the 12th February, 1973. Coady was anxious to take the lease in the name of the applicant company which was then in the process of formation and the shares of which, when formed, were to be beneficially owned by him. Due to the delay in the formation of the applicant company, the lease was not formally executed until the 24th July, 1973.
On the 10th July, 1975, the applicants served notice, pursuant to s. 24 of the Act of 1931, of their intention to claim a new tenancy under Part III of that Act. On 29th March, 1976, the applicants applied to the Circuit Court, pursuant to s. 25 of the Act, for an order determining their right to a new tenancy in the premises; the application was successful and the respondents appealed to the High Court.
On the hearing of the appeal, it was submitted on behalf of the applicants that in reality the caretaker’s agreement was a contract of tenancy and that, as he was in licensee. The applicants further contended that, if the caretaker’s agreement did not create a tenancy, it was an agreement made with the intention of depriving Coady of his right to relief under the Act of 1931. The appeal was heard by Mr. Justice Murnaghan and, at the conclusion of the evidence, he stated a Case for the opinion of this Court upon the following two questions: –
1. Did the said caretaker’s agreement create a tenancy?
2. If the caretaker’s agreement did not create a tenancy, is the same null and void under the provisions of s. 42 of the Landlord and Tenant Act, 1931, upon the ground that it indirectly deprives the applicant of its right to relief sought in these proceedings?
The central issue on the hearing of this Case Stated is whether the caretaker’s
agreement created a tenancy. The question of whether or not the applicants would be entitled to a new tenancy under Part III of the Act of 1931 depends on the relevant provisions of sub-ss. l(a) and 2(b) of s. 19 of the Act of 1931.
There was clearly no right to a new tenancy on the expiration of the lease of the 15th October, 1970. In the relevant circumstances a right to any new lease would not arise under s. 19 unless the premises were ‘during the whole of the three years next preceeding the termination of such tenancy, bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination, either was held by the tenant thereof under . . . or under a lease or other contract of tenancy for a term of not less than one year … ‘ Sub-section 2(b) of s. 19 provides that the reference ins. 19 to the termination of a tenancy as a point in time shall be construed as referring, in the case of a tenancy terminating by the expiration of a term of years (as in this case), to the day which is three months before the expiration of such term. In other words, user by the tenant for the purpose of carrying on a business for at least three years and three months prior to the day upon which the tenancy expires is necessary before there is a right to a new tenancy. As the lease of 1970 was for three years certain, there was no right to a new tenancy when that lease expired. Indeed, as found by Mr. Justice Murnaghan, that lease was expressly limited to the period of
three years for that purpose.
In the same way, there would be no right to a new tenancy in respect of the lease dated the 24th July, 1973, unless it could be established that the premises were used for the purpose of carrying on a business ‘by the tenant for the time being thereof’ for the whole of the period of three years and three months next preceding the 12th February, 1976. The applicants cannot establish this unless Coady was a tenant between the 6th February and the 12th February, 1973.
As to the first question, it was argued on behalf of the applicants that, for the
period during which he occupied the premises during the currency of the caretak er’s agreement, Coady was a tenant under an implied tenancy on the same terms, conditions and covenants as those created by the expired lease of 1970. It was
, alleged that Coady was in exclusive possession of the premises for that period, and it was submitted that he could not have been a caretaker because exclusive posses- sion made him a tenant. It is not necessary for the purpose of this case to consider whether the occupation which Coady enjoyed during that period amounted to exclusive possession because, in my view, it is immaterial on the facts of this case. Whilst exclusive possession is one of the factors to be taken into account in determining whether an implied tenancy exists, it is not a decisive factor. To find whether it was intended to create a relationship of landlord and tenant, one must look at the transaction as a whole and at any indications that are to be found in the terms of the contract between the two parties: per Lord Denning at p. 615 and
Buckley L.J. at p. 618 of the report of Shell-Mex v. Manchester Garages ([1971] 1 W.L.R. 612).
Under s. 3 of the Landlord and Tenant Law Amendment Act, Ireland, 1860, the relation of landlord and tenant is deemed to be founded ‘on the express or implied contract of the parties’ and such relation shall be deemed to subsist in all cases in which there shall be ‘an agreement by one party to hold land from or under another in consideration of any rent’. As there could be no question of an express contract in this case, the applicants were driven to alleging an implied contract. In my view, it would be doing violence to language to hold that an implied contract could exist on the facts of this case; the evidence is coercive in establishing that Coady went into occupation under a caretaker’s agreement. In relation to implied tenancies, I would adopt the following passage from the judgment of the President of the High Court (Finlay P.) in Baumann v. Elgin Contractors ([1973] I.R. 169) at p. 177 of the report:
‘As I understand the legal principles applicable, the true origin of an implied tenancy is that the law implies from the conduct of the parties what is, in effect, a silent agreement that their relationship shall be arranged in a certain contractual fashion.’ I
On the facts of this case, there is no toom whatever for inferring a contrary silent
agreement. The parties negotiated at ?rms length, both were fully advised legally, and the caretaker’s agreement which was signed by Coady expressed the intention of the parties and was entered into, at the behest of the solicitors for the tenant. Before signing it Coady, being the former tenant, was fully aware that unless he agreed to these terms he would not under any circumstances get another lease at a fature time. He acknowledged that He was being put into possession as caretaker for the respondents and not under any contract of tenancy.
As to the second question, it was argued on behalf of the applicants that if the caretaker’s agreement was a valid and subsisting agreement, it amounted to con tracting out of the Act of 1931 and that, accordingly, it should be declared void. Section 42 of the Act of 1931 provides: ‘A contract, whether made before or after the passing of this Act, by virtue of which a tenant would be directly or indirectly deprived of his right to obtain relief under this Act or any particular such relief shall be void.’ The phrase ‘relief under this Act’ is defined in s. 2 and it includes a new tenancy under Part III of the Act.
When the caretaker’s agreement was made, the tenant under the lease of 1970 had no right to a new tenancy under the Act of 1931. The caretaker’s agreement was entered into with the express purpose of ensuring that the Act of 1931 would have no application. Indeed, the lease of 1970 was agreed to be for a term of three years with the express purpose of ensuring that the Act of 1931 would not apply. Although it is not lawful to contract out of the Act of 1931, a distinction must be drawn between a provision which attempts to exclude the Act from a transaction to which it applies, and a transaction to which the Act has no application. Thus, in Hardiman v. Galway County Council ([1966] I.R. 124) this Court held that a covenant by a tenant not to claim compensation for disturbance offended against s. 42 of the Act of 1931 and was void. In that case the term of the lease was 20 years and the tenant would clearly have been entitled to a new tenancy on the expiration of the lease.
Although s. 42 of the Act of 1931 avoids contracting out of the Act, it does not prevent the parties from so arranging matters that there is nothing to which the Act can apply. When the lease of 1970 expired, Coady was fully aware of the fact that he was not entitled to a new lease, and also that the respondents were not prepared to give him, or the company which he was in the process of forming, a new lease
which would have the effect of giving the tenant rights under the Act of 1931 on its expiration. Both parties were deliberately and intentionally arranging the transac tion in such a way as to ensure that the Act of 1931 did not apply. They understood each other perfectly, and they were fully advised. They were entitled to arrange matters in such a manner as not to attract the control of the Act. The agreement was not for the purpose of evading the Act of 1931 but of preventing the provisions of the Act from applying or, in other words, of arranging a lease which would be outside the scope of the Act. In my opinion, that is not in breach of s. 42 of the Act of 1931.
What is forbidden by s. 42 is a contract which deprives a tenant of ‘his right to
obtain relief under this Act.’ What is envisaged by this section is a contract which would affect a tenant who has a right to relief under the Act. When the agreement to enter into the caretaker’s agreement was made, Coady had no right to any relief under the Act of 1931 and the effect of that agreement was not to deprive him of any right to obtain such relief. When the lease of 1973 expired, the applicants had no right to a new lease under s. 19 as there had not been occupation of the premises bya tenant for the time being for the whole of the three years and three months immediately preceding the 12th February, 1976. There was no contract or agree ment depriving the applicants of any right which they had to obtain relief under the Act of 1931, as they had never succeeded in acquiring such a right. This factor is to be contrasted with Hardiman’s Case where the tenant had acquired rights under the Act of 1931 and the covenant was held to be void because it purported to deprive
the tenant of his right to obtain relief.
Therefore, in my opinion, both questions submitted in the Case Stated should be
answered in the negative.
Kenny J.:
Bya lease made on the 15th October, 1970, the respondent company let to Leo Gerard Coady the Gatien Service Station, Rathfarnham, Dublin (together with the equipment in it) for three years from the 6th February, 1970. Coady covenanted that he would keep the premises open each day for the sale of motor fuels during the three-year period, that he would not carry on or permit to be carried on in the premises any business except that of a garage and petrol filling station without the consent in writing of the respondents, and that he would yield up the premises to
them at the termination of the lease.
Section 19 in Part III of the Landlord and Tenant Act, 1931, provides-:
(1) On the termination within the meaning of this section of a tenancy ina tenement, this Part of this Act shall apply to such tenement if such tenement complies with any one of the following conditions, that is to say-:
(a) such tenement was, during the whole of the three years next preceding the
termination of such tenancy, bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination, either was held by the tenant thereof under a tenancy from year to year or under a lease or other contract of tenancy for a term of not less than one year . . .
(2) References in this section to the termination of a tenancy as a point in time
shall be construed as referring . . .
( b) in the case of a tenancy terminating by the expiration of a term of years or
other certain period or by any other certain event, to the day which is three months before the expiration of such term or period or the happen-
ing of such event .. .’
Section 20 of this Act of 1931 provides that a tenant of a tenement to which ‘this Part of this Act applies’ shall, on the termination of his tenancy in such tenement,
be entitled to a new tenancy in such tenement. Sections 19 and 20 are included in Part III of the Act of 1931.
Therefore, Coady would not have been entitled to a new tenancy under s. 19 of the Act of 1931 when his tenancy expired on the 6th February, 1973. On the 12th December, 1972, his former solicitor wrote to the respondents asking them whether they were prepared to give his client a new tenancy in the premises when his existing one would expire. The respondents replied that they were prepared to give Coadya new tenancy from the 12th February, 1973, for a period of three years but that Coady would have to vacate the premises for a week from the 6th to the 12th February. Coady went to another firm of solicitors who wrote that their client was worried over the suggestion that he would have to vacate the premises for a week and then resume possession. They also stated that the new lease would be taken in the name of the applicant company, which was then being formed. Negotiations took place between the respondents and Coady’s solicitors. Efforts were made to finda method by which Coady would not acquire the right to a new tenancy under the Act of 1931 and, at the same time, would not have to vacate the premises, as he feared that this would damage the goodwill of the business which he had built up.
It was ultimately agreed that Coady would be allowed to remain in the premises asa caretaker only for the period of one week and that the new tenancy would commence on the 12th February, 1973, and would be for a period of three years. Before Coady signed the acknowledgment that he was a caretaker, he knew that he would not be given a new tenancy of the premises unless he did so and that the interval of a week and the acknowledgment were being required to prevent him acquiring rights to a new tenancy under the Act of 1931. He was fully advised on the position by his solicitor before he signed the acknowledgment that he wasa caretaker. This document is of such importance that I must set it out in full. It
reads: –
‘I, Leo Gerard Coady do hereby acknowledge that I have been this day put into the possession of all that the premises and ·equipment attached thereto Gatien Service Station, Whitechurch Road, Rathfarnham, Co. Dublin, as caretaker by and for Continental Oil Company of Ireland (Conoco) and that now I am in possession of said premises and equipment solely as such caretaker of and for Conoco and not under any contract of tenancy. And I hereby further acknowledge that I have undertaken and agree and I do now hereby undertake and agree with Conoco to take care of the said premises and equipment for him [sic] and to preserve same from trespass and injury and to deliver up the possession thereof to Conoco its • successors, his heirs [sic] or assigns, when required so to do.’
This document is dated the 6th February, 1973; it was signed by Coady on the 5th February and his signature was witnessed by Mr. Prior, who certified that he had read the document to Coady and had explained it to him.
The terms of the new lease were agreed on the 10th February, 1973, but its execution did not take place until the 24th July, 1973, because of the delays experienced in the formation of the applicant company. By the lease of the 24th July, 1973, the respondents let the premises to the applicants for three years from the 12th February, 1973, and the applicants covenanted with the respondents in
terms substantially similar to those in the lease of 1970. The lease of 1973 expired on the 12th February, 1976.
On the 10th July, 1975, the applicants served notice of their intention to seek relief under the Act of 1931, and on the 29th March, 1976, they served notice of their intention to apply to the Circuit Court for a new tenancy. In that notice they stated that their tenancy in the premises ‘terminated’ – within the meaning of that term ins. 19 of the Act of 1931- on the 12th November, 1975. The applicants’ application for a new tenancy succeeded in the Circuit Court and the respondents appealed to the High Court. The applicants’ principal arguments in both Courts were that Coady had exclusive possession of the premises from the 6th February to the 12th February, 1973, and that, therefore, he had been a tenant of the premises for that week so that he and the applicants had been using the premises for more than three years as tenants. They also submitted that if this first proposition was wrong, the caretaker’s agreement of the 6th February, 1973, was made void bys. 42 of the Act of 1931.
When the evidence and arguments had concluded, the High Court judge said that he was prepared to accept the arguments advanced by counsel for the respon dents. Counsel for the applicants then asked the judge to state a Case for the opinion of this Court.
[Having referred to the questions posed in the Case Stated, the judge continued] The applicants’ counsel argued that the caretaker’s agreement created a tenancy because the tenant was in exclusive possession of the premises from the 6th February to the 12th February, 1973. He said that the law in the Republic of Ireland was different to that in England, and that in this State a person who has exclusive possession of land must be regarded as holding it as a tenant. He went on to argue that the reality of the arrangements made between the respondents and Coady was that they created a tenancy from the 6th February to the 12th February, 1973.
When determining whether a person in possession of land is to be regarded as a tenant or as being in some other category, exclusive possession by the person in possession is undoubtedly a most important consideration but it is not decisive. The existence of the relationship of landlord and tenant or some other relationship is determined by the law on a consideration of many factors and not by the label which the parties put on it. Even if the documents disclose an intention to confer exclusive possession on the person in possession, it does not necessarily follow that he is a tenant. All the terms of the document and the circumstances in which it was entered into have to be considered.
In Shell-Mex v. Manchester Garages ([1971] 1 W.L.R. 612) Lord Justice Denning
M.R. said at pp. 615 – 616 of the report: – ‘I turn, therefore, to the point: was this transaction a licence or a tenancy? This does not depend on the label which is put on it. It depends on the nature of the transaction itself: see Addiscombe Garden Estates Ltd. v. Crabbe ([1958] 1 K.B. 513). Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence), or whether it grants an interest in land, in which case it is a tenancy. At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether But Mr. Dillon says that
Manchester Garages Ltd. have exclusive possession, and that that carries with it a tenancy. That is old law which is now gone. As I have said many times, exclusive possession is no longer decisive. We have to look at the nature of the transaction to see whether it is a personal privilege or nnot.’
I do not agree with the submission by the applicants’ counsel that the law in the Republic of Ireland is different to that in England on this matter. No case has been cited by him which supports this proposition, while there is at least one decision of this Court which seems to me to disprove it. In Davies v. Hiliard ((1965) 101
I.L.T.R. 50) the defendant signed a caretaker’s agreement on the 4th March, 1964, and went into occupation of two flats which were the property of the plaintiff. On the 21st March, 1964, a cheque for £160 for rent for six months payable in advance was given to the plaintiffs solicitor, who paid the sum for which the cheque was Part of this Act applies’ shall, on the termination of his tenancy in such tenement, be entitled to a new tenancy in such tenement. Sections 19 and 20 are included in Part III of the Act of 1931.
Therefore, Coady would not have been entitled to a new tenancy under s. 19 of the Act of 1931 when his tenancy expired on the 6th February, 1973. On the 12th December, 1972, his former solicitor wrote to the respondents asking them whether they were prepared to give his client a new tenancy in the premises when his existing one would expire. The respondents replied that they were prepared to give Coady a new tenancy from the 12th February, 1973, for a period of three years but that Coady would have to vacate the premises for a week from the 6th to the 12th February. Coady went to another firm of solicitors who wrote that their client was worried over the suggestion that he would have to vacate the premises for a week and then resume possession. They also stated that the new lease would be taken in the name of the applicant company, which was then being formed. Negotiations took place between the respondents and Coady’s solicitors. Efforts were made to find a method by which Coady would not acquire the right to a new tenancy under the Act of 1931 and, at the same time, would not have to vacate the premises, as he feared that this would damage the goodwill of the business which he had built up.
It was ultimately agreed that Coady would be allowed to remain in the premises asa caretaker only for the period of ope week and that the new tenancy would commence on the 12th February, 1973, and would be for a period of three years. Before Coady signed the acknowledgment that he was a caretaker, he knew that he would not be given a new tenancy of the premises unless he did so and that the interval of a week and the acknowledgment were being required to prevent him acquiring rights to a new tenancy under the Act of 1931. He was fully advised on the position by his solicitor before he signed the acknowledgment that he wasa caretaker. This document is of such importance that I must set it out in full. It
reads: –
‘I, Leo Gerard Coady do hereby acknowledge that I have been this day put into the possession of all that the premises and equipment attached thereto Gatien Service Station, Whitechurch Road, Rathfamham, Co. Dublin, as caretaker by and for Continental Oil Company of Ireland (Conoco) and that now I am in possession of said premises and equipment solely as such caretaker of and for Conoco and not under any contract of tenancy. And I hereby further acknowledge that I have undertaken and agree and I do now hereby undertake and agree with Conoco to take care of the said premises and equipment for him [sic] and to preserve same from trespass and injury and to deliver up the possession thereof to Conoco its successors, his heirs [sic] or assigns, when required so to do.’
This document is dated the 6th February, 1973; it was signed by Coady on the 5th February and his signature was witnessed by Mr. Prior, who certified that he had read the document to Coady and had explained it to him.
The terms of the new lease were agreed on the 10th February, 1973, but its execution did not take place until the 24th July, 1973, because of the delays experienced in the formation of the applicant company. By the lease of the 24th July, 1973, the respondents let the premises to the applicants for three years from the 12th February, 1973, and the applicants covenanted with the respondents in
terms substantially similar to those in the lease of 1970. The lease of 1973 expired on the 12th February, 1976.
On the 10th July, 1975, the applicants served notice of their intention to seek relief under the Act of 1931, and on the 29th March, 1976, they served notice of their intention to apply to the Circuit Court for a new tenancy. In that notice they stated that their tenancy in the premises ‘terminated’ – within the meaning of that term ins. 19 of the Act of 1931- on the 12th November, 1975. The applicants’ application for a new tenancy succeeded in the Circuit Court and the respondents appealed to the High Court. The applicants’ principal arguments in both Courts were that Coady had exclusive possession of the premises from the 6th February to the 12th February, 1973, and that, therefore, he had been a tenant of the premises for that week so that he and the applicants had been using the premises for more than three years as tenants. They also submitted that if this first proposition was wrong, the caretaker’s agreement of the 6th February, 1973, was made void bys. 42 of the Act of 1931.
When the evidence and arguments had concluded, the High Court judge said that he was prepared to accept the arguments advanced by counsel for the respon dents. Counsel for the applicants then asked the judge to state a Case for the opinion of this Court.
[Having referred to the questions posed in the Case Stated, the judge continued] The applicants’ counsel argued that the caretaker’s agreement created a tenancy because the tenant was in exclusive possession of the premises from the 6th February to the 12th February, 1973. He said that the law in the Republic of Ireland was different to that in England, and that in this State a person who has exclusive possession of land must be regarded as holding it as a tenant. He went on to argue that the reality of the arrangements made between the respondents and Coady was that they created a tenancy from the 6th February to the 12th February, 1973.
When determining whether a person in possession of land is to be regarded as a tenant or as being in some other category, exclusive possession by the person in possession is undoubtedly a most important consideration but it is not decisive. The existence of the relationship of landlord and tenant or some other relationship is determined by the law on a consideration of many factors and not by the label which the parties put on it. Even if the documents disclose an intention to confer exclusive possession on the person in possession, it does not necessarily follow that he is a tenant. All the terms of the document and the circumstances in which it was entered into have to be considered.
In Shell-Mex v. Manchester Garages ([1971] 1 W.L.R. 612) Lord Justice Denning
M.R. said at pp. 615 – 616 of the report: – ‘I tum, therefore, to the point: was this transaction a licence or a tenancy? This does not depend on the label which is put on it. It depends on the nature of the transaction itself: see Addiscombe Garden Estates Ltd. v. Crabbe ((1958] 1 K.B. 513). Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence), or whether it grants an interest in land, in which case it is a tenancy. At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether … But Mr. Dillon says that Manchester Garages Ltd. have exclusive possession, and that that carries with it a tenancy. That is old law which is now gone. As I have said many times, exclusive possession is no longer decisive. We have to look at the nature of the transaction to see whether it is a personal privilege or nnot.’
I do not agree with the submission by the applicants’ counsel that the law in the Republic of Ireland is different to that in England on this matter. No case has been cited by him which supports this proposition, while there is at least one decision of this Court which seems to me to disprove it. In Davies v. Hiliard ((1965) 101
l.L.T.R. 50) the defendant signed a caretaker’s agreement on the 4th March, 1964, and went into occupation of two flats which were the property of the plaintiff. On the 21st March, 1964, a cheque for £160 for rent for six months payable in advance was given to the plaintiffs solicitor, who paid the sum for which the cheque was drawn to the owners. During this period a proposed tenancy agreement was being discussed but complete agreement was never reached and the document was not executed by either party. The plaintiff demanded possession of the premises and, when this was refused, he issued a caretaker’s summons in the District Court. The District Justice made an order for possession and the defendant appealed to the Circuit Court. The Circuit Court judge stated a Case for this Court, and this Court held that the Circuit Court judge should affirm the order of the District Justice as, on the evidence, the defendant did not hold the premises as a tenant of the plaintiff. In that case the defendant had paid rent and was undoubtedly in exclusive posses sion but, despite that, this Court decided that he did not hold the property as a tenant but as a caretaker.
In principle, therefore, supported by the decision to which I have referred, the argument of the applicants’ counsel is incorrect. This conclusion is also supported by a passage at p. 732 in Wylie’s Irish Land Law for the accuracy of which, in relation to the law in the Republic of Ireland, I have accepted responsibility: seep. vii of the preface. That passage states: ‘The rule now may be stated that, if the “grantee” of the land in question does not have possession of it, he is clearly not a tenant. If he does have possession, he may be a tenant but this is not necessarily the case.’ 1
Coady signed the caretaker’s agreement acknowledging that he had been put into possession of the premises as caretaker for the respondents and that he was in possession of the premises and equipment solely as such caretaker for the respon dents and not under any contract of tenancy. The tenancy created by the lease of 1970 ended on the 6th February, 1971. The tenancy created by the lease of 1973 commenced on the 12th February, 1973, and neither Coady nor the applicants paid anything in respect of the period 6th – 12th February, 1973. The caretaker’s agree ment, the non-payment of any sum for the period 6th – 12th February, 1973, and all the surrounding circumstances indicate that Coady was not a tenant from the 6th -12th February, 1973, and that the caretaker’s agreement of the 6th February, 1973, did not create a tenancy.
The second question asked by the High Court judge relates to the effect of the provisions of s. 42 of the Act of 1931. That section provides: ‘A contract, whether made before or after the passing of this Act, by virtue of which a tenant would be directly or indirectly deprived of his right to obtain relief under this Act or any particular such relief shall be void.’ The phrase ‘relief under this Act’ is defined by
s. 2 of the Act of 1931 which states that it shall be construed as equivalent to the expression ‘compensation for improvements or a new tenancy under Part III of this Act.’
In my opinion s. 42 operates to make void a contract which would deprive a tenant of a right which he has to obtain relief under the Act of 1931. He must have such a right before he can rely on the section to make void a contract which, directly or indirectly, deprives him of that right. The foundation of the section is that there is an existing right of a tenant to relief under the·Act; if he has this, a contract which deprives him of it, whether directly or indirectly, is void. In the instant case the applicants did not use the premises for the purpose of carrying on a business during the whole of the three years preceding the 12th Novemeber, 1975, and they cannot invoke any part of the period of three years during which Coady was in occupation under the lease of 1970 because neither the applicants nor Coady were in occupation as tenants between the 6th and the 12th February, 1973.
The applicants’ counsel also argued that the caretaker’s agreement of the 6th February, 1973, had the effect that Coady was deprived of his right to a new tenancy by it. Even if the caretaker’s agreement was made void by s. 42 of the Act
of 1931 (a proposition which I do not accept), once it is held that it did not create the relationship of landlord and tenant, the applicants are not entitled to a new tenancy because they and Coady were not in possession for the necessary period of three years calculated in accordance with the standard specified in s. 19 of the Act. Section 42 of the Act of 1931 was considered by this Court in Hardiman v. Galway County Council ([1966] I.R. 124) but the meaning of the terms “indirectly” deprived’ in the section did not arise for determination in that case. I confess that I do not understand what the parliamentary draftsman had in mind when he referred to “indirect” deprivation. How can a tenant be indirectly deprived of his right to obtain relief under the Act of 1931? I was happy to find that in 1932 Mr. T.C. Kingsmill Moore (subsequently Mr. Justice Kingsmill Moore, and a member of this Court) and Mr. Odell had a similar difficulty for, at p. 81 of their book published in 1932, they wrote in relation to this section: – ‘It is difficult to see what contracts “indirectly” deprive the tenant of his right to relief.’ I reserve the problem of the meaning of this delpic phrase for future consideration because, in my view, adecision
as to its meaning is not required in this case.
Both questions in the Case Stated should be answered ‘No’.
Parke J.:
I have read the judgments already delivered and I would answer both questions
in the negative.
ILC v Holmes
IRISH LAND COMMISSION V. HOLMES
(1898) 32 I.L.T.R. 85 (Queen’s Bench)
Palles C.B.:
My difficulty throughout has been to see how argument can arise in this case. The
question is whether the defendant Holmes is liable to pay the tithe rent-charge when admittedly by this instrument of March, 1869, he has no estate in the lands. I call it an instrument because the parties are not agreed as to what exactly to call it. Whatever it be called it passed the fee-simple in the lands subject ot the payment of a yearly rent, and was an instrument whereby the relation of landlord and tenant was created under s. 3 of what we are told not to call Deasy’s Act. I shall treat it as Dr. Falconer desires on this basis. Dealing with it as though the term fee-simple were inserted instead of ‘lease for ever,’ it is clear that, referring to the Tithe Rent-charge (Ir.) Act, 1838, s. 7, Harding’s estate answers the conditions of the section that the tithes shall be payable by the party having the first estate of inheritance, &c., under which there shall be no perpetual estate or interest. That simple consideration concludes the case, but the arguments have been so elaborate that I do not like to leave it there. Prior to 1861 the relation of landlord and tenant depended upon the existence of a reversion, and the object of s. 3 of the Act of 1860 was to get rid of the inconvenience that this necessity caused, yet in the teeth of the section it is argued that there is a kind of sectional reversion left, which does not amount even to a scintilla juris, for that has a real existence. The relationship was made to depend upon contract, not upon actual tenure, and all that one has to do is to look, not to an estate, but to an agreement for the payment of rent – i.e., the relationship of landlord and tenant in respect to the payment of rent does not depend upon an estate in the lands, and so when one finds that relationship it does not go one step towards elucidating the question here, and accordingly the line of decisions referred to by Dr. Falconer does not assist us. [His Lordship here explained the decision in Adams v. Alexander (281.L.T.R. 141).) In this case we have no estate; nothing remains but a rent; and is Stanley’s Act applicable to a case of this kind? The policy of the Act without going through its sections is evident – namely, that the tithe composition should attach to the fee. S. 12, after exempting tenancies at will as from year to year from the liability for tithes after 1833, provides that as successive interests in lands detc:rmine the liability shall fall upon the next higher interests until ultimately it shall rest upon the fee-simple; and to prevent this policy being defeated with regard to future estates s. 13 was enacted, that in any future setting, letting, or demise of lands the tenant or lessee shall hold free from the payment of tithes or composition for tithes. But even if there could have been a lease of the fee there could have been no liability for tithes upon the lessor, for the estate that is to be freed from liability must be one less than the fee. The meaning of the Act is that liability must rest upon the fee. For all these reasons, whether taken together or separately, the tithe rent-charge is not payable by Holmes.
O’Brien and Johnson, JJ., also delivered concurring judgments.
McCausland v Murphy
(1881) 9 L.R.Ir. 9 (Chancery Division)
The defendants’ agent, with full authority, though not in writing, advertised a house and farm to be let. Several proposals were sent in – one by the plaintiff, in writing, offering £2 per acre for such term as might be agreed on. The proposals were laid before the defendants by the agent, who explained to them their nature and effect. The plaintiffs and another were selected, and the agent was authorised to accept either, if satisfied with security for the rent. The agent prepared a draft lease from the defendants to the plaintiff for thirty-one years, which he read to the plaintiff, and wrote on the draft the names of the proposed sureties, which he afterwards inserted in the draft as co-lessees with the plaintiff. The plaintiff afterwards attended at an auction of the furniture and farming-stock, and purchased some of the furniture and a large quantity of manure for the farm. In a suit for specific performance, the defendants denied the agent’s authority to conclude the agreement for a letting, or to put the plaintiff in possession, and they pleaded the Statute of Frauds, and that the agent was not authorised in writing, as required by the Landlord and Tenant Act, 1860, sect. 4.
Sullivan M.R. said that the defendants the Misses Murphy relied on two defences. First, they say that Mr. Warnock was not authorised by them to conclude an agreement for the letting of the lands; that he was authorised to negotiate for a letting, but he was not authorised to conclude any agreement without their sanction being given to the particular terms of it; and they never sanctioned the letting in the draft lease. Secondly, they say that they are not bound by the agreement in point of law, as Mr. Warnock was not authorised in writing to make the agreement; and they rely on the Statute of Frauds (7 Wm. 3 c. 12, s. 1, Ir.) and on the Landlord and Tenant (Ireland) Act, 1860, s. 4. As to the first defence, His Honor went fully through the evidence, and expressed his opinion that Mr. Warnock was authorised by the defendants on every point – to make the letting, to take the plaintiff M’Causland as tenant, and to give him possession on the terms of the tenancy. As to the legal defence, a question of difficulty was raised as to the construction of the 4th section of the Act of 1860. Previously to that Act, there was a well-marked distinction drawn by the Statute of Frauds. By the 1st section of that Act, an agent, to make a lease for his principal when an interest was intended to be actually passed, must have been authorised in writing; whereas under the 2nd section, where a mere agreement was entered into, the agent need not be authorised in writing. The contrast between the two sections was plain and clear. The Act of 1860 made a great alteration in the law, and one would expect to find its provisions plain and clear, if the intention was to put an end to the distinction between an actual lease and an agreement. But no such intention was expressed in the Act. The 1st section of the Statute of Frauds is repealed by the schedule, and the provisions of the 4th section of the Act of 1860 are substituted for it as to actual leases. But the 2nd section of the Statute of Frauds is not repealed, though by the 1st and 3rd sections of the Act of 1860 the relation of landlord and tenant is founded on the express or implied contract of the parties; and a lease means any instrument in writing containing a contract of tenancy. In this case there was authority to make a preliminary agreement for a future tenancy, and a lease was to be executed. In his opinion, therefore, the plaintiff was entitled to specific performance of the pre liminary agreement by the execution of a lease in the terms of the draft lease.
Sacco now Boylan -v- Fenne; & anor
[2017] IEHC 665
JUDGMENT of Mr. Justice Twomey delivered on the 3rd November, 2017.
Summary
1. The proceedings in this case involve a claim by Mr. Daniel Sacco against his father, Mr. Luigi Sacco and Mr. Kenneth Fennell (“the Receiver”), a receiver appointed by IIB Bank (now KBC Bank Ireland Plc) (the “Bank”). The claim against Mr. Luigi Sacco was undefended. The claim against the Receiver relates to a takeaway chip shop at 116 Ranelagh Road, Dublin known as ‘Luigi’s Takeaway’ and two apartments over the takeaway which property was mortgaged by Mr. Luigi Sacco to the Bank (the “premises”).
2. Mr. Daniel Sacco is suing the Receiver of the premises as he alleges that he is the true owner of that premises, rather than his father, and that while he is not taking any issue with the validity of the appointment of the Receiver, he claims that his ownership of the premises takes priority over the rights of the Receiver. While the plaintiff claims to have an ownership interest in the premises, the interest he is claiming in the premises was not registered in the Registry of Deeds at the time of the registration of the Bank’s interest in the premises, nor has the alleged ownership interest been subsequently registered in the Registry of Deeds. In light of the inconsistent evidence in this case, the key issue is whether on the balance of probabilities the plaintiff did in fact acquire an ownership interest in the premises, as he alleges, from his father in 1998/1999 which interest he claims would then take priority over the subsequent mortgage by his father of the premises to the Bank.
Background facts
3. Mr. Daniel Sacco is 37 years of age. In 1998 he was awarded £417,000 as compensation for the loss of his leg in a car accident which occurred in 1992 when he was 12 years old. In his evidence, the plaintiff stated that he was “robbed” by his father of this money and has nothing to show for the very unfortunate accident that befell him when he was very young. This is because the plaintiff claims that most, if not all, of his compensation was consumed by certain dealings with his father; first, the purchase price for an ownership interest in the premises (some £153,000 plus £20,000 for fit-out and equipment) which is the subject matter of these proceedings; secondly, another tranche was given to his father (some £200,000) to be invested in a restaurant business in Dame Street, which investment came to nought; and thirdly, the balance was lent to his father and never repaid.
4. So aggrieved is the plaintiff that on the 23rd February, 2016, he changed his surname by deed poll to adopt his mother’s surname, Boylan, so that now he is known as Daniel Boylan. However, since most of the evidence provided in this case refers to him as Daniel Sacco, this name is used by the Court in these proceedings.
5. The essence of the plaintiff’s claim before this Court is that he agreed to buy an ownership interest in the premises in September of 1998 from his father. On the 4th September, 1998, he transferred the bulk of the £417,000 award into a bank account in the joint names of himself and his father and then on the 23rd March, 1998, from this account he paid his father £153,000 by bank draft, which he says was the purchase price for the premises. He also paid his father a further £20,000 by bank draft of the same date for the fit out of the premises and for equipment for the purpose of trading the take away business. Crucially no Deed of Transfer was produced in evidence to support this claim nor was the alleged ownership interest of the plaintiff in the premises ever registered. While evidence has been produced to the Court that the plaintiff paid his father the sums alleged, since copies of bank drafts of the relevant sums have been produced, there is little direct evidence that this payment was made in return for an ownership interest in the premises apart from the plaintiff’s testimony. In this regard, the plaintiff did provide sworn evidence on the second day of the trial that, on the 23rd March, 1999, in the offices of Mr. Ronnie Ringrose, solicitor (now deceased), the plaintiff and his father executed a Deed of Transfer which transferred the ownership of the premises from his father to him. He accepts that this alleged interest which he has in the premises was never registered in the Registry of Deeds and that Mr. Luigi Sacco remains registered in the Registry of Deeds as the owner of the premises. He relies, inter alia, on the payment of the money, the fact that he registered the business name ‘Luigi’s Takeaway’ in his own name on the 3rd September, 1998, the fact that he paid rates for the takeaway and that in 2001/2002 he invested €60,000 in refurbishing the apartments over the takeaway as evidence of his acquisition of an ownership interest in the premises.
6. On the basis of his alleged acquisition of the ownership of the premises in 1998/1999, the plaintiff alleges that his father should not have mortgaged the premises to the Bank on the 14th August, 2002, and that the Receiver appointed by the Bank is not now entitled to possession of the premises, since the plaintiff’s unregistered ownership interest in the premises which he says he acquired in 1998/1999 takes priority over the Bank’s mortgage (which was registered on the 8th November, 2002). On this basis, the plaintiff also claims that his ownership interest in the premises takes priority over the rights of the Receiver appointed pursuant to that mortgage.
7. No evidence was adduced to show that the Bank was on actual notice of the alleged ownership interest of the plaintiff when the mortgage between the Bank and Mr. Luigi Sacco was executed in 2002. Evidence was however produced to the effect that the plaintiff ran the takeaway from 1998 to 2004. In 2004 he became a property developer on a full-time basis, and was involved in the development of a housing estate in Carpenterstown, County Dublin. As a result, from 2004 until late 2014 (just before the Receiver took possession of the premises), the takeaway was run by a Mr. Marco Bertuzzi. Two leases were produced in evidence, a lease dated 1st January, 2009, between Mr. Bertuzzi and the plaintiff, and a lease dated 1st January, 2012, between Mr. Bertuzzi and Mr. Giuliano Sala as tenants and the plaintiff as landlord.
8. This Court has some concern about the authenticity of the lease dated 1st January, 2012, and in particular the credibility of the claim by Mr. Daniel Sacco in his evidence to this Court that it was executed in the presence of his former partner, Ms. Pamela Hanley. This is because her name is spelled correctly where it witnesses the plaintiff’s signature, but it is spelled incorrectly, as ‘Hanely’, where her signature witnesses Mr. Bertuzzi’s signature.
9. On the 18th February, 2014, the Receiver was appointed to the premises. Just over a week prior to the Receiver taking possession of the premises, on the 11th December, 2014, the plaintiff resumed his occupation of the takeaway premises.
10. A key issue in this case is whether on the balance of probabilities the account provided by the plaintiff, of his acquisition of an ownership interest in the premises from his father by oral agreement and subsequent execution of a Deed of Transfer, is true. This is because if the plaintiff did not acquire an ownership interest in the premises as alleged by him, then there is no basis for his claim that he owns the premises and that his ownership interests take priority over the rights of the Receiver.
Analysis of the evidence
11. It is important to note that the only evidence which was provided to this Court of the existence of the Deed of Transfer in favour of Mr. Daniel Sacco was his own oral evidence on the second day of the trial. For this reason, it is relevant to set out that evidence in some detail. On day two of the hearing, at page 87 of the transcript in the course of the plaintiff’s examination in chief, it is stated:-
Q. And what did you understand you were going to receive from Luigi Sacco?
A. The complete ownership, the ownership of the whole premises, that’s what he was selling to me. He was selling it to me, I owned it, that’s what he said.
Q. And once again, because it is important to be specific on this, what did you understand by ownership of the premises?
A. Ownership meaning I owned it, I was going to own the whole property. I owned it, I was buying it. I was giving him £173,000 for the property. I owned the property, that’s what I —
Q. Was there any reference at this time to you paying him rent in respect of that premises going forward?
A. No, no, no. I gave him £173,000 and that was for the ownership, that’s what I thought I was buying, was led to believe I was buying.
Q. Can I ask you then were there any dealings with Mr. Ringrose in respect of this agreement?
A. There was –
Q. Because Mr. Ringrose was obviously your solicitor acting for you at the time?
A. There was. Mr. Ringrose was instructed to do the paperwork of the — get the transfer of the ownership on foot of this, that’s what he was instructed to do, because he represented both myself me and my dad at the time and that’s what he did do.
At pages 92 to 93 of this direct examination, it states:-
Q. Can I ask you whether or not you ever executed such a deed yourself?
A. I did, yes.
Q. Where did that take place?
A. On the same day. It took place in Ronnie Ringrose’s office.
Q. Okay, on what date again?
A. On the same date that the drafts were given, I gave him the drafts in Ronnie Ringrose’s office, he was paid.
Q. If you could speak up just —
A. I says in RT Ringrose’s office, in Ronnie Ringrose’s office.
Q. Okay.
A. The day we signed — the day I signed the transfer of ownership.
Q. The day you signed the transfer of ownership?
A. Yes.
Q. Can I ask you if you were provided with a copy of the deed?
A. I just remember signing the papers at the time. I wasn’t —
Q. Was your father there also?
A. He was, yes.
Q. Can I ask you whether or not your father was involved in this process as well?
A. Yes, he had to sign, both of us had to sign the papers.
Q. Have you a copy of that deed in your possession now?
A. No.
Q. And have you seen it at any time since —
A. No.
Q. — March 1999?
A. No.
On day three of the hearing, in the course of the plaintiff’s cross examination, at pages 75 and 76 of the transcript, it states:-
Q. Okay. That’s fine. Yesterday in the witness box — and this is very important now, Mr. Boylan — you told us that a transfer was executed by you —
A. Yes.
Q. — and your father —
A. Yes.
Q. — in the office of Mr. Ringrose in March 1999.
A. Yes.
Q. But that it hasn’t shown up, in effect nobody has been able to find it.
A. That is correct.
Q. And Mr. Ringrose is now deceased?
A. Yes.
Q. And I take it you’d agree with me that from your perspective that’s a very important fact in the case, that you executed this document in March ’99?
A. Yes.
Q. Would it be fair to say that’s almost a centrepiece of
your case —
A. Yes.
Q. — that you executed such a document?
A. Yes.
Q. And from your point of view it is then unfortunate, obviously, that you can’t find the document. And Mr. Ringrose’s death may have something to do with that. But how and ever, your evidence is that you did execute such a document —
A. Correct.
Q. — in March ’99?
A. Yes.
12. In deciding whether the plaintiff acquired an ownership interest in the premises, this Court has to have regard not only to this evidence regarding the centrepiece of his case, namely the execution of the Deed of Transfer, but also all the other evidence in this case. Based on an assessment of all of the evidence, this Court finds that on the balance of probabilities the plaintiff did not acquire an ownership interest in the premises in return for the money paid by him to his father in March 1999 and that Mr. Luigi Sacco did not execute a Deed of Transfer in favour of the plaintiff at that time or subsequently. This Court bases its conclusion on the following evidence.
Reason 1 – Evidence of the solicitor
13. The plaintiff’s solicitor in 2012 was Mr. Paul Maher of O’Leary Maher. He was engaged by the plaintiff because by that time relations between the plaintiff and his father had broken down as his father was pursuing the plaintiff for unpaid rent for the premises, which the plaintiff now claims that he owned all along. This claim for unpaid rent was being pursued by Mr. Luigi Sacco through his solicitor Mr. Gerard Cosgrove of Branigan Cosgrove Finnegan. In his direct evidence, Mr. Maher stated:-
“I was first instructed by Daniel in or about late 2012. His instructions were to me that he had been effectively in continuous occupation of the premises at 116 Ranelagh since 1998 and it was his understanding, at that time, that there had been a 35-year lease drafted by Mr. Ronald Ringrose, solicitor, but unfortunately Mr. Ringrose, who I had known also, had since died in the meantime.”
These instructions which Mr. Maher received from the plaintiff, that he was a tenant in the premises and that a 35 year lease, rather than a Deed of Transfer had been signed with Mr. Ringrose, are in clear contradiction to the plaintiff’s evidence before this Court that he was the owner of that premises since 1998/1999.
14. In addition, in his cross examination, in apparent reference to the £153,000 (which it is to be noted approximates to €193,000) and which the plaintiff claims was the purchase price paid to Mr. Luigi Sacco for his ownership interest in the premises, Mr. Maher stated that:-
“….evidence was also given to me of funds €193,000 transferred to Luigi’s Italian account.
Q. Is that your note?
A. That’s the e-mail I received, yes.
Q. That’s the e-mail you received. Okay.
A. The funds were for rent and other outlays.
Q. The funds were for rent and other outlays?
A. Sorry, part of these funds. Part of these funds.
Q. Was for rent and other outlays?
A. Part of them.
Q. Okay.
A. “I have also given Luigi Sacco substantial amounts of cash as loans.”
Q. As loans. Okay. And those were his instructions to you?
A. As loans, yes, but he said part of the money was for other outlays.”
15. Thus, based on this evidence, Mr. Maher’s instructions in 2012 from the plaintiff were that the plaintiff had signed a 35 year lease with Mr. Ringrose, and not that he had signed a Deed of Transfer. Also, it seems that his instructions were that part of the lump sum payment of £153,000 paid by Mr. Daniel Sacco to his father was a payment of rent and other outlays.
16. It is difficult for this Court to reconcile the clear and compelling evidence of the plaintiff’s then solicitor that he became a tenant in 1998/1999 with the evidence of the plaintiff now that he bought the premises in 1998/1999. However, this is not the only evidence that contradicts the plaintiff’s claim in these proceedings that he acquired an ownership interest in the premises in 1998/1999.
Reason 2 – Execution of sham lease by Mr. Daniel Sacco
17. The second reason is that a lease, which is dated 10th March, 2008, between the plaintiff and his father for the lease of the premises for a 25 year term from that date was produced in evidence (the “2008 Lease”) to this Court. This 2008 Lease identified Mr. Luigi Sacco as the landlord of the premises and the plaintiff as the tenant and it specified a monthly rent of €1,651. It is self-evident that if the plaintiff was the owner of the premises since 1998/1999, as alleged by him, it would be illogical for him to sign a lease as a tenant with his father in 2008.
18. In order to explain this clear inconsistency, the plaintiff, in his evidence to this Court indicated that his father asked him to sign the 2008 Lease in order to support his father’s endeavours to restructure loans with the Bank and in particular to enable his father show to the Bank that he had a stream of rental income. On this basis, the plaintiff claims that this lease was therefore only for “bank purposes” to assist Mr. Luigi Sacco obtain finance and so it was a sham or fake lease and that he was at all times the owner of the premises.
19. However, some years later in March of 2013, Mr. Daniel Sacco brought the 2008 Lease to the attention of his then solicitor, Mr. Maher. Not only did he not advise Mr. Maher that it was sham document, but (as noted below) in solicitors’ correspondence he sought to expressly rely on that lease to establish that he was in fact a tenant of his father’s in the premises, that he now says he owns.
20. If this Court were to conclude that it did not believe the retrospective explanation for the execution of the 2008 Lease by the plaintiff, namely that it was a sham lease executed for bank purposes, and instead conclude that it was a genuine lease as alleged by him through his solicitor in 2013, it would be further evidence which is inconsistent with his current claim that he became the owner of the premises in 1998/1999. In support of such a conclusion is the fact that rent was actually paid under the alleged ‘sham’ lease by the plaintiff to Mr. Luigi Sacco, yet if the only purpose of this lease was to hoodwink the Bank into believing that Mr. Luigi Sacco was getting money, it would seem that there would be little or no reason for the rent to be actually paid. It is clear that rent was paid under this allegedly sham lease because Mr. Orazio Grosso of Grosso & Maldonado, the plaintiff’s current solicitor stated in his letter of 14th November, 2014, to the Receiver’s solicitors in reference to the 2008 Lease that:-
“Monies payable under this said agreement were paid by our Client for a period of one year, after which point it was agreed between our Client and his father that no further payments were required to be made by our Client.”
21. In addition, the conclusion that the 2008 Lease was a genuine lease and that rent was duly paid by the plaintiff thereunder for one year is also consistent with the subsequent solicitors’ correspondence and Civil Bill for unpaid rent issued by Mr. Luigi Sacco in 2013. Of significance in the present context is the fact that as of the date of Civil Bill in November, 2013, Mr. Luigi Sacco claimed a sum in rent which was equivalent to almost four and half years rent from the plaintiff on the basis of the weekly rent claimed. Since the 2008 Lease commenced in March 2008, this claim for rent in the Civil Bill is consistent with the plaintiff having stopped paying rent under the 2008 Lease in March of 2009. This is because between March 2009 and November 2013 is approximately four and a half years, which is consistent with the amount of rent claimed by Mr. Luigi Sacco in the Civil Bill in 2013.
22. The execution by the plaintiff and his father of a genuine, rather than a sham, lease in 2008 for 25 years (to expire in 2033), is also consistent with the claim of the plaintiff’s solicitor (by letter dated 30th November, 2012, noted below) that the plaintiff and his father had executed a 35 year lease some 10 years previously in 1998/1999, which lease had gone missing. This is because that missing 35 year lease would also have expired in or around 2033, which was the expiry date for the 2008 Lease, which could therefore be seen as a replacement for the original 35 year lease and therefore genuine, rather than a sham.
23. On the other hand, if this Court were to believe the version of events now suggested by the plaintiff that although he signed the 2008 Lease as a tenant, he did not become a tenant of his father’s in 2008, since this was a sham document as he was the owner of the premises all along, this leads to the inevitable conclusion that Mr. Daniel Sacco was willing to assist his father in perpetuating a fraud on the Bank in order to gain a financial benefit for his father. However, the consequence of such a conclusion would mean this Court having tonow treat with caution the plaintiff’s claim that he executed a Deed of Transfer in 1999, when there is no direct evidence of such a Deed of Transfer and his interest in the premises arising from the execution of such a Deed of Transfer was never registered by his then solicitor, Mr. Ringrose.
24. In truth therefore, whichever conclusion this Court reaches in relation to the 2008 Lease it does not assist Mr. Daniel Sacco in support of his claim before this Court that he became the owner of the premises in 1998/1999.
Reason 3 – Solicitors’ correspondence between 2012 and 2013
25. Another reason which bolsters this Court’s finding that on the balance of probabilities a Deed of Transfer was never executed by Mr. Luigi Sacco is the contents of the solicitors’ letters which were sent by Mr. Maher on the plaintiff’s behalf between 2012 and 2013. These letters were sent in relation to a claim by Mr. Cosgrove, solicitor to Mr. Luigi Sacco, that the plaintiff owed his father rent in relation to the premises.
26. It is clear to this Court from the oral evidence of Mr. Daniel Sacco and the oral evidence of Mr. Maher that these letters were written on the express instructions of the plaintiff and based on information provided to Mr. Maher by the plaintiff. In the letter of 30th November, 2012, Mr. Maher states to Mr. Cosgrove in relation to his client, the plaintiff, that:-
“We are instructed by our client that he took a 35 year commercial Lease in the above mentioned premises in or around September 1998 and it is our understanding that this Lease was drafted by Ronnie Ringrose Solicitor of 3 Chancery Place, Dublin 7.
We understand that you acted for Luigi Sacco of 21 Charlestown Way, St. Margaret’s Road, Finglas, Dublin 11, at the time, who we understand was the Landlord of the premises.
Mr. Ronnie Ringrose Solicitor regrettable passed away last year and we have been advised that all of his files have been sent to the Law Society, however the Law Society are unable to locate any lease relating to the above mentioned premises. ”
By letter of the 18th December, 2012 to Mr. Cosgrove, Mr. Maher states that:-
“We would request that your client agree to grant our client a new tenancy in respect of the premises at the current rent of €15,600 per annum and we await hearing from you with draft Lease for our attention in this regard.”
Thus, it is clear from these letters that the plaintiff expressly instructed Mr. Maher, not that he was the owner of the premises, but rather that he was a tenant in the premises. Once again this is plainly inconsistent with the claim the plaintiff makes in this Court; that he was the owner of the premises since 1998/1999.
27. In addition, based on the replies in his solicitor’s letters it is clear that Mr. Luigi Sacco believed that his son was a tenant in the premises. Thus, in a letter dated 6th February, 2013, from Mr. Cosgrove to Mr. Maher, it is stated that:-
“Our client is prepared to grant a lease to your client at a rent of €500 per week (€26,000 per annum) plus insurance.
In addition our client requires payment of the arrears of rent due on the property for the last three years, none of which have been paid”.
28. After this exchange of correspondence between the Mr. Luigi Sacco’s and the plaintiff’s solicitors, which was based on a 35 year lease executed in 1998/1999, the existence of the 2008 Lease was brought to Mr. Maher’s attention for the first time (in March of 2013). As previously noted, Mr. Maher was not told by the plaintiff that this was a sham lease, as is now alleged. Accordingly Mr. Maher wrote to Mr. Cosgrove on the 21st March, 2013, in the following terms regarding the 2008 Lease:-
“I enclose a copy of a Lease of 10th March 2008 whereby your client, our client’s father, granted a Lease of the premises to Daniel Sacco for the term of 25 years at a monthly rent of €1,651 […] It is clear that a Landlord and Tenant relationship exists between our respective clients and we should allow them resolve any outstanding matters between themselves directly, if this can be done.”
29. The only explanation from the plaintiff as to why in all of this correspondence he claimed that he was a tenant in the property, first under a 35 year lease and subsequently under a 25 year lease, when he was in fact the owner of the property, as he now alleges, is that he was afraid that he was going to be ejected from the premises by his father who was pursuing him for unpaid rent and that he was under considerable stress as a result. In response to these claims and this pressure, the plaintiff claimed he was entitled to stay in the premises, albeit as a tenant with occupancy rights rather than as an owner.
30. This Court finds this excuse to be illogical. It is as plain as night follows day that Mr. Daniel Sacco could never have been evicted from the property if he was its owner, as he now claims. It is also relevant to note that at this time in 2013, he was not only an experienced business man who had run a fast-food restaurant for a number of years, but more significantly he was an experienced property developer and owner of several residential and business premises which he leased to tenants. It is for this reason that this Court finds that it is unable to accept that the plaintiff would have instructed his solicitor in 2012 and 2013 that he was a tenant in the takeaway premises if, as he now alleges, he had become the owner of the premises in 1998/1999 pursuant to an oral agreement and subsequent Deed of Transfer that was never registered.
Reason 4 – Delays in assertion of ownership interest and in claim of a Deed of Transfer
31. The next reason for the rejection of the plaintiff’s claim of an ownership interest in the premises is because there was a significant delay in the plaintiff’s assertion this ownership interest, which he says he acquired in 1998/1999. It is relevant to note that by 2004, the plaintiff had left the takeaway business to become a property developer and he began thereafter purchasing and leasing out residential and commercial properties to third party tenants. As such, if the plaintiff had acquired an ownership interest in the premises and signed a Deed of Transfer in 1998/1999, in consideration for the payment by him of £173,000 to his father, as he now alleges, it seems almost inconceivable that the first time the execution of the Deed of Transfer would be alleged by him was on the second day of this trial some 18 years after it is alleged to have occurred. Yet, this is exactly the sequence of events in this case because there is no reference in the solicitors’ correspondence, in the Statement of Claim or in his affidavits, to a Deed of Transfer executed by him.
32. Equally curious is the fact that although the alleged acquisition of the ownership interest took place in 1998/1999, the first time a claim of an ownership interest, as distinct from a tenancy right, was made, was some 15 years later by his then solicitor, Mr. Grosso, who stated in his letter of 22nd May, 2014, to the Receiver’s solicitors, that:-
“Our Client strongly denies the existence of all and any leases which appear to have been allegedly entered with Mr. Luigi Sacco and in particular with Mr. Luigi Sacco in respect of 116 Ranelagh Road. Without prejudice to the foregoing, our Client entered into an agreement dated the 10th of March 2008 for the sole purpose of assisting Mr. Luigi Sacco in obtaining finance with KBC Bank. Monies payable under this said agreement were paid by our Client for a period of one year, after which point it was agreed between our Client and his father that no further payments were required to be made by our Client.
In 1998 our Client paid to Mr. Luigi Sacco the total amount of IRL £150,000.00 as full consideration for the freehold interest in the property in question and since then our Client has been in full possession without payment of rent to Mr. Luigi Sacco, as was agreed between the two.”
33. The most that had been claimed by the plaintiff prior to this date was a right of occupancy in a defence to Circuit Court ejectment proceedings taken against him on the 26th November, 2013 by his father in relation to the premises. In those proceedings Mr. Luigi Sacco sought possession of the premises as well as arrears in rent of €138,600, which rent was described in the civil bill as payable on foot of an oral agreement entered into between Mr. Luigi Sacco and the plaintiff in or around 1998. In his Defence filed on the 4th February, 2014, the plaintiff insisted that he had been permitted by Mr. Luigi Sacco to “occupy the said property for the consideration of the sum of £153,000”. It is telling that between September 1998 and February 2014, there was no assertion by the plaintiff of an interest in the premises greater than that of a tenant. Then, when the ownership interest claim first emerged, the plaintiff did not allege in this defence that he had purchased the premises from his father, but rather than he was entitled to occupy the premises. The strongest he puts his ownership claim at this stage is that it was his “belief and understanding that it was the intention of the parties that the freehold interest in the property would be conveyed to the Defendant by the Plaintiff in exchange for the said consideration”. It is to be noted that even in relation to this belated first claim of an ownership interest in the premises, there is no reference to the Deed of Transfer allegedly executed in March of 1999.
Reason 5 – Mr. Daniel Sacco’s own emails
34. The next reason is the fact that the plaintiff’s own emails do not support the claims which he now makes. This is because the plaintiff engaged in an email exchange headed ‘116 Ranelagh’ with Mr. Cosgrove, his father’s solicitor, regarding the payment of rent for the premises. Mr. Cosgrove had previously acted for the plaintiff and so the fact that there was email correspondence between them is not that surprising, even though at this stage Mr. Cosgrove was acting for his father in seeking rent from the plaintiff. Mr. Cosgrove sent an email to the plaintiff dated 11th January, 2013, in which he stated:-
“I don’t have a record of the lease either or a copy of it. Who drafted it?
Last time we spoke you were going to start paying rent directly to KBC.
Did you do that?”
Mr. Daniel Sacco replied by email dated 15th January, 2013:-
“Good Morning Gerard,
No I have not started paying rent directly to KBC yet but I will straight away”.
This undertaking by the plaintiff in January of 2013, to pay rent in respect of the premises is completely inconsistent with his claim before this Court that he is the owner of the premises.
35. In an even more recent email of 19th February, 2015, which it is to be noted is one year after the plaintiff first made a claim of having an ownership interest in the premises (in his Defence to the ejectment proceedings on the 4th February, 2014), the plaintiff stated to his solicitor at that time, Mr. Grosso:-
“Prior to the 1st of December 2014 I had sublet [emphasis added] the Luigis takeway to Marco Bertusi of 38 Rathmines Road, Dublin 6, who occupied the premises on a verbal agreement for the past number of years.”
36. The use of the term ‘sublet’ is significant. A lay person is unlikely to use the term ‘sublet’ instead of ‘let’ accidentally, as by the very nature of the construction of the word ‘sublet’, its meaning is plainly different from ‘let’. Since an owner lets a property while a tenant sub-lets a property, this is further evidence, as late as 2015, that the plaintiff believed that he was the tenant of the premises, and not its owner as he alleges in the proceedings before this Court. While the plaintiff in his cross examination claimed not to understand the difference between ‘let’ and ‘sub let’, the Court does not find this lack of understanding to be credible in view of the plaintiff’s experience as a landlord and property developer in 2015.
Reason 6 – No Deed of Transfer and no registration of a Deed of Transfer
37. The final reason for this Court’s conclusion is that there is an absence of any direct evidence to support the plaintiff’s bald claim in the witness box that he executed a Deed of Transfer in Mr. Ringrose’s office. Despite a search having been conducted by the Law Society, which took over Mr. Ringrose’s files upon his death, no such Deed of Transfer was discovered. In addition, if such a Deed of Transfer had been executed it would be most unusual for it not to be registered in the Registry of Deeds by Mr. Ringrose who was alive for many years after its alleged execution. However, no such registration was ever effected leading this Court to conclude that on the balance of probabilities no such Deed of Transfer was executed. It is this Court’s view that if a document was signed by the plaintiff and Mr. Luigi Sacco in Mr. Ringrose’s office, as alleged by the plaintiff, then on the balance of probabilities and based on the foregoing evidence it was a 35 year lease rather than a Deed of Transfer and as such the plaintiff did not acquire an ownership interest in the premises.
Conclusion
38. The combined effect of all of this evidence is that this Court concludes that the plaintiff, Mr. Daniel Sacco, has not established on the balance of probabilities that Mr. Luigi Sacco signed a Deed of Transfer in his favour in respect of the premises or that he otherwise acquired an ownership interest in the premises.
39. In reliance inter alia on the evidence of Mr. Maher, who was a convincing witness (both in his evidence to the Court and in his analysis of his written correspondence), this Court finds that on the balance of probabilities the plaintiff orally agreed, or signed, a 35 year lease with his father in 1998 and paid him £153,000 on account of future rent for several years in advance, but he did not agree to acquire an ownership interest in the premises, nor did he sign a Deed of Transfer in relation to the premises. This would also explain why some 10 years later in 2008 the plaintiff signed a lease for 25 years. Also consistent with this conclusion is the fact that as the owner of a long lease, the plaintiff would register the business name ‘Luigi’s Takeaway’ in his name in September of 1998, pay rates in respect of the premises (since it is to be noted that like a lot of commercial tenants, under the terms of the 2008 Lease signed by Mr. Daniel Sacco he undertook as a tenant to pay the rates on the property), invest approximately €60,000 in re-furbishing the apartments in 2001/2002 and indeed why he paid £20,000 for the fit-out of the premises. This conclusion is consistent also with the numerous instructions he gave to his solicitor at that time, Mr Maher, that he was the tenant in the property and indeed his email to his current solicitor Mr. Grosso that he ‘sub-let’ the premises.
40. While not determinative of the issue, it is also worth noting that the conclusion that the payment of £173,000 (when one adds the £20,000 paid for fit-out to the payment of £153,000) by the plaintiff to his father was rent in advance, is also consistent with the Circuit Court proceedings instituted by Mr. Luigi Sacco in 2013 wherein he claimed that he had rented the premises to his son since 1998/1999 but that Mr. Daniel Sacco owed him unpaid rent of €138,600, which equates to a period of approximately four and half years. Since the Civil Bill was issued in November, 2013, this would suggest that rent had been paid up to at least June of 2009. In addition it has been noted that the plaintiff’s solicitor claimed that money had been paid to Mr. Luigi Sacco by the plaintiff for a year pursuant to the 2008 Lease which has a commencement date of March 2008. On this basis, it is implicit in Mr. Luigi Sacco’s Civil Bill that he did receive rent from the plaintiff for a period of approximately 10 years from 1998/1999 to 2008. This is consistent with the conclusion that the payment of £173,000 in March of 1999 by the plaintiff to Mr. Luigi Sacco was up to 10 years’ rent in advance rather than the purchase price for the premises.
Consequences
41. This Court finds the plaintiff does not have an ownership interest in the premises and therefore does not have an ownership interest in the premises which takes priority to the interest of the Receiver.
42. Arising from the decision of this Court, it is clear that the plaintiff has wrongfully collected rents from the upstairs apartments in the premises which are otherwise due to the Receiver from the date of his appointment on the 18th February, 2014. In his own evidence, the plaintiff estimated that he had collected at least €60,000 in rent, while a valuer who was called on behalf of the plaintiff estimated that the loss of rent to the Receiver was in the region of €100,000, if market rents had been charged for the two apartments during the relevant time.
43. For his part, the plaintiff has claimed that due to the Receiver cutting off the electricity in the takeaway premises he had to dispose of approximately €4,000 worth of perishable stock and he has claimed that he is entitled to be reimbursed by the Receiver for this loss.
44. Taking account of all of these claims and counter claims, this Court will make one order that Mr. Daniel Sacco pay the Receiver €60,000 in respect of rents collected by him.
45. To the extent the terms of this judgment does not decide all issues between the parties (and/or in relation to any consequential orders to be made), this Court will hear submissions from the parties.
Addendum to judgment delivered on 24th October, 2017
46. As was anticipated by paragraph 45 of the foregoing judgment which was delivered on the 28th July, 2017, it became necessary for this Court to hear submissions from the parties regarding the precise orders to be made by the Court arising from its judgment.
Mr. Daniel Sacco seeks order for possession and damages
47. Although the Court found against Mr. Daniel Sacco in his claim that he had acquired a freehold interest from Mr. Luigi Sacco, counsel for Mr. Daniel Sacco argued in her submissions that since the Court found that on the balance of probabilities Mr. Daniel Sacco had agreed to take a 35 year lease from Mr. Luigi Sacco in 1998, this Court should make an order granting Mr. Daniel Sacco possession of the premises and grant him damages from the Receiver for the Receiver’s alleged wrongful taking of possession of the premises on the 11th December, 2014, as well as an order for costs.
48. In this regard, it is to be noted that the Statement of Claim delivered by Mr. Daniel Sacco seeks a declaration that he is the beneficial owner of the legal interest in the premises. The Statement of Claim pleaded nonetheless that:
“In the alternative, a Declaration that the Plaintiff is entitled to a commercial lease of the Property.”
However, as noted hereunder, of crucial significance is the fact Mr. Daniel Sacco’s evidence denied the very existence of a lease, which he had pleaded in the alternative.
49. In the Receiver’s defence which was filed in this case, it is pleaded that Mr. Daniel Sacco is:
“estopped and /or precluded from advancing a claim to a commercial lease in the property in circumstances where he has maintained from the outset of the proceedings that in fact he holds a beneficial interest in the property.”
In his submissions, counsel for the Receiver, argued, inter alia, that Mr. Daniel Sacco should be estopped by his own actions from being granted any relief based on his having a lease to the premises, since not only did he deny having a lease in sworn evidence to this Court but he was also offered by the Receiver’s solicitors by letter dated 22nd May, 2014, a new lease, which he failed to accept. In this letter it was stated to Mr. Daniel Sacco’s solicitor that:
“Our client understands that your client currently occupies the Property by virtue of an oral agreement purportedly made in or around 1998 between Mr. Luigi Sacco and your client. Our client also understands that proceedings were issued against your client by Mr. Luigi Sacco seeking possession of the Property as well as payment of rental arrears in the amount of €138,600.
Our client is prepared to allow your client to remain in occupation of the Property subject strictly to the following conditions:
1. Your client produces evidence of having been in occupation of the Property since 1998 within seven days of the date of this letter;
2. Your client discharges the rental arrears of €138,600; and
3. Your client agrees to enter into a written lease agreement on terms acceptable to our client”
50. Despite reminders from the Receiver’s solicitor regarding this offer, Mr. Daniel Sacco failed to accept it and by letter dated 2nd December, 2014, Mr. Daniel Sacco’s solicitor stated:
“As stated in our letter of the 14th November, 2014, our Client strongly denies the existence of any lease existing between himself and his father and maintains that he has a freehold interest in the property in question.”
51. In addition to this denial of a lease, in the proceedings for the forfeiture of the lease in the Circuit Court by Mr. Luigi Sacco (which proceedings were not taken over by the Receiver), Mr. Daniel Sacco’s defence which was delivered on the 3rd February, 2014, is that he was entitled to the freehold of the premises.
The reality of what Mr. Daniel Sacco is seeking
52. In summary therefore, what on the face of it might seem to be a relatively benign post-judgment application by counsel for Mr. Daniel Sacco for a court order granting him possession, because of the finding by this Court that he entered a lease with his father, belies the significance of what Mr. Daniel Sacco is actually asking this Court to do.
53. To consider the reality of what Mr. Daniel Sacco is asking this Court to do, one needs to consider the basis of the proceedings and in particular Mr. Daniel Sacco’s own evidence which led to this Court’s judgment in the first place.
Documentary evidence of lease which was denied by Mr. Daniel Sacco
54. First, in order to seek to deny the Receiver possession of the premises, Mr. Daniel Sacco claimed in his proceedings that he was not the lessee of the premises but the owner of the premises. This was in the teeth of the most compelling evidence that he was a tenant, including in particular the written lease agreement which he had personally signed (referred to in the judgment as the ‘2008 Lease’), and which lease he himself had expressly relied upon in solicitors’ correspondence (i.e. the letter dated 30th November, 2012, from Mr. Maher to Mr. Cosgrove referred to in the judgment). As is evident from the judgment, he sought to disown and deny these documents by claiming that the 2008 Lease was a sham lease.
Mr. Daniel Sacco’s sworn evidence to this Court that he was an owner not lessee
55. Secondly, in addition to denying this documentary evidence, in his sworn evidence to this Court, as set out at paragraph 11 of this judgment, Mr. Daniel Sacco stated that he agreed to acquire ownership of the premises from Mr. Luigi Sacco, he also denied that there was any question of rent being paid by him for the premises and he accepted that the ‘centrepiece’ of his case was that he had executed a Deed of Transfer of the ownership of the premises, as distinct from a lease. Thus, his direct oral evidence was that he was the owner of the premises and never a tenant.
Willing to be a participant in a fraud to justify sham lease
56. Thirdly, since Mr. Daniel Sacco is requesting this Court’s assistance in the orders he is now seeking, it is also relevant to note that his admitted motive for his entering the allegedly ‘sham’ 2008 Lease, was not an honourable one. This is because he said he entered the allegedly ‘sham’ 2008 Lease so as to obtain money for his father from the Bank on false pretences. It follows that not only did this Court find that Mr. Daniel Sacco was not telling the truth regarding the 2008 Lease, but also that Mr. Daniel Sacco admitted in his own evidence to the Court, in order to justify his claim that the 2008 lease was a sham, that he was happy to be a participant in a fraud.
57. For the numerous reasons set out in the judgment, this Court did not accept the evidence of Mr. Daniel Sacco on his claim to a freehold and his denial of the existence of a lease.
58. While the Court’s language in the foregoing judgment is somewhat restrained, the application by Mr. Daniel Sacco after the delivery of that judgment to effectively profit (in the sense of denying the Receiver possession of the premises) from his proceedings, obliges this Court to spell out what should be clear from any reading of this judgment. This is the fact that Mr. Daniel Sacco’s proceedings to deny the Receiver possession of the premises, and his evidence to this Court and his actions prior to these proceedings, are based on brazen and blatant lies.
59. It is inconceivable to this Court that Mr. Daniel Sacco can seek possession of the premises and damages on the basis that he is the lessee of the premises, when in these proceedings and by his evidence he did everything in his power to deny and conceal the fact that he had a lease of the premises. This Court cannot simply ignore the blatant lies and the waste of court resources and taxpayers’ money caused by Mr. Daniel Sacco.
60. To do so would be to allow Mr. Daniel Sacco to abuse the process of this Court. In essence it would allow him to run one case which he has lost based on the lie that he was not a tenant, but yet having lost that case to permit him to seek, and be granted orders, as if he had run another case, i.e. that he was a tenant and thereby ignore all the lies that had gone before.
61. Since, for whatever reason, perjury is not an offence that is commonly prosecuted in this country, it is this Court’s view that to allow this to happen would be for this Court to signal that there are no consequences for litigants who deliberately and consciously mislead the Court. Instead the message that would go out would be that litigation is a game where one does not have to tell the truth and that sometimes one can profit even where there has been a clear abuse of the system. This Court is of the view that if this were to happen in this instance it would be a parody of justice.
Conclusion
62. On this basis, this Court makes a Declaration that it is an abuse of process before this Court for Mr. Daniel Sacco to apply for possession of premises based on the existence of a lease, after judgment has been given to that effect in a case, when during that case, he deliberately denied and sought to conceal the existence of that lease. For this reason, this Court rejects the application by Mr. Daniel Sacco for possession of the premises and his application for damages for the Receiver’s taking of possession of the premises. It rejects all the applications in his Statement of Claim and makes an award of costs against him in favour of the Receiver.
63. In particular in relation to Mr. Daniel Sacco’s claim in his Statement of Claim that he is entitled to a commercial lease of the premises, this Court makes a Declaration that he is estopped from making this claim that he has a leasehold interest in the premises in view of his own evidence and his actions to date. This is because not only of his blatant and brazen lies to this Court that he did not have a lease, but also his lies to the Receiver that he did not have a lease. In this regard and as required by the estoppel doctrine, it is clear that Mr. Daniel Sacco’s conduct has caused the Receiver to act to his detriment. This is because Mr. Daniel Sacco’s claim of a freehold interest has cost the Receiver a significant amount of money in its defence of the claim for possession in the High Court. Yet, if Mr. Daniel Sacco had accepted that he had a lease and he had not pursued High Court proceedings claiming that he owned the premises, the Receiver could have pursued forfeiture proceedings at a significantly lesser cost in the Circuit Court.
64. On the basis that rent is still being collected by Mr. Daniel Sacco, the actual order for damages, set out in the judgment of 28th July, 2017, will be increased by €8,100 to €68,100, to take account of the additional rent for approximately three months which would have been paid on the two apartments since the Court’s judgment to today’s date.
65. This Court will also make an order against Mr. Daniel Sacco that any rent collected by him or on his behalf from today, which is currently being collected at a rate of €2,700 per month in respect of the two apartments is to be forthwith paid to the Receiver.
Addendum to judgment delivered on 3rd November, 2017
66. Judgment in default of defence was granted by Gilligan J. on the 30th July, 2015, in favour of the plaintiff against his father, Mr. Luigi Sacco. In the proceedings before this Court, where judgment was delivered on 28th July, 2017, and 24th October, 2017, the plaintiff was unsuccessful in his claim that he acquired a freehold interest in the takeaway premises in Ranelagh, the subject of the proceedings.
67. On the 31st October, 2017, this Court heard submissions on behalf of the plaintiff regarding the amount of damages that should be awarded against Mr. Luigi Sacco, who did not participate in the hearing before this Court.
68. Based on the evidence during the hearing, this Court held that on the balance of probabilities, the plaintiff paid to his father some £173,000 (being £153,000 in respect of rent in advance and £20,000 in respect of fit-out) in return for the plaintiff’s rental of the premises during the period 1998/1999 to in or around 2009. Evidence was also provided to the Court that during this period the plaintiff had the use of the premises for which he had paid rent. Accordingly, this Court sees no basis for finding that there should be any award of damages against his father in respect of this payment, since the plaintiff got value for his rental payments.
69. Evidence was also provided during the hearing that £200,000 was paid by bank draft dated 6th April, 1999 by the plaintiff to his father to be invested in a premises in Dame Street in Dublin under the name of the company ‘Shop to Shop Limited’. However, evidence was provided that the plaintiff received no value for this investment as the shares in the company were held by a solicitor on trust for Mr. Luigi Sacco. As no controverting evidence was provided on behalf of Mr. Luigi Sacco, this Court will make an award of damages of the equivalent of £200,000, namely €254,000, in favour of Mr. Daniel Sacco, under his current name, Daniel Boylan.
70. An affidavit sworn by Mr. Luigi Sacco was produced in evidence during the hearing. However, a copy of a letter signed by Mr. Luigi Sacco, although not sworn evidence, was also produced to the Court, which letter retracted the contents of the affidavit. Evidence was also given by Mr. Grosso, solicitor for Mr. Daniel Sacco, of a phone conversation he had with Mr. Luigi Sacco. However, as Mr. Luigi Sacco did not give any evidence to the trial, this Court treats with considerable caution any documents allegedly signed by him and statements made by him. For this reason, this Court did not for the purposes of its main judgment attach any reliance to the purported evidence or admissions of Mr. Luigi Sacco. Accordingly, in making its orders against Mr. Luigi Sacco, it places no reliance on the alleged evidence or admissions of Mr. Luigi Sacco.
71. For this reason, this Court can see no basis for making any further orders against Mr. Luigi Sacco. In particular, it cannot see the basis for making an order (sought by the plaintiff) making Mr. Luigi Sacco liable to effectively indemnify Mr. Daniel Sacco for the costs awarded against him for Mr. Daniel Sacco’s decision to pursue the Receiver for a claim that he owned the premises. This is because this Court found that Mr. Daniel Sacco had no basis for bringing these proceedings.
72. For the same reason, this Court cannot see any basis for an order (sought by the plaintiff) that Mr. Luigi Sacco should effectively indemnify Mr. Daniel Sacco for Mr. Daniel Sacco’s decision to retain rent on the premises which belongs to the Receiver. This Court has found that Mr. Daniel Sacco was wrong to retain that rent and so can see no basis for Mr. Luigi Sacco being affixed with this cost.
North Quay Developments Ltd v Carty
[2014] IEHC 444.
JUDGMENT of Mr. Justice Hogan delivered on the 15th day of October, 2014
1. Is a lease which is delivered into escrow pending the subsequent fulfilment of a conditions precedent binding on the parties once that condition has been fulfilled, even though the lease itself was never subsequently delivered to the other party in a manner which would thereby have formally released the lease from that escrow? In my judgment, absent special circumstances which would render the enforcement of that lease inequitable, this question must be answered in the affirmative. The present case may accordingly be said to represent a classic exemplification of two separate, but overlapping, equitable principles, namely, that an agreement for a lease is as good as a lease in accordance with the rule in Walsh v. Lonsdale and that equity regards as done what ought to be done.
2. These proceedings arise from an agreement originally arrived at in February 2007 whereby a company called Iverwell Ltd. (“Iverwell”) entered into possession of retail premises at the Bridgewater Centre, Arklow, Co. Wicklow. The premises were the property of the landlord, North Quay Developments Ltd. (“North Quay”). It was contemplated by the parties at the time that Iverwell (which traded under the name Vienna Shoes) would fit out the premises as a shoe shop. A combination of high rents and a lack of consumer demand following the banking collapse of late 2008 meant that the business ultimately foundered. Iverwell ultimately went into liquidation in June, 2012.
3. In these proceedings the plaintiff, North Quay, now claims to be entitled to summary judgment against the defendant in the sum of €156,888 under the terms of a lease which was agreed in February 2007, but which was immediately held in escrow. (The background to the escrow agreement will be presently described.) Iverwell agreed to discharge the rent by quarterly payments.
4. Mr. Carty was also a party to this lease and he had guaranteed the performance of these payments obligations by Iverwell of which company he was also the principal director. It follows, therefore, that for this purpose at least, he stands in the shoes of Iverwell and that if the company is bound by the terms of the lease, he is also so bound.
5. It is not in dispute but that Iverwell defaulted on its obligations to pay the rent. Clause 9.1 of the lease stated that the guarantor covenanted with the landlord as a primary obligation that “the tenant and the guarantor shall at all times during the currency of this agreement”. Clause 9.2 provided for joint and several liability. Clause 10.4.2 provided that the tenant and the guarantor:
“shall be liable to observe and perform covenants and agreements equivalent to the covenants agreements on the tenant’s part to be contained in the lease, including without limitation the liability to pay to the landlord from the rent commencement day by way of licence fee without set off deduction a counterclaim a sum equal to and payable in the same manner as the yearly rents which would have been payable under the lease had been granted and delivered…”
6. As Iverwell incurred debts in the sum now claimed by North Quay against Mr. Carty as guarantor, the issue now is whether the lease was actually effective to create such an obligation. The defendant’s response is to say that the lease was simply executed in escrow and that Iverwell instead entered possession pursuant to an agreement described as an agreement for an occupational lease. This latter agreement terminated in December, 2008 when an architect’s certificate of compliance with the Building Regulations following the fit-out of the retails premises as a shoe shop was supplied to the plaintiff. In essence, the defendant’s case is that there was never an effective lease supplied by the plaintiff which would serve to release that lease from its provisional status in escrow. In these circumstances – or so the argument runs – the defendant cannot be held liable under the guarantee which is admittedly contained in the lease and in respect of which he would otherwise be liable to North Quay qua surety following the default of Iverwell.
7. The defendant maintains that this is not a purely technical defence on the part of the surety, but that this failure to deliver the actual lease to Iverwell has had practical consequences as well. Specifically, Mr. Carty contends that the absence of an executed lease meant that the liquidator appointed to the company was thereby precluded from selling what might under other circumstances have been the principal asset of Iverwell, namely, the lease of the premises. It also meant that North Quay could take re-enter possession of the premises at a moment’s notice following the liquidation since it was not otherwise encumbered by a lease. It had the further consequence that North Quay could take the benefit of the elaborate and costly fit out of the premises which Iverwell had undertaken without the encumbrance of an actual lease.
8. North Quay in turn says that this particular line of argument has no relation to reality in that following his appointment the liquidator disclaimed the lease pursuant to s. 290 of the Companies Act 1963, as an onerous contract. This latter contention is borne out by the terms of the liquidator’s letter of 5th July, 2012.
9. How, then, did this situation come about where there was confusion as to whether Iverwell held under an agreement for an occupational lease or an actual lease? What appears to have happened is that in February, 2007 two separate documents were signed by the parties, an agreement for an occupational lease and the actual lease itself. It seems clear that it was the intention of the parties that the agreement for the occupational lease would be supplanted by the actual lease once the architect’s certificate of compliance was furnished by Iverwell to North Quay’s solicitors. It appears that following the fulfilment of this condition precedent to the coming into effect of the lease itself, the obligation to supply Iverwell with a duly executed version of the lease was subsequently overlooked. The question, accordingly, is whether this failure means that Mr. Carty cannot be sued on foot of the guarantee contained in that lease.
10. At one point, the objection was taken that neither document was stamped, but this objection has now been overtaken by events inasmuch as both documents have now been stamped.
The Application of the Rule in Walsh v. Lonsdale
11. The only remaining objection is one to which the courts have given a consistent answer for the best part of 130 years, namely, that since the enactment of the Supreme Court of Judicature (Ireland) Act 1877 (and its earlier English counterpart), an agreement for a lease is as good as a lease. This is illustrated by Walsh v. Lonsdale (1882) 21 Ch. D. 9 itself.
12. In that case the plaintiff had been allowed into possession of a mill under an agreement for a lease, even though the lease itself was never executed. While the plaintiff had previously being paying rent quarterly, the defendant subsequently demanded payment of a year’s rent in advance under the terms of the (unexecuted) lease and he sought to re-enter the premises when such payment was not forthcoming. As the actual lease itself contained such a clause allowing the defendant to demand such payment in advance, the English Court of Appeal held that the plaintiff was bound in equity by the terms of the lease, even though it had never formally been executed by the parties.
13. As Jessel M.R. famously stated ((1882) 21 Ch. D. 9, 14-15):
“There is an agreement for a lease under which possession has been given. Now since the Judicature Act the possession is held under the agreement. There are not two estates as there were formerly, one estate at common law by reason of the payment of the rent from year to year, and an estate in equity under the agreement. There is only one Court, and the equity rules prevail in it. The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted, it being a case in which both parties admit that relief is capable of being given by specific performance. That being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted; he cannot be turned out by six months’ notice as a tenant from year to year. He has a right to say, ‘I have a lease in equity, and you can only re-enter if I have committed such a breach of covenant as would if a lease had been granted have entitled you to re-enter according to the terms of a proper proviso for re-entry.’ That being so, it appears to me that being a lessee in equity he cannot complain of the exercise of the right of distress merely because the actual parchment has not been signed and sealed.”
14. This is the effectively the position in the present case, because even if no actual lease was formally delivered following the release of the lease from the suspensive form in which it was held in escrow, equity treats as done what ought to have been done. Once the certificate of compliance was furnished to the plaintiff’s solicitors the pre-condition to the operation of the lease was satisfied and the lease – which ought, admittedly, at that point to have been formally released from escrow and delivered to Iverwell – took effect in equity. Adapting freely the words of Jessel M.R., one might say that the defendant cannot object to the terms of an agreement (namely, the actual lease) once the condition precedent to its effective operation has been satisfied, even if “the actual parchment” was not formally handed over to Iverwell, the company whose obligations he guaranteed under the terms of that lease.
15. There are, admittedly, limitations to the rule in Walsh v. Lonsdale: there may, for example, be circumstances in which the enforcement of the agreement for a lease would be inequitable. Nor is an agreement for a lease an actual lease, so that, for example, third parties might not be so bound. Depending, moreover, on the particular statutory context, it may be that references in certain statutory provisions would not apply to a mere agreement for a lease as distinct from a lease itself.
16. None of these limitations apply in the present case. Iverwell (and, by extension, Mr. Carty) continued in possession as if the lease had been duly delivered following its release from escrow. It follows that the defendant is bound by its terms. Of course, the situation might have been otherwise had Iverwell been so prejudiced by the failure to deliver the actual lease that its enforcement at the hands of North Quay might now have been held to be inequitable. This might, for example, have occurred had the liquidator wished to sell the lease to a third party but the sale fell through for want of an actual lease. This, however, was not the case here, as it is perfectly clear from the liquidator’s letter of 5th July, 2012, that he had no use for the lease and that he wished to disclaim it under s. 290 of the 1963 Act as an onerous contract. Nor, for the reasons already set out, can the defendant qua guarantor be regarded as if he were third party with no knowledge of or interest in the terms of the lease.
17. An argument to the effect that the credit raising capacity of Iverwell was prejudiced by the failure to grant an actual lease was also advanced as a defence. This might possibly have amounted to real prejudice of the kind I just mentioned had, for example, Iverwell or the defendant been able to point to correspondence with a bank to the effect that the failure to deliver an actual lease prejudiced their respective ability to raise a loan. In the present case, however, there is little more than a generalised averment to the effect that there was or might have been such prejudice. In the light of the comments of McKechnie J. in Harrisgrange Ltd. v. Duncan [2003] 4 IR 1, 8 I cannot think that a “mere assertion” of this kind is in itself sufficient to raise a tenable defence in a claim for summary judgment in respect of a liquidated sum.
Conclusions
18. In summary, therefore, it is clear that the February, 2007 lease became binding and operative once the condition precedent for the operation of that lease was fulfilled. This occurred in December 2008 when Iverwell’s architect supplied a certificate of compliance with the Building Regulations following the fit-out of the shop. At that point, the actual lease ought to have been formally delivered up to Iverwell and it is agreed that this did not happen.
19. Iverwell are nonetheless bound by that lease in equity as if the lease had in fact been formally delivered up to them. Iverwell suffered no prejudice as a result of this failure and, accordingly, it would not be inequitable to give effect to the lease in such circumstances. It follows, therefore, that by virtue of the application of the rule in Walsh v. Lonsdale, the defendant, qua guarantor of the lease, is bound by its terms.
20. In these circumstances, as the defendant cannot establish any realistic or arguable defence to the plaintiff’s claim, I find myself obliged to give summary judgment for the sums claimed by plaintiff.
Reynolds v Altomoravia Holdings Ltd
[2017] IECA 157
JUDGMENT OF MR. JUSTICE MICHAEL PEART DELIVERED ON THE 12TH DAY OF MAY 2017
1. For the trial judge to describe this as an unusual case, as he did in para. 2 of his judgment, is something of an understatement. At its heart is a perfectly straightforward agreement for lease of a well-known nightclub premises in Dublin known as ‘The Pod’, which was entered into on the 12th April 2012 between the present plaintiff (‘Mr Reynolds’) who owned the premises, and the first defendant company (‘Altomoravia’) which wanted to take a lease of it. The intended lease was to be supported by personal guarantees of the second to fifth defendants.
2. When Mr Reynolds had not executed the lease by the 24th April 2014, Altomoravia commenced proceedings against him for specific performance of the agreement for lease. Those proceedings eventually came on for hearing in the High Court. On the 5th March 2014, which was the second day of the hearing, the parties agreed terms of settlement which were reduced to writing and made the subject of a court order by Kelly J. (as he then was). The terms of settlement provided, inter alia, that Mr Reynolds would consent to an order for specific performance of the agreement for lease, and that he would by the 26th March 2014 execute a lease in terms of the draft lease already provided and agreed, that Altomoravia would pay to Mr Reynolds a sum of €185,000 due to him, and that by the 26th March 2014 Mr Reynolds would withdraw an appeal which he lodged with An Bord Pleanala in respect of a planning application made by Altomoravia to enable certain alterations to be made to the premises.
3. As a legal transaction nothing could have been more straightforward. The agreed lease had to be executed by Altomoravia and sent over to Mr Reynolds’s solicitor so that Mr Reynolds could sign it by the 26th March 2014, and each guarantor had to execute his guarantee. Once that had been done one would have thought that the solicitor acting for each party would simply arrange to meet so that those documents could be handed over in exchange for a cheque for the agreed €185,000. Clearly Mr Reynolds’ solicitor would also have had to hand over other necessary items such as the bank’s consent and the intoxicating liquor licence attaching to the premises, but there was never any difficulty in relation to those matters. That is what ought to have happened by 26th March 2014 under the terms of settlement, or even by some agreed date in April if some slippage occurred due to the Easter holiday period. However the events that followed lend weight to the aphorism that while you may lead horses to water without any particular difficulty, it can be quite another matter to make them drink.
4. The agreed date of 26th March 2014 came and went, as did the Easter holidays, and another couple of weeks thereafter without the transaction being completed as required under the terms of settlement, and indeed the High Court order made on 5th March 2014. On the 24th April 2014 therefore a second set of High Court proceedings were commenced – only this time it was Mr Reynolds who sought an order for specific performance of the terms of settlement of the first proceedings.
5. Where each party has said during their evidence in the High Court that they were at all times ready, willing and able to complete the transaction, and blamed the other for the fact that this did not happen either by the 26th March 2014 or subsequently, one struggles to understand why it was necessary for these experienced and successful businessmen to fight each other ‘fero ignique’ over some 13 days in the High Court, spawning a written judgment by Mr Justice Cregan running to some 76 pages which culminated in an award of substantial damages in favour of Mr Reynolds in lieu of specific performance, he having eventually elected to seek rescission and damages. It is against that judgment and order that the present appeal has been taken by the defendants.
6. The evidence given by both sides in the High Court revealed a number of factors which individually and cumulatively conspired to frustrate the completion of this otherwise straightforward transaction. That said, it is fair to observe that the trial judge was clearly of the view that between the 5th March 2014 and the 26th March 2014 the solicitors ought themselves to have been putting more effort into ensuring that everything was done that needed to be done by the date provided for in the High Court order.
7. While there was limited email and telephone contact between the solicitors during that period, it is the case that while on the 6th March 2014 Mr Reynolds had instructed his architect to withdraw his appeal to An Bord Pleanala as required under the terms of settlement, his architect had, due to an admitted oversight, overlooked doing so until he was reminded about it by Mr Reynolds’ solicitor on the 25th March 2014. Equally, the solicitor for Altomoravia was for some reason waiting for Mr Reynolds’ solicitor to send him an engrossed lease and guarantees for execution by his clients, even though in April 2012 those documents had already been provided, including in electronic/soft copy form, and therefore needed only to be slightly amended as to the date on which the lease was to commence, and be then printed off for execution by the parties. In reality there was no need for further engrossed documents to be provided by Mr Reynolds’ solicitor, and better communication between the solicitors would have sorted that out very quickly. These are just a couple of simple examples of matters said to have contributed to the transaction not being completed by the 26th March 2014.
8. However, the evidence also disclosed other factors in the background on each side of more potential significance to the failure to complete matters either by the 26th March 2014, or by the time the present proceedings first came before the High Court at the end of July 2014. It appears that even on the 30th July 2014 Kelly J. was informed that it was expected that by the end of that very day all matters would be in place to complete the transaction. But that did not happen, and by the time Altomoravia’s solicitor was eventually in a position to confirm to Mr Reynolds’s solicitor on the 14th August 2014 that the lease and guarantees had been executed by all necessary parties and that he was in a position to complete, Mr Reynolds had decided that enough was enough and that he would seek damages in lieu of specific performance.
9. At the hearing before Mr Justice Cregan in the High Court each side alleged factors on the other side which caused the transaction not to be completed by the 26th March 2014 first of all, or by the end of April, or thereafter up to the 14th August 2014. Each side strenuously rejected those allegations, and blamed the other. The following is a brief summary of these allegations which emerged during the trial:
• As already mentioned, Altomoravia’s solicitor maintained that after the settlement on 5th March 2014 he was expecting Mr Reynolds’ solicitor to send him a hard copy engrossed lease for execution by his clients, with the guarantees attached for execution by the guarantors. He did not however write seeking these. He had simply assumed that they would be furnished. Mr Reynolds’ solicitor on the other hand had expected that these documents which he had already previously provided in 2012 would simply be printed off by his opposite number with appropriate amendments as to the date of commencement. It had not occurred to him that he would have to provide further engrossed documents for execution before the 26th March 2014 in circumstances where they had already been provided. Better communication between the solicitors would certainly have prevented that misunderstanding.
• Altomoravia’s solicitor discovered on the 25th March 2014 that Mr Reynolds had not yet withdrawn his appeal to An Bord Pleanala. He contacted Mr Reynolds’ solicitor about this on that date. It was immediately brought to the architect’s attention, and was attended to immediately, resulting in the withdrawal of the appeal being noted by An Bord Pleanala as being withdrawn as of the 26th March 2014. Altomoravia’s solicitor said in evidence that even if everything else had been in order by the 26th March 2014 he would not have completed the transaction without written confirmation from An Bord Pleanala that the appeal had been withdrawn. That written confirmation was available within a few days of the 26th March 2014. Again, better communication between the parties after the 5th March 2014 would have ensured that this appeal was withdrawn in good time prior to the 26th March 2014 thereby avoiding any last minute hitch in this regard.
• Altomoravia’s solicitor did not confirm that he was actually in funds to close by the 26th March or even during April 2014. In fact it has turned out that he was not in funds. Even by the time he was put in funds by Mr Anderson in the rather circuitous manner described by the trial judge, it appears that he was under instruction from Mr Ormond (Mr Anderson’s man in Dublin who carried out Mr Anderson’s instructions) not to part with the funds until the question of certain damage to the premises which had occurred to the premises since April 2012 was dealt with. The question of such damage being rectified by Mr Reynolds was a new condition and not part of the terms of settlement despite the fact that it had been an issue in the first proceedings. Altomoravia’s solicitor’s evidence was that by the 30th July 2014 this conditionality had been removed on the instructions of Mr Ormond, so that he was free to release the funds if a closing had taken place. However, Mr Ormond in his evidence had denied that he ever instructed his solicitor that he could release these funds. That evidence was given before Altomoravia’s solicitor gave his evidence that the conditionality was removed by Mr Ormond. He stated that he believed that Mr Ormond was simply wrong in this regard, though he had to accept that he had no memo or note of the telephone call from Mr Ormond in which the conditionality was removed, or any written instruction in that regard. Mr Anderson’s evidence was that at all times he had the money, and it was only a matter of being told by Mr Ormond that the money was required on a particular day, and that he would have transferred it. On the other hand Mr Reynolds did not believe that Mr Anderson could come up with the funds required to complete at all.
• Altomoravia was of the view that it was Mr Reynolds who did not want to go through with the lease because all along he had what came to be referred to as a “Plan B” which essentially involved the development of the Pod site as a hotel complex, and that he was therefore intent on ensuring that the lease did not take place, even though his Bank was putting him under pressure to enter into the lease with Altomoravia. They referred to his failure to withdraw the appeal to An Bord Pleanala as required by the 26th March 2014 and the failure of his solicitor to furnish an engrossment of the lease for execution by Altomoravia, and the guarantees, as indicating his desire to ensure that the implementation of the settlement was frustrated. They referred back also to the fact that Mr Reynolds had failed to sign the intended lease in April 2012 which had led to Altomoravia’s proceedings for specific performance of the agreement for lease.
• What has turned out to be the most significant factor of all in the failure to complete the transaction by the 26th March 2014, and certainly after the 14th May 2014 involves the third defendant Mr Dolan who was one of the intended guarantors of Altomoravia’s obligations under the intended lease. Mr Dolan’s interactions with his co-defendants shortly after the 5th March 2014, and his contacts with Mr Reynolds on and after the 14th May 2014 are at the heart of this appeal.
10. Altomoravia is convinced that it was in fact Mr Reynolds who after the 14th May 2014 was trying to ensure that Mr Dolan did not sign the guarantee which he was required to sign before this transaction could be completed, and that he did so deliberately to ensure that the premises did not become subject to a 20 year lease to Altomoravia, so that he could, instead, develop the site under so-called Plan B. In this regard, Altomoravia places heavy reliance upon certain text messages which passed between Mr Reynolds and Mr Dolan after 14th May 2014, as well as a certain indemnity provided by Reynolds to Mr Dolan at the end of July 2014. Further, in so far as Mr Reynolds stated in his evidence that he was at all times very anxious to complete this transaction because he was under great pressure from his bank to have the matter completed, Altomoravia contends that this alleged pressure by AIB was not borne out by the evidence of Mr Cranston of AIB whom they called as a witness. The appellants submit that the trial judge failed to give any proper consideration and weight to these matters when concluding that it was Altomoravia, and not Mr Reynolds, who was responsible for the failure of this transaction to complete, and that Mr Reynolds was entitled to rescission and damages in lieu of specific performance in all the circumstances.
11. All these matters were the subject of thrust and counter-thrust during the evidence given by the respective parties and their witnesses in the High Court. There was little that was uncontroversial, and it fell to the trial judge to decide as a matter of probability where the fault lay for the failure to have completed this transaction either by the 26th March 2014 as agreed in the terms of settlement dated 5th March 2014, or by the 30th July 2914 which seems to be the latest agreed date by which it might have been completed so as to avoid the continuation of the present proceedings.
The judgment of Mr Justice Cregan
12. In the course of a lengthy and detailed judgment, Mr Justice Cregan outlined certain of the events which transpired between the 5th March 2014 and the commencement of the present proceedings on the 24th April 2014, and thereafter. Some of these events have already been referred to above.
13. He accepted the evidence given that in accordance with common and accepted conveyancing practice it was for the defendants to execute the lease and guarantees and to furnish same together with the sum of €185,000 to the plaintiff’s solicitor before Mr Reynolds executed same, and to do so in time before the 26th March 2014 so that Mr Reynolds could then execute the lease prior to that agreed date, even though that detail was not included in the terms of settlement. In my view he was entitled to accept that evidence.
14. He also accepted the plaintiff’s evidence that as a matter of fact Mr Reynolds’ objection lodged with An Bord Pleanala had been withdrawn as of the 26th March 2014, even though the defendants had been given wrong information in that regard when they inquired about the matter with An Bord Pleanala, and therefore drew a wrong conclusion in that regard. Again, the trial judge was entitled to accept that evidence, and to conclude that the appeal was withdrawn by the specified date, even though very close to the deadline for doing so.
15. As I have already stated, the trial judge considered that the respective solicitors ought to have been in better communication between the 5th March 2014 and the 26th March 2914 in order to make sure that everything was in order in good time to ensure completion by the 26th March 2014. But he accepted Mr Reynolds’ solicitor’s evidence that having already provided the engrossed lease and guarantees in April 2012, it was reasonable for him to have expected that those would be used for the purposes of the completion now required by the 26th March 2014 without any need for him to provide a further engrossment. Again, I consider that he was correct to so conclude.
16. He noted also that on the 26th March 2014 the defendant’s solicitor had contacted the plaintiff’s solicitor and had requested a meeting on the following Monday the 31st March 2014 “to discuss a closing agenda”, as Mr Anderson, the principal guarantor, was out of the country. Noting that if Mr Anderson was going to be out of the country he ought to have made arrangements to sign the lease before he left, the trial judge stated that the responsibility for the failure to close the transaction on the 26th March 2014 was that of the defendants and not of Mr Reynolds. It also appears that by that date the defendants’ solicitor had not been provided with the necessary funds to close the transaction. Again, this was evidence that the trial judge was entitled to accept in order to so conclude.
17. On the 4th April 2014, the plaintiff’s solicitor sent an email to inquire if the matter could be closed on the 9th April 2014, stating also that he was under pressure from both the plaintiff and the bank to complete the matter. The trial judge noted that the 9th April 2014 was significant since the defendants’ solicitor was due to go on holidays on the 12th April 2014. No such confirmation was received, and on the 8th April 2014 a further letter was sent referring to the continued failure to complete in accordance with the terms of the court order, and stating that if the documents were not signed that week and the funds paid over, the plaintiff would regard the defendants’ failure in that regard as being a breach of the court order, and reserved his position in that regard.
18. There was some controversy about the reality of the plaintiff’s position as reflected in that letter. It was suggested by the defendants that the plaintiff was only going through the motions, as it were, of applying this pressure in order to keep his bank happy that he was trying hard to get the matter completed, whereas, as contended for by the defendants, the plaintiff was at all times intent upon pursing his Plan B to which I have referred, and was not therefore serious about the threat of taking steps to address the breach of the court order. Mr Ormond had stated in evidence that before sending this letter Mr Reynolds’ solicitor had phoned the defendants’ solicitor to tell them that he was under instructions from the bank to send such a letter. However, the trial judge was satisfied that Mr Reynolds was anxious to complete the transaction at this date, and that he was under pressure from his bank to do so. As I have already mentioned, the defendants contest this finding on the basis of Mr Cranston’s evidence to which, they say, the trial judge did not give sufficient consideration and weight.
19. With regard to the question of bank pressure on Mr Reynolds, Mr Cranston stated in his evidence that he did not think he had met Mr Reynolds more than once between the 5th March 2014 and the 26th March 2014 but would have spoken to him on the phone during that period. When asked if he might have telephoned him every day for an update, he stated that he may have rung him “a couple of days in a row” but not every day, but that this may have been because he had failed to get through to him on the first occasion. He had been made aware after Easter that the transaction had not closed, and he understood that the reason for this was that certain documents had not been signed. He was asked if the bank was putting pressure on Mr Reynolds to which he responded that he was not “putting enormous pressure on Mr Reynolds” but “would have been asking him for updates in relation to what was going on … and that would be it”. In relation to the period between March and July 2014 he felt that there would have been three to four meetings, and apart from these meetings any contact would have been by telephone. He was aware that further proceedings had been issued by Mr Reynolds, and stated that the bank’s approach was “very much a hands off approach” pending the conclusion of those proceedings. There was also evidence that on the 25th July 2014 when the matter was for mention in the Commercial Court, Mr Cranston had decided to come down to court to see for himself what was happening, and that he left the court satisfied that there would be progress towards completion of the transaction by the same afternoon – in other words that whatever documents remained to be signed would be signed later that day. It appears that quite apart from any direct contact between Mr Reynolds and the bank to keep them updated on what was happening, there was contact between Mr Cranston and the bank’s own solicitors, and between Mr Reynolds’ solicitor and the bank’s solicitor in relation to the matter.
20. There are two references to bank pressure on Mr Reynolds in the judgment of the trial judge. In para. 27 he states “it is clear that Mr Reynolds was most anxious to complete the transaction at this time; it is also clear that AIB was putting Mr Reynolds under pressure to complete the transaction …”. In para. 132 he stated that not only was Mr Reynolds ready willing and able to execute the lease by the 26th March 2014, but “was most anxious to do so as he was under immense pressure from his bank, AIB, to execute the lease” so that rental income would start to flow in order to reduce his indebtedness to the bank.
21. The defendants submit that the trial judge has erred in concluding that Mr Reynolds was under pressure or immense pressure to complete, and that he has completely overlooked and failed to refer to the evidence given by Mr Cranston. They submit that his evidence does not support the conclusion that pressure was being applied to Mr Reynolds by the bank, as Mr Reynolds stated in his evidence, and as his solicitor had stated in correspondence and in his dealings with the defendants’ solicitor. The defendants contend that the trial judge fell into error in this regard, and that in so far as the finding of such pressure by the bank on Mr Reynolds assisted the trial judge in concluding that Mr Reynolds was at all times ready willing and able to complete, that finding also should be set aside.
22. In my view, however, whether the bank did or did not put pressure on Mr Reynolds at various times is not particularly important. The trial judge referred to this pressure in the context of Mr Reynolds being anxious to complete the transaction. Firstly, there was other evidence which the trial judge was entitled to accept that pointed to Mr Reynolds being ready willing and able to complete by the 26th March 2014 and on later dates. The finding of pressure from the bank was not crucial to such a conclusion. But in any event, it is clear that somebody in Mr Reynolds’ position would, as he himself stated, feel under pressure from his bank to complete this transaction, whether or not the bank was in fact from its perspective putting him under pressure or “immense pressure”, given:-
(a) that a receiver had been appointed by AIB over the company he had used to operate the nightclub business at The Pod premises,
(b) he owed the bank a great deal of money which the bank was naturally keen to recover,
(c) there was a risk that further enforcement by the bank would have a knock-on effect on his other business interests,
(d) the matter was dragging on since 2012,
and
(e) he was required to keep the bank updated as to how the transaction was proceedings through such meetings as took place and through telephone contact.
23. The bank was certainly keenly interested in what was happening with this transaction and the court proceedings, as is evidenced by the fact that on one occasion at the end of July 2014 Mr Cranston even saw fit to attend the Commercial Court to see for himself what was happening. After all it was owed a great deal of money and was anxious to see a substantial income stream coming into the bank by way of rental income. I have no doubt that some customers of the bank may have been placed under far greater pressure than was Mr Reynolds, and that Mr Cranston might well consider that given the degrees of pressure possible, that applied to Mr Reynolds was not at the high end of that spectrum of possible pressure. But it was certainly open to the trial judge to consider that Mr Reynolds was under pressure from the bank to complete the transaction, even if his use of the word “immense” was not an adjective used by Mr Cranston. Whether he was or was not under pressure, or immense pressure, does not determine anything of relevance as far as this appeal is concerned. In that regard, what is important is whether or not the trial judge was entitled to conclude that it was defendants who were responsible for the failure to complete this transaction, rather than any action by Mr Reynolds, particularly by reference to his dealings with Mr Dolan on and after the 14th May 2014, and his alleged desire to scupper the whole transaction so that he could pursue his Plan B. These are the real issues for determination, and not whether or not there was immense bank pressure put upon Mr Reynolds by the bank. I shall come to these other issues in due course, and in particular the significance of the text messages already referred to, and the indemnity given by Mr Reynolds to Mr Dolan on the 30th July 2014, and the question whether any failure by the trial judge to refer to these matters in any detail, and/or whether he overlooked or ignored them, means that this Court should overturn his findings of fact in this regard.
24. Having digressed in order to address the question of bank pressure, I should resume the narrative of events from the 9th April 2014 to which the trial judge referred in his judgment in order to put into context the defendants’ contention that it was Mr Reynolds who contrived deliberately to frustrate the completion of this transaction for his own purposes.
25. On the 9th April 2014, three days prior to his going on vacation for two weeks, the defendants’ solicitor, on the instructions of Mr Ormond, wrote to the plaintiff’s solicitor raising a number of matters. He said that he was awaiting an engrossment of the lease, in addition to confirmation in relation to the provision of the skywalk and as to the ownership of the rear stairway, as well as a draft consent from both the bank and the receiver. He sought also confirmation that the intoxicating liquor licence was still in place and a copy of same, and an undertaking that it would be transferred to Altomoravia upon completion. These matters with the exception of the skywalk and the rear stairway, as the trial judge noted, were matters which could and should have been raised prior to the 26th March 2014, but were in any event normal conveyancing matters. However, the letter also concluded with the following paragraph:
“You should be aware that there is a leak on the ground floor which has become worse due to your client’s failure to complete this lease over the last two years as this is a full FRI lease, and in such circumstances we will be calling on your client immediately upon completion to repair this leak. You might confirm the position by return.”
26. In relation to that paragraph the trial judge noted that Mr Reynolds’s view was that it was raising new conditions which were not part of the terms of settlement. He noted Mr Ormond’s view also that these matters were simply what were referred to as “information matters” and not intended to be additional conditions to be fulfilled prior to completion. However the trial judge rejected Mr Ormond’s evidence in this regard, stating that it was difficult to accept it because the letter of the 9th April 2014 did not indicate that it was simply seeking information in relation to the matters, and that it would not hold up completion. In fact the trial judge went on to state that quite the opposite was the case. In that regard he referred to a later letter dated 2nd July 2014 in which the defendants’ solicitor referred to the issues raised in this letter of the 9th April stating “which we would imagine are essential to the completion of the transaction”, and went on to state “subject to the above … we confirm that we are ready willing and able to complete this transaction and close this agreement” [emphasis added].
27. It must be remembered that by the time that letter was written on the 2nd July 2014 the second plenary proceedings commenced by the plaintiff on the 24th April 2014 were well under way, and in fact, as noted by the trial judge, the defendants’ defence and counterclaim specifically pleaded that the issues of the skywalk and the rear stairs were essential to the completion of the transaction.
28. The trial judge concluded that he was satisfied from the evidence of Mr Ormond that these issues were deliberately raised by Mr Ormond for the purpose of negotiating further concessions from the plaintiff in relation to the significant costs associated with the leak complained of, and damage caused to the premises. He stated that “it is clear from the Mr Ormond’s evidence that he directed Mr Carty (defendants’ solicitor) to write this letter and insert the condition about the cost of repairs because he wanted Mr Reynolds to take on the liability for the repairs or because he wanted Mr Reynolds to be equally liable for the cost of repairs.” These were undoubtedly matters which the defendants were well aware of by the 5th March 2014 when the first proceedings were compromised, and yet were not referred to as part of that settlement. The trial judge was in my view entitled on the evidence which he heard to come to this conclusion, despite the view expressed by Mr Anderson in his evidence that what the defendants were seeking was simply common sense and normal – namely that when the lease actually commenced they should get the premises in the same condition they were in when the agreement for lease was first signed back in 2012, and accordingly that Mr Reynolds should be responsible for any damage to the premises caused by the leak in the intervening two years. It seems obvious that if the defendants felt this way, they ought to have included that as a condition of the terms of settlement that were agreed on the 5th March 2014. There may well have been less than optimal communication between Mr Ormond and Mr Anderson around the 5th March 2014. Mr Anderson was in the United Kingdom, and Mr Ormond was dealing here with the first proceedings and the settlement of them. Perhaps if Mr Anderson had had a more hands-on approach to the case, and was more directly involved in the settlement negotiations on the 5th March 2014, rather than relying on Mr Ormond as his ‘man on the ground’, the parties might have made reference to the condition of the premises and the repairs thereof, and reached some agreement in relation thereto. But the settlement is silent on these matters, and stands to be enforced on the basis of its express terms.
29. By letter dated 11th April 2014 the plaintiff’s solicitor replied to the letter of the 9th April 2014. He dealt with a number of matters including that he was enclosing fresh engrossed documents for execution, even though he noted that these were already provided in 2012. He refuted the suggestion that he had agreed a postponement of the closing to the 25th April 2014 (after the defendants’ solicitor would have returned from vacation). The trial judge made a finding of fact that there had been no such agreement – again, in my view, a finding of fact which he was entitled to make on the evidence which he heard.
30. Another matter dealt with in the reply dated 11th April 2014 was a request by the defendants’ solicitor, which had been made on the 2nd April 2014, that perhaps Mr Dolan could be released as a guarantor of the intended lease. It appears that the reason for that request was that Mr Dolan was for his own reasons in the process of extricating himself from his previous close business relationship with the Altomoravia parties. He no longer wanted to be part of Altomoravia’s plans for The Pod or its other activities. It presumably seemed logical therefore that he should not be required to be a guarantor of the lease going forward, even though in April 2012 he had been willing to do so. In his own evidence, however, Mr Dolan stated that in fact if he had been asked to sign the guarantee at any time up to the 14th May 2014 he would have done so. As he understood the guarantee, he would have only a limited exposure in the event that Altomoravia defaulted on its rent obligations. I will return to that question when dealing with the text messages issue. At any rate, having received the request on the 2nd April 2014 that Mr Dolan be released, Mr Reynolds’s solicitor stated in this letter that his client’s instructions were that the lease had to proceed on the basis of the terms of settlement, meaning that Mr Dolan had to sign as one of the guarantors. When giving evidence, Mr Cranston of AIB stated that he had not been requested by Mr Reynolds to agree to Mr Dolan’s release, but that if he had been he would have had to pass the request up the line for a decision. The defendants seek to rely on that evidence as further support for their contention that Mr Reynolds deliberately obstructed the completion of this transaction by, inter alia, not even asking AIB if they would be agreeable to removing the need for a guarantee from Mr Dolan. However, as of April 2014 certainly and also up to 14th May 2014, Mr Dolan, according to his own evidence, was still willing to act as one of the guarantors.
31. The reply of the 11th April 2014 also stated that the skywalk and rear stairs were extraneous matters unrelated to completion, and confirmed also that the licence was in place and would be transferred on completion.
32. By the 12th April 2014 the defendants’ solicitor was on holidays until the 24th April 2014. However he managed nonetheless to send a holding reply on the 16th April 2014 stating simply that he would take his clients’ instructions.
33. On the same date, the plaintiff’s solicitor wrote again complaining that the agreed closing date had passed, and that no executed lease or funds had been received, and stating further that unless confirmation was received by close of business on the following day the case would be re-entered before the court. The defendants’ solicitor was also asked if he had authority to accept service of proceedings. A reply dated 17th April 2014 (Holy Thursday) stated that he had no such authority, and raised again the issue of the leak, and whether the plaintiff would agree to rectify it. Thereafter the Easter break intervened, and nothing further occurred before the return of the defendants’ solicitor from vacation on the 24th April 2014.
34. On the 24th April 2014, having received no substantive response to his letter dated 16th April 2014 the plaintiff’s solicitor issued the present proceedings. These were served on Altomoravia by post that same day, and a courtesy copy was sent with a covering letter to the defendants’ solicitor. No response was received. Some difficulties were encountered in effecting personal service of these proceedings on the remaining personal defendants which necessitated an application to the High Court for an order for substituted service upon the solicitors acting for the defendants in the transaction. That order was granted on the 12th May 2014, and service was effected on these solicitors that same date.
35. The trial judge concluded, and correctly so in my view, that the plaintiff’s action in issuing these new proceedings and seeking an order for substituted service as soon as that proved necessary indicates that he was ready, willing and able to conclude this transaction in accordance with the terms of the previous settlement, and that by contrast it was the defendants who were dragging their feet and making no real effort to abide by the court order and complete the transaction.
36. On the 14th May 2014 the plaintiff issued and served a motion to have the proceedings admitted to the Commercial Court pursuant to O. 63A RSC. That order was granted on the 26th May 2014. The trial judge concluded that it was extraordinary that the defendants, who were professing that they were at all times ready, willing and able to complete, did not simply do so even by this time by simply executing and returning the lease and guarantees, and paying over the sum of €185,000 being the agreed sum due for rent. He noted also Mr Reynolds’ evidence that if that had happened he would himself have immediately executed the lease.
37. I pause this narrative briefly to draw attention to the fact that on the 14th May 2014 Mr Reynolds happened to meet Mr Dolan on the street, and a discussion ensued as to the terms of the guarantee that, inter alios, Mr Dolan was required to sign. The defendants relied heavily in the High Court upon certain text messages and other events following that meeting between the two men for their contention that at all times, while giving the appearance of being ready, willing and able to complete, Mr Reynolds, in reality, had no wish to complete this transaction following the settlement on the 5th March 2014, and pursued a contrary agenda, so that he could implement his Plan B, of trying to frustrate the completion of this lease by putting into the mind of Mr Dolan an interpretation of the guarantee which was wrong, and which also was contrary to what Mr Dolan had up to the 14th May 2014 believed it to mean. As I have said already, the defendants contend that the trial judge virtually ignored the existence and significance of these text messages and the interactions between Mr Reynolds and Mr Dolan between the 14th May 2014 and the end of July 2014, and that this Court should overturn his findings of fact in relation to complete the transaction.
38. The trial judge noted that following the entry of this case into the Commercial List the defendants had failed to enter an appearance in a timely fashion despite undertaking to do so, and had failed also to deliver a defence as directed, necessitating a motion for judgment in default of defence. That motion issued on the 24th June 2014, and a defence was delivered on the 27th June 2014.
39. On the 27th June 2014 the plaintiff’s solicitor wrote noting that a defence was received and went on to request confirmation:
(a) that the lease had been sealed by Altomoravia,
(b) that the guarantees had been executed by all guarantors and were available to be handed over,
and
(c) that the defendants’ solicitor was in funds to complete.
This letter evoked a response by letter dated 30th June 2014 stating:
(a) that the lease had been sealed by the company,
(b) that “the guarantees are physically attached to the lease but are executed and are available”,
and
(c) that the solicitors were in funds to the required amount “to be handed over to your office on completion”.
The trial judge stated that what was surprising about this letter was what it did not say, namely that it did not send over the lease or the funds and make a demand that the plaintiff execute the lease, and in addition that it did not mention any of the other issues that had been raised in previous correspondence. The plaintiff’s solicitor responded that same day by asking that the lease and guarantees as executed be furnished immediately. A reminder letter was sent on the following day, the 1st July 2014, and on that date also the plaintiff’s solicitor delivered a reply and defence to counterclaim in the proceedings.
40. On the 2nd July 2014 the defendants’ solicitor wrote quite a lengthy letter. But before I set it forth verbatim as the trial judge did in his judgment because of what he called its significance, I want to note, as the evidence in the High Court revealed, that the reference made by the defendants in their letter dated 30th June 2014 to the lease being sealed and to the guarantees being executed and available refers to the execution of the documents back in 2012, and not to the execution of the freshly engrossed lease containing the new commencement date of the lease, and the new guarantees which the defendants’ solicitors had required to be furnished to them in April 2014. This is a very significant fact in my view, especially when one realises that according to the uncontroverted evidence of Mr Dolan’s own solicitor, from whom he had sought his own advice as to the interpretation of the guarantee after the chance meeting with Mr Reynolds on the 14th May 2014, he had specifically and clearly told the defendants’ solicitor that he was not authorised to hand over the earlier guarantee that Mr Dolan had executed back in 2012. In other words, the statement in the letter dated 30th June 2014 that the guarantees were executed “and available” was not correct.
41. The letter dated 2nd July 2014 was in the following terms:
“Dear Sirs,
Further to yours of 30th ult. and 1st inst., we enclose herewith as requested lease and guarantee in duplicate executed by our clients.
We would ask you to note that the attached are forwarded to you on a strictly without prejudice basis to the current proceedings in this matter and our clients’ rights to recover damages from your client for the damage caused to the premises known as The Pod, Harcourt Street, Dublin 2 due to water ingress arising as a result of inter alia your client’s negligence, disregard, breach of duty, breach of statutory duty relating to the protection of the premises. Further, for the record, we note that we have not received clarification to the issues raised in our letter of 9th April last which we would imagine are essential to the completion of this transaction:
(1) confirmation regarding the consent given by your client for the provision of the skywalk on the building.
(2) confirmation of the ownership of the rear stairways.
(3) consent from the mortgagee in this matter.
(4) consent from the receiver in this matter.
(5) confirmation regarding the liquor licence attached to the premises namely that same is in order and remains in place.
Subject to the above and the attached we confirm as per our pleadings, we are ready willing and able to complete this transaction and close this agreement.
We await hearing from you,
Yours faithfully”
42. This letter evoked an immediate response on the 3rd July 2014. Before setting out the terms of that letter, one must recall that the defendants had raised the issue of water damage to the premises since April 2012 and the skywalk in previous correspondence, and those matters were not referred to in the most recent letter dated 2nd July 2014. Understandably, the plaintiff’s solicitor wanted clarification that those issues were no longer alive. The letter dated 3rd July 2014 stated as follows:
“Dear Sirs,
Please confirm the following by return:
(1) That in accordance with the terms of the agreement for lease with guarantee and of the lease itself, your clients will take the premises as is.
(2) That your clients accept that our client has no liability whatsoever to your clients in respect of any alleged damage, which is denied, which is said to have been caused by ingress of water. In this regard we draw your attention to clause 8 of the agreement for lease with guarantee, and the terms of the lease itself.
(3) We have reviewed the lease as executed by your clients and furnished to this office, and note that the commencement date of the term of the said lease is 20th September 2012. Kindly confirm therefore that your client will commence the payment of the rent reserved under the lease immediately upon execution thereof by our client.
(4) It has come to our client’s attention from a third party that there may be a miss apprehension on your client’s part as to the correct interpretation of the guarantee provided by the guarantors at the fifth schedule of the lease. For the avoidance of any doubt the liabilities of the guarantors, or each of them, shall not exceed the sum of €260,000 in each and every year of any default on the part of the tenant or a sum which equates to 50% of the annual rent in each and every year of any default on the part of the tenant which gives rise to a liability under the guarantee, whichever is the greater. Accordingly, the guarantors are potentially liable to pay a sum equivalent to up to half the rent reserved under the lease in each and every year of the 20 year term created thereby.
Please confirm by return that you accept the position as set out above.
Yours faithfully. ”
43. This letter was responded to by letter dated 4th July 2014 from the defendants’ solicitor. In addition to taking issue with what the plaintiff’s solicitor had stated as to the meaning of the guarantee, the letter dated 4th of July 2014 stated:
“(1) Our client had not been afforded any opportunity to inspect these premises prior to the order of the High Court on 5th March 2014. Your client refused to complete this transaction for a period of 18 months and during that time allowed severe damage to be caused to the premises which will necessitate huge expense for our client in rectifying same.
(2) When the agreement for lease was entered into over two years ago our client was then happy with the state of the premises. However since that time your client has allowed the premises to fall into disrepair and in particular has allowed the premises to suffer water damage which to date your client has not remedied. The agreement for lease in this matter does not relieve your client of his obligation to protect the premises for the benefit of our client pending our client taking up lawful occupation of the premises. In short, the completion does not deprive our client reserving their position via any action they may take against your client for the damage caused to the premises.”
44. In relation to this reply, the trial judge stated at para. 68 of his judgment:
“It is clear from this letter, that the plaintiff’s request in his letter of 3rd of July 2014 that the defendants would take the premises “as is” had not been accepted by the defendants, and instead they are complaining not only of the damage to the premises but also that they had not been afforded any opportunity to inspect these premises prior to the order of the High Court on 5th March 2014. Given that the defendants had obtained an expert’s report on the state of the premises dated August 2013 and which was exhibited as a witness statement for the first set of proceedings it is difficult to understand this statement. Thus again the defendants were making an issue of the state of the premises almost 4 months after the court order and agreement of 5th March 2014.”
45. The plaintiff’s solicitor wrote again on the 6th July 2014 stating inter alia:
“… it is quite clear both at the date of the hearing and now that your clients continue not to be ready, willing and able to close and furthermore seeking to negotiate new terms by way of amending the liability of the guarantors under the guarantee and by introducing other matters in relation to the premises itself.
Again, we have taken our client’s instructions and the state of the premises was known to your client at the date of the hearing on the High Court in March 2014 when the parties settled the proceedings on foot of your client’s oral evidence under oath that your clients were ready, willing and able to close the transaction.
It is now not open to your clients to introduce new elements that could have been addressed during the negotiations that lead to the terms of settlement of 5th March 2014 that were entirely foreseeable and mount your clients and while the premises remained unoccupied for approximately 2 years.
Your clients chose not to seek to introduce terms in the settlement at that time in circumstances where at all times your client’s would take the premises ‘as is’.
It would appear therefore that your clients are now seeking to introduce further pre-conditions before closing to which they are not entitled.
Further, as previously advised to you, confirmation of consent in relation to the provision of the skywalk and the ownership of the rear stairways cannot now be imposed as pre-conditions before the closing by your clients.
……… .
The attempt to introduce further pre-conditions as another attempt on the part of your clients to renege on the terms of settlement and earlier agreement.
Accordingly, on the grounds that it is quite clear that your clients are not willing to complete the transaction, in all of the above circumstances, the current proceedings will now proceed and our client will continue to seek damages on foot of same.
Yours faithfully.”
46. The trial judge stated in his judgment that the plaintiff’s solicitor, was right to respond in these terms and that the letter was “clearly an attempt by them to introduce new conditions to the court order and the settlement”. The trial judge went on to refer to further correspondence between the parties’ solicitors and in particular a letter dated 25th of July 2014 from the defendant’s solicitors stating that subject to the execution of the agreement in writing the following payments would be made by the defendants forthwith, namely:
(1) the sum of €180,000 representing the deposit,
(2) payment of €130,000 for rent repayments,
and
(3) €5000 for stamp duty.
The letter also requested that the plaintiff’s solicitor should make contact to confirm an appointment to complete the transaction. The trial judge referred also to a letter from the plaintiff’s solicitors dated 30th July 2014 which requested the defendant’s solicitor to revert by return to confirm that his office was in funds in order to close the transaction, and that his clients were in a position to close the transactions that day. The trial judge noted that evidence was given during the hearing that this letter was written in order to see whether the defendant’s would in fact be in a position to close the transaction on that date. The letter was clearly sent by fax because it was responded to on the same date, 30th July 2014, as follows:
“Dear Sirs,
Further to your letter of even date we confirm that we are awaiting signatures on the documentation necessary to complete this transaction. As soon as the documentation is signed we will forward it to you for completion. Funds are in place to close this transaction and will be given to you on completion.
Yours faithfully.”
47. Although this letter was sent by fax to the plaintiff’s solicitors, which apparently was not seen by the plaintiff’s solicitors until they saw it at the trial of this action before Mr Justice Cregan. However, as he stated in his judgment, “nothing substantive turns on this”. It was certainly clear that the defendants were still not in a position to complete the transaction that day. I should perhaps mention also that the proceedings were listed for mention before the Commercial Court on the 30th July 2014 having been adjourned from the 25th July 2014 on the basis that it was anticipated that by the 30th July the necessary documents would have been signed to enable the transaction to be completed. On the 30th July 2014 the Court was informed by the defendants’ counsel that Mr Dolan had still not executed his guarantee.
48. It is unsurprising in my view that, as the trial judge stated, the plaintiff decided at this stage that “enough was enough” and that his solicitors wrote to the defendant’s solicitors on 31st July 2014 as follows:
“Dear Sirs,
We refer to previous correspondence in relation to the above matter and our recent attendances before the Commercial Court. We refer specifically to the representations to the court made by your counsel to the effect that the lease, guarantee and settlement agreement were not signed by all the defendants.
Given your clients’ related admission yesterday they are not in a position to comply with the terms of the court order of 5th March last, we wish to advise that we are instructed that our client will not now seek specific performance of the agreement referred to above, but rather will seek damages in lieu.
Furthermore, in an attempt to minimise his losses our client now proposes to deal with other interested parties in relation to the said property, and the purpose of this letter is to formally put your clients on notice of this fact.”
49. It is clear that it was the absence of Mr Dolan’s guarantee that was causing the problem. While he had signed a guarantee back in April 2012, his own solicitor had made it clear to the defendants’ solicitor, as already referred to, that that particular guarantee could not be handed over. It was also stated by Mr Dolan in his evidence in the High Court that in fact he had been advised by his own solicitor that he should not sign any fresh guarantee since he was not going to have any involvement in the Pod enterprise and no control over what happened. Mr Dolan was not prepared to sign the guarantee unless he was given an indemnity by the other guarantors.
50. I have referred to the fact that Mr Dolan was from 14th May 2014 unclear as to the precise meaning of the guarantee and his potential liability thereunder, and had sought his own legal advice in relation to it. I have referred to the fact that by April 2014 Mr Dolan was anxious to disentangle himself from his previous business relationship with the other defendants but was nevertheless by that date at least, albeit perhaps based on a misunderstanding of its potential liability under the proposed guarantee, still willing to execute the guarantee. Thereafter, however, and as noted by the trial judge at para. 80 of his judgment, Mr Dolan was unwilling to sign the guarantee unless he received an indemnity in respect of any liability he might have under that guarantee from all of the other guarantors. As the trial judge noted, such an indemnity was not given to him by his co-guarantors until the 4th or 5th of August 2014. Again, as noted by the trial judge, the plaintiff would not have been aware of this. Having received that indemnity from his co-guarantors Mr Dolan signed the guarantee in the knowledge that he was protected from any exposure thereunder, but the plaintiff’s solicitor was not made aware that the defendants were in a position to complete the transaction until the defendants’ solicitor wrote to that effect on the 14th August 2014 when the documentation was furnished duly executed by all necessary parties, but extraordinarily in my view the necessary funds were still not enclosed. However, the plaintiff’s solicitor replied on 15th August 2014 stating that his client’s position remained as set out in the letter dated 31st of July 2014 already referred to, and he returned the documentation which had been closed.
51. I will return to the contention by the defendants that it was a deliberate ploy by the plaintiff to sow the seeds of doubt in the mind of Mr Dolan as to the meaning of the guarantee and the potential extent of Mr Dolan’s liability under it, in order to ensure that he would not sign the guarantee, and thus deliberately frustrate the completion of the transaction by the defendants, all with a view to being able himself to pursue the alternative Plan B for the premises which would otherwise be subject to the 20 year lease in favour of Altomoravia.
52. Before returning to that question, and the series of text messages upon which the defendants so heavily rely on this appeal, I should set out the trial judge’s conclusion reached in relation to the delay in the completion of the transaction after 26 March 2014 and where the blame for it should be cast. In para. 80 of his judgment he stated as follows:
“… Given that the plaintiff was under immense financial pressure from AIB, given that the plaintiff had been ready willing and able at all times since 26th March 2014 to sign, given that the defendants had constantly delayed and added new conditions, it is clear that as at 31st July 2014 the defendants were in breach of the court order of 5th March, and had, in effect, acted in such a way as to add extra conditions to the court order and also to in effect frustrate the enforcement of the court order. In those circumstances, the defendants’ actions were clearly a breach of the agreement between the parties, and they were clearly a breach of the scheme of the court order because certain things had to be done by the defendants before the plaintiff could perform his part of the court order.”
The text messages
53. Nobody besides Mr Reynolds and Mr Dolan was aware of these texts until they were provided much later by Mr Dolan to his co-defendants. The first time these texts were disclosed was when Mr Dolan prepared his witness statement around January 2015. There was no application made to amend the pleadings in the light of these text messages, but nevertheless Mr Dolan gave evidence in relation to them and was extensively cross-examined in relation to them. The defendants sought to rely upon these texts in the High Court to support their contention that while there was undoubtedly delay in completing this transaction, the principal cause of the failure to complete was that Mr Dolan was unwilling to execute the guarantee required of him, and that the content of these texts and the evidence of other contact between Mr Reynolds and Mr Dolan show that Mr Reynolds was engaged upon efforts to persuade Mr Dolan not to execute a new guarantee between June and August 2014, and that he acted in bad faith in this regard. It is submitted that in error the trial judge considered the question of fundamental breach only in the context of why the agreement had not been performed by the 26th March 2014, or even shortly thereafter in April 2014, and that instead he ought to have concentrated his attention on why the transaction was not completed between the date of commencement of these proceedings in April 2014 and the 30th July 2014, and that if he had done so he would have had to give consideration to the text messages and other contact between Mr Reynolds and Mr Dolan, and should have concluded that far from being anxious to have the matter completed, Mr Reynolds was pursuing a contrary agenda by trying to ensure that Mr Dolan did not sign the required guarantee and in this way ensure that the transaction did not complete, so that he would be free to pursue so-called Plan B.
54. The defendants submit on this appeal that the trial judge erred by failing to give any consideration and weight to these texts and other contact between Mr Reynolds and Mr Dolan after 14th May 2014, and that had he done so he could not have concluded that it was the defendants, and not Mr Dolan, who were responsible for the failure to complete the transaction in accordance with the terms of settlement, and ought in such circumstances have made an order in favour of the defendants requiring the plaintiff to specifically perform the agreement of the 5th March 2014 by executing the lease.
55. The trial judge expressed his conclusions on the question of whether or not the defendants were entitled to an order requiring the plaintiff to specifically perform the agreement of the 5th March 2014 in trenchant terms commencing at para. 143 as follows:
“143. The court will not grant an order of specific performance if, taking all the circumstances into account, it would be inequitable to do so.
144. In the present case I have no doubt that it would be inequitable to grant an order for specific performance because the defendants’ conduct after 5 March 2014 amounted to bad faith. They unilaterally postponed the closing date; they delayed the closing date; they prevaricated; they said that one of the guarantors [Mr Anderson] was out of the country; they demanded engrossments of the lease when they had them in their possession of all time; they added entirely spurious new conditions which they accepted in evidence had been resolved in the first set of proceedings (e.g. the skywalk, the rear staircase and the water damage issue); they refused to close until these new conditions were agreed to by the plaintiff; they delayed in order to put pressure on the plaintiff whom they knew was in financial difficulties; they delayed knowing the plaintiff had withdrawn his planning objection and had therefore lost his main “negotiating card”; they refused to sign before the plaintiff signed when they knew that was entirely inappropriate; they forced the plaintiff to issue these proceedings because of their behaviour; they deliberately refused to accept service of these proceedings; they deliberately failed to comply with the direction of the court about filing their defence; they delayed in order to negotiate the exit of one of their members (Mr. Dolan) and allow Mr Clinton to replace him; one of their number [Mr Dolan] refused to sign the guarantee until early August 2014 until he received an indemnity from the other parties; they rooted the deposit monies through a murky and unexplained route; they filed misleading affidavits of discovery and a misleading witness statement; they concealed all their machinations about the exit of one member [Mr Dolan] and the entry of another member [Mr Clinton] from the plaintiff; they sent a copy of a signed lease dating from 2012 when they knew that that was irrelevant; they sent a copy of the signed lease despite the fact that one of the defendants’ [Mr Dolan] own solicitors had stated that under no circumstance was this signed lease to be sent to the plaintiff’s solicitors.
145. It is clear from all of the above that the defendants adopted a deliberate strategy of delaying, obfuscating, obstructing, adding new conditions, playing for time, concealing from Mr Reynolds what was going on behind the scenes, and seeking to wrest on new concessions from Mr Reynolds in his weakened condition. They carried on the strategy even after proceedings had been issued to force them to comply with the agreement and order of fifth of March 2014.
146. I have no doubt that the defendants, led by Mr Anderson, engaged in an entirely unscrupulous attempt to gain extra concessions from Mr Reynolds realising as they did, that he was in a weak financial position, that he had withdrawn his appeal from An Bord Pleanala, and that he was bound by a court order. This was all done deliberately by the defendants to try and force extra concessions out of Mr Reynolds to contribute to the cost of the water damage when they had quite clearly agreed to take the property in the condition it was in as at 5th March 2014.
147. I would therefore conclude that the actions of the defendants were unscrupulous and were acts of bad faith. The defendants were never ready willing or able to complete the transaction until early August 2014 at the earliest. But even then, it is clear that the defendants’ agreement to execute the lease on or about 14th August 2014 was conditional on a number of matters including the condition that the plaintiff would contribute to the water damage. These conditions were set out in the defendant’s counterclaim dated 30th June 2014 and were maintained at all times by the defendants up to and including the trial of these proceedings. Thus it is clear that the defendants were not ready willing and able to complete the agreement on the 26th March 2014 as stipulated by the agreement and as directed by the court order.
148. I also of the view that the defendants sought to use the existence of the court order for their own ends. They believed that Mr Reynolds now have to sign the lease not only because of the agreement but also because of the court order. Their actions subsequent to the court order of 5th March 2014 were not only acts of bad faith, they were also an abuse of the court order and therefore an abuse of process.
149. In those circumstances therefore I refuse the reliefs of specific performance sought by the defendant.”
Reynolds V Altomorovia Holdings Limited
[[2017] IECA 147
56. The defendants in their submissions accept that under Hay v. O’Grady principles, the trial judge’s findings of fact may not be disturbed by this Court unless there was no credible evidence at trial to support them. However, they go on to submit that the trial judge must be seen to have considered all of the evidence, and where it appears from his judgment that he did not consider what they submit to be the crucial evidence of these text messages and therefore failed to give any weight to them, nor to the other communications between Mr Reynolds and Mr Dolan during the period from May 2014 until the end of July 2014, including the hand-written indemnity given by Mr Reynolds to Mr Dolan when they met on that date, this Court is entitled to consider that evidence, and reach a conclusion that this evidence is sufficiently strong that if the trial judge had considered it, and given it due weight, he would have had to reach a different conclusion on the question of fundamental breach and who was responsible for it.
57. The series of text messages relied upon by the defendants to indicate egregious bad faith on the part of Mr Reynolds commence on the 4th June 2014, and therefore cannot speak to why the transaction did not complete on any date prior to that date, or at least prior to the 14th May 2014 when Mr Reynolds happened to meet Mr Dolan on the street and a conversation about the meaning of the guarantee took place. Mr Dolan stated in his evidence that if he had been asked to execute a guarantee at any stage prior to the 14th May 2014 he would have been willing to do so, but that he had not been asked. Insofar as the trial judge considered the question of fundamental breach of the terms of the agreement, and who was to blame for it, the defendants submit that the trial judge erred in considering the question of fundamental breach only in the context of why the agreement had not been completed by the end of March 2014, and that he ought more correctly have focussed upon that question by looking at why the transaction did not complete between the commencement of these proceedings on the 14th April 2014 and 30th July 2014. They submit that had he considered the question of fundamental breach in the context of that particular period, and had he given any consideration and weight to the text messages and other communications between Mr Reynolds and Mr Dolan during that period, he would have been forced to conclude that it was Mr Reynolds who had prevented the transaction been completed by the end of July 2014 and that therefore it was Mr Reynolds who was in fundamental breach of the terms of the agreement, such that he was disentitled to the reliefs which he sought.
58. The evidence was that on the 14th May 2014 (Mr Dolan thought it was the 15th May 2014, but that difference is neither here nor there) Mr Reynolds and Mr Dolan met by chance on the street, and a discussion ensued which included reference to the guarantee that Mr Dolan was required to sign. It appears that from whatever way the discussion went Mr Reynolds realised that Mr Dolan’s understanding of the liability to which Mr Dolan would be exposed under the guarantee was different to his understanding. Mr Dolan considered the extent of his liability to be one half of one year’s rent (i.e. the year of default), whereas Mr Reynolds believed that the exposure was to one half of the rent for every year of default which could be over a period of 20 years, being the term of the lease. While, in his judgment, the trial judge stated, correctly, that he was not required as part of the case to determine the true construction of the guarantee, he stated that it was clear that there were diverging views as to its meaning and that “this sent alarm bells ringing in Mr Dolan’s mind and he decided to seek independent legal advice from his own solicitors”. The trial judge also noted Mr Dolan’s evidence that at this point he was getting confused about the guarantee because he had one version from Mr Anderson, one version from Mr Ormond, another from Mr Carty (the defendants’ solicitor, and yet another from Mr Reynolds. There was evidence also that at this point Mr Dolan’s own solicitor write to Mr Carty clearly stating that the guarantee which Mr Dolan had signed back in 2012 could not be now used without Mr Dolan’s consent. It is worth noting also that the trial judge stated that in fact the opinion of Mr Dolan’s own solicitor as to the meaning of the guarantee coincided with that which Mr Reynolds had expressed on the 14th May 2014, which if correct would mean that Mr Dolan’s understanding as to the extent of his liability under it back in 2012 and still was up to that point incorrect.
59. The allegation arising out of the text messages that from the 14th May 2014 onwards until the end of July 2014 Mr Reynolds pursued a strategy of trying to scare Mr Dolan into not signing the guarantee so as to ensure that the transaction did not complete while at the same time commencing and pursuing proceedings for specific performance of the agreement, by putting into his mind an interpretation of the guarantee that was exaggerated and incorrect, has to be seen in the context that Mr Dolan’s own solicitor was of the same view and instructed Mr Carty that the guarantee which Mr Carty had on his file and which was executed in 2012 by Mr Dolan could not be furnished to the plaintiff’s solicitor without his express consent.
60. As it transpired, though this was never communicated to the plaintiff’s solicitor as the reason why the transaction was not being completed, Mr Dolan was thereafter unwilling to execute the required guarantee until such time as he received a written indemnity from his co-guarantors, and for whatever reason this was not provided until the middle of August 2014 by which time the plaintiff had decided that he would seek rescission and damages in lieu of specific performance and so informed the defendants’ solicitors as already stated.
61. The text messages themselves are difficult to summarise given their brevity and somewhat typical use of verbal abbreviation. There is no doubt that Mr Reynolds and Mr Dolan were in frequent touch during this period about a number of matters. There is no doubt that some of the texts related to the guarantee, and also the fact that Mr Dolan was in the process of disengaging from his previous involvement with the other defendants. That disengagement process is certainly relevant to the willingness or otherwise of Mr Dolan to provide a guarantee in respect of a lease for a premises to be used for a business in which he would have no involvement. The texts certainly suggest that Mr Dolan was discussing his business relationship with the other defendants with Mr Reynolds. When Mr Reynolds became aware of a text sent after the plaintiff’s solicitor was sent the guarantee which Mr Dolan had signed in 2012 he texted Mr Dolan as follows: “Colin I see you are proceeding with Alto etc. Your guarantee and signed lease just furnished to my solr … I take it with your approval.” Another text from Mr Reynolds stated: “Colin have you read clause 2 in the guarantee … if Co is insolvent or in liquidation then then [sic] the 4 of you, jointly and severally take up the lease for the remaining period of the term. You should ask Carthy [a reference to Mr Carty, the defendants’ solicitor] his view on that?”.
62. There is one particular text to which the defendants attach great significance in condemning Mr Reynolds’s bona fides at this time, and to which I should refer to. It is the text sent by Mr Reynolds on the 26th June 2014 in which he tells Mr Dolan that he has spoken to a named senior counsel who Mr Dolan’s solicitor knows well, and goes on to say that this counsel “is v. clear that you have an agreement to ‘let you out of Alto’ then that is totally out inc. guarantees. And as such can’t come back on you. [counsel] has said if [your solicitor] wants, he can ring [counsel] ‘off the record’ on this. Kind regards”. It is accepted by Mr Reynolds that what he stated in this text message was a complete fabrication. He had had no such conversation with the named counsel at all. The defendants contend that this is particularly indicative of duplicitous and egregious conduct on the part of Mr Reynolds whereby Mr Reynolds was trying to ensure that Mr Dolan did not do the very thing which was holding up the completion of the transaction which Mr Reynolds was at the same time telling the Commercial Court coming up to the end of July 2014 he was at all times ready willing and able to complete. It is submitted that if the Commercial Court had been informed of these texts and communications taking place between the plaintiff and one of the defendants, the Court would have taken the view that it was the plaintiff himself who was intent on frustrating the finalisation of the transaction, and would have taken appropriate steps to ensure that the transaction was completed in July 2014.
63. It is true that the trial judge did not refer to these text messages in his written judgment despite the fact that they were the subject of evidence by Mr Reynolds and Mr Dolan. However, it cannot be presumed that he overlooked them. It is equally open to the inference that he considered them to be of peripheral significance only and not determinative of where the blame should be placed for the failure to have completed this transaction in accordance with the terms of the settlement. In particular it is worth reiterating in this regard that they postdate by several weeks the agreed completion date of the 26th March 2014.
64. But that apart, it is not as clear and obvious as the defendants suggest that these texts evince such egregious, sinister and duplicitous conduct on the part of Mr Reynolds as to disentitle him to the relief that he sought. They have submitted that these texts were sent with the intention and objective of dissuading Mr Dolan from executing the lease and guarantee. I do not agree that such an intention is clear at all. It is certainly evident that they are sent against the background of the chance meeting on the 14th May 2014 when it became apparent to Mr Reynolds that Mr Dolan’s understanding of the guarantee did not accord with Mr Reynolds’s understanding of the document. It should be remembered that Mr Reynolds suggested to him that he take his own solicitor’s advice in the matter. As it happens, that solicitor appears to have agreed with the understanding that Mr Reynolds had of the guarantee, and advised Mr Dolan accordingly and told the defendants’ solicitor that under no circumstances should he furnish the 2012 signed guarantee to the plaintiff’s solicitor without a specific consent from Mr Dolan in that regard. Given that Mr Dolan’s own solicitor was advising Mr Dolan not to execute any new guarantee it is not open to the defendants to simply place all the blame for the failure by Mr Dolan to execute the guarantee on Mr Reynolds because of the text messages. In addition, I note that in his sworn evidence, when under cross-examination, he accepted that Mr Reynolds had never asked him to, or told him not to, sign the guarantee. I accept also that when so accepting Mr Dolan went further and stated that neither had Mr Reynolds asked him to sign the guarantee.
65. There were clearly unresolved issues or difficulties between Mr Dolan and the other Altomoravia parties which had to be resolved before Mr Dolan would execute the required guarantee. He was disengaging from that relationship. He clearly needed to be protected from exposure under the guarantee in circumstances where he was no longer being involved in the business venture that would happen at The Pod when the lease was signed.
66. Despite these text messages there was ample credible evidence upon which the trial judge could and did rely for his conclusion that it was the conduct of the defendants and not Mr Reynolds that prevented the agreement from being implemented either by the 26th March 2014 or indeed any later date. He explained his reasons for reaching this conclusion in a lengthy and considered written judgment, and after hearing evidence and submissions over some fourteen days. While it is true that the text messages did not feature in the judgment, and while it would have been referable that this should have occurred, I am completely satisfied that those text messages when considered in their overall context do not have the significance for which the defendants contend on this appeal, even allowing for the fact that Mr Reynolds admitted that one of the texts was a complete fabrication. They do not show what the defendants would contend that they show. They are not such as to set at nought the findings of fact made by the trial judge. He clearly set forth the evidence which he accepted for the purpose of his findings. That evidence supports his findings and conclusions.
67. Before concluding I should mention one other matter, namely the fact that on the evening of the 30th July 2014 after this matter had been before the Commercial Court and when that Court was told that it was expected that the required documents were expected to be executed during the course of that day, Mr Reynolds and Mr Dolan met. Obviously there must have been some discussion between the two about the transaction and the guarantee which had not been signed. In any event, it appears that Mr Reynolds wrote out and signed a document in the form of an indemnity in the following terms and gave it to Mr Dolan:
“30th July 2014
I, John Reynolds, confirm that I will not take any legal action against Colin Dolan in respect of “Alto Moravian/Pod deal” at any time now or in the future.
I also confirm that Colin Dolan has no liability personal or otherwise to me in relation to the above named deal, now or in the future.
Any legal action that may arise in relation to the above proposed deal Colin Dolan will be fully indemnified against any costs or damages by myself.
Yours sincerely,
John Reynolds.”
68. In his evidence Mr Dolan stated that he wanted an indemnity from everybody if he was to sign the guarantee, including from Mr Reynolds. He stated that Mr Reynolds gave him this indemnity on the 30th July 2014. Mr Reynolds in his evidence confirmed that he and Mr Dolan had met by arrangement in the afternoon of the 30th July 2014, and that during their meeting Mr Dolan had asked for this indemnity.
69. I mention this Indemnity because the defendants have suggested that this also is something to which the trial judge gave no attention in his judgment, that he ought to have done so, and had he had due regard to it together with the text messages, he would have reached different conclusions. It is stated in their written submissions, and was stated in oral submissions, that Mr Reynolds had failed to instruct his solicitors on the 31st July 2014 before the matter was once again before the Commercial Court, that on the previous evening he had given Mr Dolan “a full indemnity against any claims which might be made against him by the [Altomoravia parties] for failing to execute the Lease with Guarantee”. The submissions go on to state:
“The fact that Mr Reynolds should elect to give a full indemnity to Mr Dolan is wholly inconsistent with Mr Reynolds assertion that as of the 25th July 2014 he held a genuine intention of securing specific performance of the Settlement Agreement and compliance with the Order of the Commercial Court dated 6th March 2014. Moreover, it is submitted that Mr Reynolds through his communications (including text messages to Mr Dolan) had contrived a state of affairs whereby he had dissuaded Mr Dolan from executing the Lease with Guarantee. The only reason why the Lease with Guarantee was not finalised by 30th July 2014 was because of Mr Reynolds surreptitious and duplicitous conduct.”
70. In my view this paragraph of the submissions mischaracterises completely the indemnity that was given to Mr Dolan. First of all, the evidence of both Mr Reynolds and Mr Dolan was that Mr Dolan requested it. Secondly, the document does not hold the meaning contended for by the defendants. It is not a document designed to dissuade Mr Dolan from executing the guarantee in an effort to ensure that the agreement was not performed. If anything it endeavours to achieve the opposite by giving an assurance to Mr Dolan that Mr Reynolds would not at any stage in the future come after Mr Dolan on foot of the guarantee if he signed the guarantee. It should therefore be seen as an encouragement to Mr Dolan to sign the only document that was holding up the completion of the transaction. In my view, even if the trial judge had considered the document and made reference to it in his judgment it is not such a document as should, along with the text messaging, lead to a setting aside of the trial judge’s findings of fact and his conclusions on foot of them.
71. For all these reasons I would dismiss this appeal.
Dempsey v Tracey
1924 2 IR 170
MICHAEL DEMPSEY v. MARY JANE TRACY (1)
(1924. No. 4026.)
Appeal. (I. F. S.) 12 June 1924
3 July 1924
KENNEDY C.J. :
3 July
By an agreement in writing dated the 1st of August, 1920, made by way of proposal and acceptance, the defendant, Mary Jane Tracy, agreed to become tenant to Messrs. Kelly Bros., Ltd., Kingstown, “for the lock-up shop, No. 16 Upper George’s Street, Kingstown, in the County of Dublin, for three years, and as yearly tenant thereafter from the 1st day of September, 1920, at the annual rent of £60 sterling, payable by equal quarterly payments of £15 sterling, the first payment to be made on the 1st day of December, 1920.” The agreement contained the following provision as to determining the tenancy: “Three months’ notice in writing on either side previous to the expiration of the third or any subsequent year to terminate this tenancy.”
It appears that on the 2nd November, 1922, Messrs. Kelly Brothers, Ltd., assigned their interest in the premises to the plaintiff, Michael Dempsey. It was admitted that the defendant paid rent to the plaintiff prior to the service of the notice to quit.
Dempsey, on the 1st of June, 1923, served on the defendant a notice to quit bearing that date, whereby he required her to deliver up possession of the said premises “on the 1st day of September next ensuing the date hereof.” The defendant did not comply with the notice to quit; and on the 8th March, 1924, the plaintiff issued his specially indorsed writ claiming possession of the said premises. On the 2nd May, 1924, an order was made by the Lord Chief Justice, sitting for the King’s Bench Divisional Court of the late High Court of Justice, giving the plaintiff liberty to sign final judgment in the action for recovery of possession of the said premises. The present appeal is taken by the defendant from that order.
Mr. John Bartley, for the defendant, rests his appeal on two grounds. In the first place, he says that the notice to quit served was bad, and has not determined the tenancy. In the second place, he says the plaintiff’s affidavit grounding the motion for judgment does not verify the cause of action as required by the rules of the Supreme Court. He throws out the further contention that the action involves a difficult question of law, not fit to be disposed of on a motion for summary judgment.
Mr. Bartley’s learned and subtle argument upon the notice to quit begins at the very beginning, for his first proposition is that, inasmuch as the tenancy is expressed in the agreement to commence “from the 1st day of September, 1920,” and not “on the 1st day of September, 1920,” the 1st day of September is excluded from, and the 2nd day of September would be the first day of, the term, which commenced at midnight of the 1st-2nd September.
I am not prepared to lay down that the word “from” has in this connexion a fixed meaning. I am sure that it is used quite loosely in colloquial English; at any rate as we speak it in this country. I have no doubt that the ordinary non-legal person would usually intend quite the same thing if he said that he had taken a house “for a month from the 1st of June” as if he said that he had taken the house “for the month of June.” In either case he would suppose himself to be entitled to go into possession of the house at any time on the first day of that calendar month, and he would expect to render himself liable to further rent if he were found still in occupation on the 1st day of July. Very many, probably the majority, of short term tenancy agreements are cast in the language of ordinary speech, and must be so read in order to find the true intention of the parties. In that sense I concur in the dictum of Lord Lindley that “‘at,’ ‘on,’ ‘from,’ and ‘on and from’ are for this purpose equivalent expressions”: Sidebotham v. Holland (1). On the other hand, in a technically and precisely drawn instrument, whose language was the formal draftsmanship of the conveyancer, one would naturally and primarily give to the word “from” its precise literal meaning. So, one finds that in the very exact language of the learned editors of Key and Elphinstone’s Precedents a leasehold term is made to commence “from” a particular day, meaning from the expiry of that day. Similarly, in the Encyclopaedia of Forms and Precedents. The learned editors of the latter work have a useful, and on the whole sound, note on this question in their prefatory note to the subject of Landlord and Tenant, vol. vii, p. 81.
The tenancy agreement in the present case is not a highly technical document. It is a proposal by Mr. Bartley’s client, in the language of ordinary speech, to become tenant to Kelly Bros., Ltd., who accepted the proposal, from the 1st day of September, 1920. I read the document as a whole to see whether there is anything that fixes the meaning of the word “from” in the intention of the parties. Mr. Bartley contends that rent may as of course it maybe made payable at any time by agreement. But it supports Mr. Bartley’s contention to look at the clause providing for payment of rent. The rent is not made payable in advance. It is to be paid quarterly, the first payment to be made on the 1st day of December, 1920. If the 1st day of September, 1920, be included in the term, the final payment of rent would be posterior to the lease. One cannot doubt that the quarterly rent days are the final days of the quarters: Acklandv. Lutley (2). I am satisfied that, on the true construction of this particular agreement, the 1st day of September, 1920, was not the first day of the term, but that the term commenced immediately upon the expiry of that day. Mr. Bartley’s first proposition therefore prevails. Accepting, then, Mr. Bartley’s contention that the 2nd September, 1920, was the first day of the term, Mr. Bartley argues that the notice to quit given for the 1st day of September was bad.
I confess that I find this portion of Mr. Bartley’s argument difficult to follow, in view of the authorities. I find a consensus of opinion and recognised authority that a notice to quit given
for the last day of the term is unquestionably good. The doubt of A. L. Smith L.J. in Sidebotham v. Holland (1) was not as to the validity of such a notice, but as to the validity of a notice to quit given for the day after the last day of the term; such a notice as Mr. Bartley says ought to have been served in the present case. A notice to quit contains two elements, namely, notice and demand of possession. The notice, in such a case as the present, and in cases similar to those cited, should expire simultaneously with the expiry of the term, that is to say, at midnight of the last day of the term. Thereupon the reversioner is entitled to possession. It seems to me that the fallacy in Mr. Bartley’s argument is that he segregates the demand of possession, and construes it as requiring delivery of possession at some time during the currency of the last day of the term (which would be wrong), instead of attributing it to the expiry of the notice, that is to say, to the expiry of the last day of the term. In my opinion, this question is now closed against Mr. Bartley, and we cannot reopen it, going back, as he would have us do, to start like pioneers from the early discussions as to what constitutes a reasonable notice to quit.
Mr. Bartley’s second contention is that the plaintiff’s affidavit grounding the motion for judgment is insufficient under the rules of Court, because it does not verify the cause of action, for which purpose, he says, that the affidavit should prove the alleged assignment of the 2nd November, 1922. He relies on Bruen v.Ashmore (2). Now, it is to be observed that Mr. Bartley has not taken any objection to the indorsement on the writ; and I do not wish to be taken as deciding that the averment there as to the alleged assignment is sufficient. For this purpose I take the indorsement, which has not been objected to, as good and sufficient. The rules of Court only require that the cause of action be verified. That may be done in general terms. The rules do not require a detailed verification of the particulars: May v.Chidley (3). The report of Bruen v. Ashmore (2) is not quite satisfactory. The cause of action certainly included an assigned chose in action, and the claim does not appear to have shown a complete assignment. In the present case, not only is it admitted that the defendant paid rent to the plaintiff, but she has filed an affidavit to the effect that she pressed him to accept a larger rent. The alleged assignment is not questioned. It is treated by the defendant as good. This contention, therefore, also fails.
Finally, Mr. Bartley says that the validity of the notice to quit involves a difficult question of law, which should not be disposed of on motion for final judgment. It is true that Mr. Bartley decked it out with his best resources of ingenuity and learning; but, in the view I have taken, the question in this particular case is simple, and covered by established authority.
In my opinion, therefore, this appeal fails, and should be dismissed with costs.
O’CONNOR J. :
I will assume, when dealing with Mr. Bartley’s principal ground of defence, that the tenancy commenced at midnight the intervening point of time between the first and second days of Septemberand that the first day of the term for which the premises were let was the 2nd September. This is his contention, based on the written document which creates the tenancy “from the 1st September,” construing the word “from” in its strictest technical meaning. But, this being so, the last day of each year of the tenancy was the 1st September; and I think that it is well established that a notice to quit served in sufficient time for the last day of the year is a valid notice. Sidebotham v.Holland (1) is an authority which cannot be disregarded. It was the judgment of the Court of Appeal in England, consisting of Lord Halsbury, Lindley L.J., and Smith L.J.; and although on the question there at issue Smith L.J., while not dissenting from the judgment, expressed a personal opinion at variance with his colleagues, yet on the question at issue in the present case he was in complete concurrence with the other members of the Court. In Sidebotham v. Holland (1) the tenancy was held to commence on the 19th May, that being the first day of the tenancy. A notice to quit was served for the 19th May, and the tenant’s contention was that it ought to have been served for the 18th May, the last day of the year, because on the 19th May he entered on a new year of the tenancy. This objection was held to be bad, Lindley L.J. saying: “I have looked at all the decisions which were referred to in the argument, and at many more, and I can find none in which it has been held that a half-year’s notice to quit on the anniversary of the day on which the tenancy commenced is bad. I should be very much surprised to find such a case” (2). No doubt this proposition does not cover Mr. Bartley’s objection, because he says that the first day of his tenancy was the 2nd September, as the term commenced, not on the 1st September, but from the 1st September. He therefore says the notice to quit should expire on the 2nd September, the anniversary. Now, it is clear that although there was not unanimity of opinion on the question whether service of a notice to quit for the anniversary of the commencement of the term was good, there was complete unanimity in holding that a notice for the last day of the yearin that case the 18th Maywould have been good. Lindley L.J. says, at p. 383: “One year from that day” [meaning the 19th], “but including that day, would expire at midnight on the 18th of the next May: Reg. v. St. Mary, Warwick (3); Ackland v. Lutley (4). If, therefore, notice to quit on the 18th were given, it would, no doubt, be good.” In this Smith L.J. concurred.
This exactly covers the present case on the assumption that the 2nd September was the first day of the tenancy, because then the 1st day of September would be the last day of each year of the tenancy. It was for this day that the notice was served. I am of opinion that it was valid. This completely disposes of Mr. Bartley’s point; but I must not be understood as assenting to the proposition that a tenancy from a particular day must necessarily be held to exclude that day and to commence at earliest on the midnight of that day. On this Lindley L.J. makes some important observations. At p. 384 he says: “When considering the validity of a notice to quit given in time and expiring on the anniversary of the commencement of a tenancy, I can find no distinction ever drawn between tenancies commencing ‘at’ a particular time or ‘on’ a particular day and ‘from’ the same day. ‘At,’ ‘on,’ ‘from,’ and ‘on and from’ are for this purpose equivalent expressions. Any distinction between them for such a purpose as this is lar too subtle for practical use.”
I must say for myself that I think nine people out of ten who would take a house for one year from the 1st May would think that they were entitled to get possession on the 1st May, and would be bound to give up possession on the following 1st May, and not entitled to hold possession until midnight. It makes no difference whether the agreement is verbal or written; but of course an agreement could be so particularly framed as to make the tenancy commence at any point of time. The able argument of Mr. Bartley is only one more instance of the technicalities in which the law of notices to quit has been involved, and it is a curious thing that this branch of the law, which had its origin in a desire to do what was reasonable and fair as between landlord and tenant, has given such ample scope for unmeritorious defences.
I agree with the Chief Justice that the cause of action was sufficiently verified.
FITZGIBBON J. :
This is an appeal by the defendant from an order of the late King’s Bench Division of the High Court of Justice, dated the 2nd of May, 1924, whereby liberty was given to the plaintiff to sign final judgment for possession of the lands and premises mentioned in the writ of summons, and for the costs of the suit, with a stay of execution for one month from the date of the order.
The tenancy of the defendant was created by a memorandum of agreement dated August 1st, 1920, whereby the defendant agreed to become tenant to Kelly Brothers, Ltd., of the shop, No. 16 Upper George’s Street, Kingstown, for three years, and as yearly tenant thereafter, from the 1st day of September, 1920, at the annual rent of £60, payable by equal quarterly payments, the first payment to be made upon the 1st day of December, 1920. The agreement contained, in addition to clauses dealing with subletting and repairs, this condition: “Three months’ notice in writing on either side previous to the expiration of the third or any subsequent year to terminate this tenancy.”
The writ of summons, which is specially indorsed, alleges an assignment dated November 2, 1922, from Kelly Brothers, Ltd., to the plaintiff, and is founded upon a notice to quit expiring on the 1st of September, 1923.
Two points have been made upon behalf of the defendant in opposition to the plaintiff’s application for final judgment: first, that the notice to quit was invalid, in that it expired on the 1st of September instead of upon the 2nd of September, which Mr. Bartley contended was the correct date; and secondly, that the plaintiff’s affidavit did not verify the cause of action.
Mr. Bartley contends that as the tenancy was for a term to run “from the 1st day of September,” the 1st day of September was not included in the term, and that the tenancy therefore commenced upon the 2nd day of September. If that be so, he says, the notice to quit should have been for the 2nd of September, because by quitting on the 1st of September at any time before midnight on the night of September 1-2 the tenant would lose a portion of the period for which he paid rent; and he relied upon Page v. More (1) and Sidebotham v. Holland (2). As to the date upon which the tenancy in the present case commenced, I respectfully concur in the judgment of the Chief Justice, and the reasoning upon which it is founded. Assuming that the tenancy in the present case did commence upon September 2, upon what date should the notice to quit expire? The law is stated by Mr. Cole (3) as follows: “Generally speaking, a notice to quit should expire on the last day of some year of the tenancy, and not on the same day on which the tenancy commenced: Poole v. Warren (4). Thus, upon a tenancy from Lady Day, the notice should expire on Lady Day, and not on the 26th of March. A lease for years from the 25th of March excludes that day, and does not expire until the last minute (12 o’clock p.m.) of the 25th day of March in the last year of the term: Ackland v.Lutley (5).” Substitute “September 1” for “Lady Day” and for”the 25th March” in the passage cited, and it applies exactly to the present case, and shows that the notice to quit with which we have to deal was framed in accordance with the law as stated by Mr. Cole. In Sidebotham v. Holland (2), upon which Mr. Bartley relies, a tenancy commenced upon May 19, and the question was whether a notice to quit on May 19 was a good notice. The Court (Halsbury C. and Lindley L.J., dubitante A. L. Smith L.J.) held that it was. We are not concerned to consider whether the doubts were well-founded; but the whole Court was quite unanimous in holding that a notice to quit on the 18th of May would have been good. “One year from that day” [i.e. May the 19th], says Lindley L.J., “but including that day, would expire at midnight of the 18th of the next May: Reg. v. St. Mary, Warwick (1); Ackland v. Lutley (2). If, therefore, notice to quit on the 18th were given, it would no doubt be good. Indeed, it is well settled that a notice ought to expire on the last day of the current year” (3). And with this statement of the law A. L. Smith L.J. agreed (4).
The tenant upon whom such a notice is served can, if he pleases, enjoy the full extent of his term, as he is not bound to quit, and his possession is not determined until midnight of the last day of the term.
The notice to quit in Page v. More (5), though served for the proper day, was bad, because it purported to determine the tenancy at 12 noon on the last day of the term, thus depriving the tenant of his full rights under his lease.
The English text-writers (Messrs. Woodfall, Foà , and others) are all in accord with Mr. Cole upon this question; and Mr. Furlong, representing the Irish tradition, says: “A notice to quit should expire on the last day of some year of the tenancy, and not upon the day upon which the tenancy commenced” (6).”A notice to quit on the proper day, at 12 o’clock at noon, was held to be bad” (6).
Mr. Bartley’s second argument is an attempt to induce the Court to follow a dictum of Lord Lindley, dissented from by A. L. Smith L.J., and, unless read with the limitations suggested by the Chief Justice, contrary to the received opinion of text-writers, in order to antedate the commencement of the tenancy in the present case for the purpose of invalidating the notice to quit. It is a sufficient answer to say that if we were prepared to hold with Lindley L.J. that the expression “from the 1st of September” included that day, the decision (7) upon which Mr. Bartley relies as supporting that construction decides also that a notice to quit on the anniversary of the day on which the tenancy commenced is good.
I prefer, however, to base my decision upon the former ground, that the tenancy in the present case commenced upon September 2, and was duly determined by a notice to quit expiring upon the last day of a year of the tenancy, and to leave the actual decision of Sidebotham v. Holland (8) open for consideration if it should ever come before this Court.
It is unnecessary to say anything about Harvey v. Copeland (9), where the question for decision was what notice, if any, was necessary to determine a weekly tenancy. In the present
case the length of the notice to be given is defined by the lease itself, and no question of custom or reasonableness can arise.
I could add nothing to the judgment of the Chief Justice upon Mr. Bartley’s second point, that the cause of action was not sufficiently verified, and I have only to express my complete agreement with it.
Smith v. Irish Rail
[2002] IEHC 103
JUDGMENT of Mr. Justice Michael Peart delivered on the 9th day of October, 2002.
1. This matter comes for decision to this Court by way of an Appeal from the Order of the Circuit Court made by her Honour Judge Linnane on the 16th day of January 2002, wherein the learned judge dismissed an application made by the applicant for a new lease of premises set out hereunder, under the provisions of Section 21(2) of the Landlord and Tenant (Amendment) Act 1980. The premises in question (hereinafter referred to as “the premises”) are those referred to in an agreement dated the 4th of December 1991 and made between Coras Iompair Eireann (thereinafter called “the Board”) of the first part Iarnród Eireann – Irish Rail (thereinafter called “the Company”) of the second part, and the applicant Noel Smith (thereinafter called “the licencee”) of the third part, as follows:-
“ALL THAT the shop unit on the floor of (but excluding the subsoil thereunder) and within the airspace of the Railway arch (No 1) situate at Tara Street Railway Station in the City of Dublin and which shop unit is shown marked “shop unit” on Plan No (sic) annexed hereto and which Railway arch is shown edged red on the said plan (the said shop unit is hereinafter called “the premises”) TOGETHER WITH permission for the Licencee and all persons authorised by the Licencee to use the staff toilet facilities at the station”.
2. In his notice of application dated the 29th of June 2001 the applicant seeks the following reliefs:-
(a) an order pursuant to Section 21(2) of the Landlord and Tenant (Amendment) Act 1980 determining the right of the applicant to a new tenancy in the premises described in the schedule thereto (being “the premises”) hereinbefore referred to, and in the event of the applicant being found to be entitled to a new tenancy, an order pursuant to Section 23 of the said Act fixing the terms of such a new tenancy;
(b) an order providing for the costs of this application; and
(c) such further or other order as to this honourable Court shall seem fit and appropriate.
3. In his said application, the applicant indicated that he would rely on the following matters in support of the application:
(1) the premises are a tenement within the meaning of the said Act of 1980 and the applicant is the tenant and the respondent is the landlord of same within the meaning of the said Act.
(2) the premises are held by the applicant under a contract of tenancy dated the 4th day of December 1991 and made between by the respondent of the first part, Iarnród Eireann – Irish Rail of the second part and the applicant of the third part for a term of ten years commencing on the 1st day of July 1991 which said term will expire on the 30th day of June 2001.
(3) on the 28th day of May 2001 the applicant served a notice of intention to claim relief upon the respondent pursuant to Section 20 of the said Act of 1980.
(4) the applicant and respondent have been unable to agree as to the entitlement of the applicant to a new tenancy or as to the terms of such tenancy.
4. Against the said order dismissing the application in the Circuit Court, the applicant filed and served a Notice of Appeal dated the 18th day of January 2002. The respondent Coras Iompair Eireann served Notice of Cross Appeal dated the 22nd day of January 2002 against so much of the said order as fails to award costs to the said respondent.
5. The operative part of the said agreement recites at clause 1 thereof that the board and the company “grant the licencee permission during the continuance of this licence to use the premises for the sale of the articles or items hereinafter described in clause 12(3) hereof”. Those items do not require to be set out in detail, but are all items one would expect to find in a newsagents shop at a railway station such as newspapers, magazines, sweets, confectionary, sandwiches, etc. The applicant carries on this business under the name “Tara Nova”.
6. Clause 2 of the agreement states that the licence shall commence on the 1st day of July 1991 and shall be for a period of 10 years from that date subject to earlier suspension or termination or revocation as thereinafter provided. Clause 6 contains provisions as to the annual licence fee payable during the term of the licence. Other clauses contain provisions one would expect to find in an agreement of this kind, or in some cases in a lease or tenancy agreement and some of these will be referred to later. However clause 10 is important and states as follows:-
“Nothing in this licence shall be construed as giving the licencee any tenancy in or right to possession of or any right or easement over or with respect to any part of the property of the Board or the property of the Company. In particular and without prejudice to the generality of the foregoing it is hereby declared that it is not the intention of either the board or the company on the one part or the licencee on the other part in relation to the premises or the said Railway arch or any part thereof to create between them the relationship of landlord and tenant or to confer such rights upon the licencee as would amount in law to a tenancy (including a tenancy at will) or to create any estate or proprietary interest for the licencee therein.?
7. Clause 11 states:-
The arrangement hereby evidenced is made by the Board and the Company for their respective temporary convenience which is that the Board or the Company while retaining the ownership possession occupation control and management of the said Railway arch (which is an integral part of the station and the railway undertaking and necessarily and essentially required in connection with the operation thereof) should use the airspace of the said railway arch to good purpose and not allow same to remain idle without profit or return”
8. It is clear from the licence agreement itself, and indeed from the evidence given by the applicant himself and on behalf of the Respondent that the intention of the parties was that a licence would be granted for a period of 10 years at an annual licence fee. Of this there can be no doubt whatsoever. However, Mr. Alex Owens SC for the applicant submits that, in spite of having the outward appearance of a bare licence and in spite of the uncontroverted evidence of the parties’ intentions at the time the agreement was entered into, the nature of the agreement is such as to grant a tenancy for the period thereof under the principles set forth in the English case of Street -v- Mountford (1985) 1AC 809 which held in the circumstances of that case that on its true construction, and notwithstanding that it was described as “licence”, the agreement in question had the effect of creating a tenancy. He submits that this is a legal consequence not dependant upon the intention of the parties at the time.
9. Mr. Maurice Gaffney SC for the Respondent submits to the contrary. He submits that the intention of the parties is clear and unambiguous from the pre-contractual correspondence and negotiations leading to the agreement, the wording of the agreement itself and the subsequent conduct of the applicant. With regard to the latter, he refers particularly to the failure of the applicant to take up an offer made on behalf of the respondent by letter dated the 18th of August 1995, wherein it was stated that it was now possible to grant a lease of a Railway Arch, which had not been possible in 1991 when the licence was granted. Mr. Gaffney seeks to distinguish the case of Street -v- Mountford on the basis that in the instant case the intention of the parties was and is clear, and also on the basis that Street -v- Mountford dealt with the letting of residential units to people of limited means.
10. What I have to decide is, in a nutshell, whether the licence agreement dated the 4th of December 1991 already referred to creates a relationship of landlord and tenant, or merely that of licencor/licencee. If the latter then no rights to a new tenancy can arise. Before dealing with the legal issues involved I will summarise the evidence given by the applicant himself, and evidence given on behalf of the respondent by Mr. Ross Shorten who was employed at the time of the agreement by Lisneys on behalf of CIE, Mr. James Gahan the Group Property Manager at the time in CIE and Mr. Niall Grogan who succeeded Mr. Gahan as Group Property Manager within CIE. Having done so I will then consider in more detail the relevant provisions of the said Agreement.
The Evidence of Noel Smith
11. Mr. Smith gave evidence that in 1991 he was in his early 20’s and was already experienced in the newsagency business having had a premises in Clondalkin which he rented under a lease. Around 1991 he became aware that the Respondent was seeking applications in relation to the letting on a ten year licence of circa 750 square feet of shop premises at the Tara Street Dart Station. He went to see the property which was simply a shell unit consisting of a space underneath one of the arches under the railway line at Tara Street. He said that there was a pub about two or three arches down from that premises. When he saw the premises he was interested in, there were simply bare walls, bare brick and bare concrete floor when he looked at it. There was a water pipe which he would have to connect into and he would also need to connect into the ESB and put in a separate electric supply. He gave evidence that he put a proposal to CIE by completing an application form to take the premises on a 10 year licence. He said that he put a proposal to CIE offering £75,000 key money and a rent of £20,000 per annum or 6% of turnover exclusive of VAT. In due course Mr. Ross Shorten of Lisneys told him that he was successful with his application. He instructed his solicitors Messrs PJ O’Driscoll & Sons to communicate with CIE’s solicitor with regard to the legal documentation. He gave evidence that CIE refused to give him a lease of the premises. What was on offer was a licence and he accepted that. His evidence was that when he took possession of the premises, he put in a pine timber ceiling, fixed various leaks coming down from the top of the arch, he raised the floor level by about 2 feet and tiled it, and put in security grills. He also fitted out the premises as a newsagents shop and stored all his stock on the premises. He was not apparently required to give a set of keys to CIE. He gave evidence that no cleaning services were supplied to the premises by CIE and that CIE had never had to come into the premises for the purpose of repair. CIE were not to be responsible for any break-ins. His opening hours were 7am to 10pm. His evidence was that he took the licence for 10 years under the terms of the licence agreement and in due course at the end of the period he received a letter from CIE requesting that he vacate the premises. Apparently after that CIE made him aware of their development plans for the station. There was some discussion as to what was to happen. He was also offered a unit at Connolly Station in substitution. He said that he had enjoyed a good relationship with CIE and that they knew that he had invested a lot of money in the business and the premises. When cross examined by Mr. Gaffney for the respondent, Mr. Smith agreed that in 1991 he was already experienced in the business having operated a similar type of business in the Clondalkin area. He agreed that Messrs PJ O’Driscoll & Sons were his solicitors at all material times. He agreed that he had seen the advertisement put out by Lisneys and that he had been informed that Lisneys would take applications in respect of the premises. Mr. Gaffney then referred Mr. Smith to some correspondence contained in a book of correspondence handed to the Court. Mr. Gaffney brought Mr. Smith through the correspondence and in particular to the references within those documents at all times to a licence agreement. In particular Mr. Gaffney referred him to correspondence that was exchanged between Messrs PJ O’Driscoll & Sons and the solicitors office for CIE when certain terms were sought to be negotiated into the agreement. In particular that the licence agreement would have to be with Mr. Smith personally and not with any company on his behalf and that the licence would terminate on Mr. Smith’s death, subject to a rebate of £7,500 for each full year of the licenced period then unexpired. It had also been sought to include a clause guaranteeing quiet possession but the solicitor for CIE responded at clause 12 of their letter dated the 16th of July 1991 that “a clause guaranteeing quiet possession is not appropriate for a licence as the agreement herein is in fact just a licence”. In fairness to Mr. Smith, he accepted that at all times it was a licence agreement and not a lease or a tenancy that he was taking. Mr. Gaffney referred in his cross examination to clause 8 of the licence agreement which states “this licence is not transferable and the licencee shall not purport to transfer, let or in anyway dispose of any of the benefits or privileges granted by this licence or any interest therein”. Mr. Gaffney also referred Mr. Smith to clause 12(31) under which Mr. Smith agreed “at the request of the board or the company to remove temporarily at the licencee’s own expense …… any building, structure or other work (or any part thereof) which may be at any time on the premises for the purpose of enabling the Board or the Company to inspect maintain or carry out other works to the said railway arch (No 1) or the other railway arches and to the railway formation generally and to keep such part so removed for as long as the board’s or the company’s engineer may require”. He also referred to clause 10 of the agreement which I have already quoted and which, briefly stated, acknowledges that nothing in the licence shall be construed as giving the licencee any tenancy in or any right to possession of the respondent’s property, and in particular that it is not the intention of either the board or the company or the licencee, in relation to the premises or the said railway arch or any part thereof, to create between them the relationship of landlord and tenant or to create such rights upon the licencee as would amount in law to a tenancy, or to create any estate or proprietary interest for the licencee therein. Mr. Smith acknowledged that these clauses were in the agreement and took no issue with same. Mr. Smith was asked by Mr. Gaffney whether he had ever had any discussion with CIE on the basis that a licence was not what he had intended. Mr. Smith indicated that he had mentioned at some point that O’Reilly’s Pub had got a lease, and that if he (Mr. Smith) were to agree to a rent increase, that CIE might be in a position to give him a lease also. Mr. Gaffney suggested that in 1995 Mr. Gahan of CIE had encouraged Mr. Smith to surrender his licence and enter into a lease and had indicated that Mr. Smith would be in a more advantageous position if he got a lease, but that it would be necessary to surrender first what he had namely a licence agreement. A copy letter dated the 18th of August 1995 from Mr. Gahan to Mr. Smith was handed into Court in this regard. It would appear that Mr. Smith did not avail of the offer to substitute his existing licence for the proposed lease.
12. Mr. Gaffney in his cross examination also referred to the fact that in 1992 CIE had cause to rebuke Mr. Smith because of rubbish being left on the station concourse and also in relation to the parking of cars. Mr. Smith accepted that this might have happened but that it was always sorted out when it was brought to his attention. Mr. Smith also accepted in answer to Mr. Gaffney that he was limited by the terms of the licence agreement as to the times he could open the shop and referred to clause 12(32) of the agreement in that regard which contains certain provisions regarding opening hours. Mr. Gaffney suggested that when he was asked to vacate the premises at the expiry of the licence agreement, Mr. Smith’s response was that he didn’t want to move and that in spite of everything in the licence agreement, that the effect of the document was to grant him the status of a lessee and not a licencee. Mr. Smith stated that he went to his solicitor and got legal advice in that regard. At the conclusion of his cross examination, Mr. Smith accepted that the licence agreement was to him personally and only to him, that clause 10 clearly indicated that there was no intention to confer any tenancy rights, that his solicitor had got the best terms possible at the time, and that being a young man in his early 20’s he had taken the risks attached to a licence agreement, namely that at the end of the 10 years he would not get a further licence. Mr. Smith agreed that all of that was the case and that he was happy to sign the document on offer.
13. The first witness called by the respondent was Mr. Ross Shorten of Lisneys. He was responsible for preparing the brochures and posters and advertisements in respect of the advertising of the premises. He said that he had no discussions with any party in relation to this premises other than on the basis of the granting of a licence and not a lease. In cross examination by Mr. Owens, Mr. Shorten agreed that the distinction between a lease and a licence was a legal matter. He also said that he had been asked by all enquirers why there was only a 10 year licence on offer. His response to all was that CIE were only in a position to offer a licence because the railway line was of strategic importance for the national railway operation. He said in evidence that CIE did not enter into leases. The next witness called by the respondent was Mr. James Gahan, the Group Property Manager at the relevant time. Part of his responsibility was the Tara Nova shop and to make sure that the business carried on was the business permitted by the licence agreement. He agreed that Mr. Smith was a very good trader/operator, that he ran a very good business and gave a good service to the public. He gave evidence that a licence agreement was the only agreement on offer. He said that subsequent to the agreement he had met Mr. Smith on a number of occasions and had complained about rubbish on the station concourse and the parking problems already referred to but that these were dealt with when they brought to Mr. Smith’s attention. He also gave evidence that in or around 1994/1995 the Urban Renewal Scheme had come into operation in Dublin. He said that he had discussions with Mr. Smith about a lease since the property was in one of the designated areas under the Urban Renewal Scheme but that if a tenant was to benefit from the scheme he would require a lease. He had some sympathy with Mr. Smith about not having a lease. Mr. Smith had indicated that he was anxious to improve the status of his occupation and have a lease of the premises rather than a licence. Mr. Gahan indicated that if he were to surrender his existing licence he might be able to recommend him to CIE for a lease. However he gave evidence that Mr. Smith had not reverted to him about that following his letter to Mr. Smith of the 18th of August 1995 already referred to. When cross examined by Mr. Owens, Mr. Gahan stated that part of the driving force of this licence agreement was that the premises were in the middle of the station concourse. He stated that Irish Rail needed an arrangement that was simply a licence arrangement and not a lease. He further stated that CIE had to make sure of their position in that regard, as part of good estate management and also because of safety issues since the premises were under a solid railway arch. He indicated that there may be circumstances in which CIE might have to move or extend the arch in the future and that CIE did not want to be tied into a lease situation. He stated that the licence agreement was drafted with this in mind. He accepted, when asked by Mr. Owens, that in a lease situation, compensation might in some circumstances be required to be paid to the tenant.
14. Some further evidence was given on behalf of the respondent by Mr. Niall Grogan who apparently succeeded Mr.Gahan as the CIE Property Manager. He confirmed what Mr. Gahan had said concerning CIE having a problem about leasing a premises. He said that CIE could only lease a premises, as opposed to grant a licence in respect of it, if the premises was “surplus to CIE’s requirements”. He said that this is the specific reason in this case why a licence was granted in 1991. He said that some three or four years later a different decision could have been made. He said that in 1991 the board of CIE had decided that only a licence would be granted. It was not a decision he personally made. He said that CIE were trying to get value out of C.I.E.’s assets, and trying to get a good return.
15. He said that the option to grant a lease in this case was not made available by the board of C.I.E.
16. I have set out the evidence in some detail from my notes for the purpose of demonstrating that there is no dispute whatsoever on the facts that the agreement entered into between the parties was known to be, and accepted by the applicant to be, a licence agreement and that it was not intended that any tenancy rights should arise. It is clear from the evidence and from the documents produced in evidence that this is the case. In fact there is no dispute on the facts. What has to be decided is, in the main, a legal issue.
THE APPLICANT’S LEGAL SUBMISSIONS
17. Mr. Owens submitted that the question to be decided was whether the premises comprising the space beneath the railway arch, constituted a “a tenement” for the purpose of The Landlord and Tenant (Amendment) Act, 1980, and that to decide this question the Court needed to decide whether the agreement dated the 4th of December, 1991 constituted a lease or other contract of tenancy, express or implied or arising by Statute.
18. He submitted that although the agreement was described as a licence throughout and indeed the parties thereto were described as licencor and licencee respectively therein, that did not determine the matter, and he referred to Irish Shell and P.B. Limited v. John Costello Limited (1981) I.L.R.M. 66, where Griffin J. stated that:
“Although a document may be described as a licence, it does not necessarily follow that, merely on that account, it is to be regarded as amounting only to a licence at law”.
19. Mr. Owens submitted that it was necessary to look at the transaction as a whole in order to draw a legal conclusion from it, and that the parties’ own intentions in respect of the legal or other consequences of arranging their relationship in a particular way cannot affect the construction of the agreement they make. He submitted that it was a matter for the Court to determine in this case, in spite of the existence of Clause 10 of the agreement, whether taking the transaction as a whole, it should be classified as a tenancy or merely a licence.
20. Mr. Owens referred also to Professor Wylie’s Landlord and Tenant Law (2nd Edition), paragraphs 2.26 to 2.38, wherein Professor Wylie discusses the many uncertainties and difficulties which the courts in this Country have encountered when attempting to determine whether a tenancy or a licence has been created, and he refers to paragraph 2.34 of this work, where Professor Wylie suggests that it is likely that Irish Courts would follow the decision of the House of Lords in Street v. Mountford (1985), 1AC 809, to which I shall return in more detail later in this Judgment.
21. It was further submitted that Irish Shell and. P.B. Limited v. John Costello is authority for the proposition that where an agreement confers an entitlement to exclusive possession and provides for a payment which is capable of constituting rent, and contains other provisions which would be inconsistent with a licence, the agreement will be a tenancy agreement and not a licence agreement, even though it is labelled as the latter.
22. Mr. Owens then referred to specific provisions in the agreement which he submitted were indicative of a tenancy being created. He pointed to the fact that under the terms of the agreement, the applicant was entitled to enjoy exclusive possession of the premises the subject of the agreement. For example, he submitted, the applicant could not under the terms of the agreement have been required to relocate to any other part of the Respondent’s property or to share the premises the subject of the agreement with any other party. This submission was made in the context of the decision of Morris J. (as he then was) in Governors of the National Maternity Hospital Dublin -v- Ann McGouran (1994) 1 I.L.R.M. 521. In that case, the agreement the subject of the proceedings had contained a clause which stated:
The licence hereby granted shall be granted on a non-exclusive basis and the licencees shall be entitled to use the premises in common with the licencor and her duly authorised representatives and any persons deriving title from her for the purposes of the licencees business of running a coffee shop in the hospital.”
23. There were other clauses also in that case consistent with the granting of a licence rather than a tenancy, and Mr. Owens seeks to distinguish the McGouran case from the present case on the basis that in the present case the provisions of the agreement indicate exclusive possession.
24. He also submitted that the term of the agreement was a fixed term of ten years subject only to the provisions for early suspension, termination or rectification to be found primarily in Clause 12(41) of the agreement. Under that clause, these powers are only exercisable
“if the board or the company is at any time of the opinion that the continuance of this licence is incompatible with or would prevent the exercise or discharge by the board or the company of its statutory powers or duties in relation to the operation of the station or the railway undertaking.”
25. He submitted that this restriction on the exercise of those powers was inconsistent with the granting of a mere licence. He submitted also that the obligation on the Applicant to pay what was described in the agreement as “an annual licence fee” is clearly capable of interpretation as an obligation to make a payment constituting a rent. He also drew attention to the fact that under clause 12(30) the agreement provided for the reservation of easements and wayleaves over the premises granted to the applicant and that clearly this reservation would not only be unnecessary in the case of a licence, but would be wholly inappropriate if the agreement created a mere licence. He also drew attention to clause 29 which provided that the applicant should not be entitled to any right of light or air and submitted that such a right would be an easement and that this could only be acquired if an interest was held in the land rather than a mere licence. He drew attention to clause 12(3) which contained a restrictive user clause, clause 12(7) prohibiting the premises from being used as a place for lodging, dwelling or sleeping, clause 12(9) which prohibited the Applicant from storing explosive or inflammable substances on the premises, clause 12(12) which prohibited the Applicant from permitting any sale or auction to take place on the premises, clause 12(13) which prohibited the Applicant from erecting advertising signs on the premises, clause 12 (18) which prohibited the Applicant from making any additions or alterations without the written consent of the board or the company. He drew attention also to clause 12(19) and clause 12(28) both of which required the applicant to permit the respondents’ servants or agents to enter the premises to inspect same or carry out works to same. It was submitted that if this agreement was in truth a licence agreement, none of these clauses were appropriate or necessary. In support of this submission, Mr. Owens referred to a passage of the Judgment of Lord Templeman in Street v. Mountford (supra) at page 818 where he states:
“If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant.”
26. Having referred the Court to these and other specific provisions in the agreement, and which he indicated were consistent with the agreement creating a tenancy rather than a licence, Mr. Owens submitted that clause 10 (already quoted in full) and the fact that the agreement referred to the terms “licencor, licencee, licence and licence fee” supported the respondent’s contention that the document was a bare licence and not a tenancy. He submitted that clause 10 purports to express a conclusion of law as to the consequence of the contract between the parties and does not create inter-party obligations. He submitted that it was an attempt to contract out of the provisions of the 1980 Act and that accordingly it was void pursuant to Section 85 of that Act which states:
“So much of any contract, whether made before or after the commencement of this Act, as provides that any provision of this Act shall not apply in relation to a person or that an application of such provision shall be varied, modified or restricted in any way in relation to a person, shall be void.”
27. It was submitted also that clause 8 of the agreement which states that the licence is not transferable and that the licencee shall not purport to transfer, let or in any way dispose of any of the benefits or privileges granted by the licence or any interest therein is clearly a covenant against alienation and is thereby caught by Section 66 of the 1980 Act which states:
“A covenant in a lease (whether made before or after the commencement of this Act) of a tenement absolutely prohibiting or restricting the alienation of a tenement, either generally or in any particular manner, shall have effect as if it were a covenant prohibiting or restricting such alienation without the licence or consent of the lessor.”
28. In conclusion, Mr. Owens submitted that when the applicant negotiated and accepted the agreement which was on offer from the respondent, he needed exclusive possession and security of tenure, and that in reality what he needed was a lease. He submitted that the respondent had no difficulty with the applicant’s requirements but did not wish that the applicant should acquire any statutory rights. He submitted also that if the applicant had been offered simply what might normally be contained in a mere licence, that the applicant would not have accepted same. The result, he submitted, was that all the conditions one might normally find in a lease were inserted into a document which was labelled “a licence” and in order to try and secure that position, inserted clause 10 whereby both parties purported to agree that what was being granted was a licence. In spite of this clause he submitted that on an objective analysis of what was agreed between the parties, the agreement created a tenancy.
THE RESPONDENT’S LEGAL SUBMISSIONS
29. Mr. Gaffney referred in his submission to what the parties stated as their intention, namely the creation of a licence and referred to the correspondence which took place between the parties and their respective lawyers, and submitted that if in the light of that intention and correspondence, the agreement had proceeded to state that the applicant should hold the premises as a tenant for the term of years granted, that this would be an impossible contradiction on the face of the document. It would be impossible to reconcile the two factors. He said that it was this that distinguished the present case from Street v. Mountford. He added that Lord Templeman, in his Judgment in Street v. Mountford was dealing with a case involving a residence being let to a poor person who may or may not had legal advice, and that Lord Templeman had found that the agreement in question was a sham for the purposes of avoiding the effect of the Rent Acts. He stated that the applicant, Mr. Smith was an experienced businessman who had been well advised by the solicitor whom he had consulted and that he knew exactly what he was getting, namely a licence. Mr. Gaffney stated that the intention of the parties in this case was completely clear and undisputed. He submitted that there was nothing illegal about entering into a licence agreement and that the law of contract is there to ensure that agreements are kept and not broken. He emphasised the fact that the applicant was clearly aware that what he was getting was merely a licence by reference to the fact that in August, 1995, the applicant had received a letter from the respondent offering to exchange the licence arrangement with a lease arrangement on certain conditions, but the applicant had taken no steps subsequent to receiving that letter. In his written submissions, Mr. Gaffney referred to the fact that the 1980 Act clearly envisages that parties can enter into a relationship that is not governed by either a lease or tenancy agreement, and that clearly therefore a licence agreement is a permitted type of relationship. He stated that there was nothing improper happening where parties constructed their arrangements in such a way as to ensure that the 1980 Act would not apply, and in this regard he referred to Gatien Motor Company Limited v. Continental Oil Company of Ireland Limited (1979) I.R. 406 where the Supreme Court held that there were no grounds for implying the creation of a tenancy contrary to the express terms of a Caretaker’s Agreement, notwithstanding the use of certain words in that agreement which might indicate the contrary.
30. Mr. Gaffney also drew attention to the particular situation faced by railway companies in relation to managing premises under their control. He pointed out that a railway company, in conducting its affairs, had to be mindful of the operational needs of the railway, and the fact that the land in question may originally have been acquired by Special Act under compulsory powers which provided that land not required for the railway should revert to the previous owner. He stated that the premises the subject of this Agreement are affected by both of these factors since the arch in question is under a railway line and that trains pass overhead. He pointed to the fact that the lands in question in this case were acquired for the City of Dublin Junction Railway under an Act of 1884. That act is in fact the Dublin, Wicklow and Wexford Railway (City of Dublin Junction Railways) Act, 1884 (47 and 48 Vict. C. clxx11). I shall return to that act in due course as it has some significance later. Mr. Gaffney submitted that under this act, no letting of land which is acquired by Special Act can validly be made by a railway company except for temporary convenience. He submitted that accordingly, it would be ultra vires the powers of the respondent to grant a lease or tenancy in respect of any of the respondents property other than property that was superfluous to their requirements as a railway operator. He submitted that this was the reasoning behind the granting of a licence only to the applicant, and that to do otherwise would have been an ultra vires Act. This is a point to which I shall return later because it is of significance in the context of the judgment in Street v. Mountford .
31. In relation to the applicant’s submission that under the terms of the agreement he had “exclusive occupation” , Mr. Gaffney referred to Pierce and Mee on Land Law (2nd Edition) wherein it is stated that
” it is now accepted that a contractual licence can confer a licence to exclusive possession, although a tenant cannot be a tenant unless he has the right to exclusive possession ……where exclusive possession is given then a lease or a licence may be created”.
32. He submitted that the existence of a right to exclusive possession did not therefore of itself determine the question. He submitted that in order to determine whether the agreement is a licence or a tenancy, three factors need to be considered, namely, the construction of the agreement, the contention of the parties and the significance of exclusive possession.
33. In relation to the construction of the agreement, Mr. Gaffney referred to the judgment of Morris J. (as he then was) in Governors of the National Maternity Hospital Dublin v. Anne McGouran and to the judgment in Irish Shell and P.B. Limited v. John Costello Limited where it was found to be necessary to scrutinise the clauses and covenants contained in the relevant agreement in order to elicit the true legal status of the agreement. In identifying clauses in the agreement consistent with it being a licence agreement, Mr. Gaffney referred to clauses 7, 9, 10, 13, 14, 15 and 16. In identifying clauses or covenants that are characteristic of either a licence agreement or a tenancy agreement, Mr.Gaffney referred to clauses 1-6 and clauses 8 and 17. In identifying clauses or covenants that are characteristic only of a tenancy agreement, Mr Gaffney referred to clause 11. He also drew attention to the numerous sub-clauses to clause 12 of the Agreement identifying some of those sub clauses as being consistent only with a licence agreement, others consistent with the agreement being either a licence agreement or a tenancy agreement, and yet others consistent only with a tenancy agreement.
34. Mr. Gaffney’s written submissions deal in some detail with the reasoning of the judgment of Morris J. (as he then was) in the McGouran case, pointing out in particular that the agreement in that case contained a clause 3 which stated:
“The provisions of this agreement are intended to constitute a licence only. Possession of the premises shall be retained for the hospital subject to the rights granted and to the provisions of this agreement and nothing in this agreement is intended to confer any tenancy on the licencee.”
35. Mr. Gaffney pointed to the obvious similarity between this clause and Clause 10 of the agreement in the instant case. He referred particularly to clause 11 of the instant agreement which states that:
“The arrangement hereby evidenced is made by the board and the company for their respective contemporary convenience which is that the board or the company while retaining the ownership, possession, occupation control and management of the said railway arch (which is an integral part of the station and the railway undertaking and necessarily and essentially required in connection with the operation thereof) should use the air space of the said railway arch to good purpose and not allow same to remain idle without profit or return.”
36. Mr. Gaffney referred to a number of clauses to be found in the agreement which would be also likely to be found in a tenancy agreement. He submits however that the fact that those clauses exist cannot turn the agreement into something that was clearly never intended, when they are read in conjunction with many other clauses which he submits are consistent with a licence agreement.
37. In relation to the intention of the parties, Mr. Gaffney urges that clause 10, already quoted, is beyond argument and expresses in the clearest possible terms what the intention of the parties was and again reiterates that Morris J. in the McGouran case was faced with an almost identical clause and of which the learned Judge commented “nothing could be clearer”. In relation to the significance of exclusive possession, Mr. Gaffney again referred to the fact that exclusive possession is an essential requirement of a tenancy agreement, but submitted that the fact that exclusive possession might be granted by a licence, did not of itself convert the licence into a tenancy agreement. In this regard, he referred to the Judgment of Barron J. in Texaco (Ireland) Limited v. Murphy (unreported), 11th July, 1991. Mr. Gaffney submitted that in deciding the significance of “exclusive possession” it was necessary to look also at the needs of the railway, the completely frank and open course of dealing between the parties in 1991 prior to the grant of the licence and also to the fact that the applicant, a business man, was fully and independently legally advised about certain terms within the agreement whereby the applicant could recoup a balance of his investment should the arrangement come to an end before the expiry of the ten year term, and he also referred again to the fact that in 1995 the applicant was offered by the respondent an opportunity to alter the nature of his occupation to that of a lease but that he chose not to avail of that opportunity.
38. In conclusion Mr. Gaffney submitted that the first decision of the respondent was to grant a licence and not a lease. The applicant accepted that decision and took a licence. Nothing in the clauses of the agreement altered that intention of the parties and that unless those clauses are inconsistent with the intention of the parties, they should not be interpreted as granting anything other than a licence. He submitted that that the fact that some clauses in the licence agreement might also be found in a tenancy agreement does not alter that position. He submitted that what distinguished the instant case from the case of Street v. Mountford was that in the instant case the intention of the parties was completely clear as evidenced by Clause 10 of the agreement.
CONCLUSION
39. As I have already stated, the facts in this case are clear and not in dispute in any material way. The question to be decided is whether the agreement created a tenancy or simply a licence. I am satisfied that clause 10 of the agreement, and the negotiations and correspondence which preceded it do not determine that issue. The entire document must be looked at, as stated in Irish Shell and P.B. Limited v. John Costello Limited (1981) I.L.R.M. 66 and Governors of the National of Maternity Hospital v. Anne McGouran (1994) 1 I.L.R.M. 521, in order to see what the legal consequences of the document may be. This is not simply a question which arises solely from the expressed intention of the parties. It is in essence a matter of law. For a tenancy to exist, there is no doubt that exclusive possession of the premises is a pre-requisite, but, as Mr. Gaffney pointed out in his submissions, the fact that there is exclusive possession does not preclude the agreement from being a licence. But in this case, it is the fact of exclusive possession which removes the case from the ambit of the McGouran case, which found on the facts of that case that a mere licence existed. Of critical importance in that case was the existence of a clause 2(b) in the agreement between those parties, which specifically provided that the licence was granted on “a non-exclusive basis” , and another clause which entitled the plaintiff to substitute for the premises in question, any other premises within the hospital which were reasonable equivalent. This distinction is important because of the significance attached by Mr. Gaffney to the finding in that case as to the terms of clause 3 of that agreement as to the expressed intention of the parties thereto that no tenancy should be created.
40. In the present case I am satisfied that the applicant was granted exclusive possession. Clauses such as 12(7), 12(9), 12(19), 12(30) and 12(31) do not reduce the applicant’s status of possession from that of “exclusive possession”. But I accept of course that there can be exclusive possession within a licence agreement as well as a tenancy agreement or lease. Other factors must also be looked at.
41. Other features of the agreement such as the payment of “a licence fee” and being for a fixed period of ten years, and the use of expressions such as licencor, licencee, licence fee and licence, do not of themselves confine the agreement to being a licence. For example, the fact that the annual payment is referred to as “a licence fee” does not mean that it cannot be regarded as a rent, simply because it bears a different label.
42. The applicant gave evidence that during the period of the agreement, he was left alone by C.I.E. apart from the occasions when he was called upon to desist from leaving rubbish on the station concourse and in relation to the parking of cars. No cleaning or other services were provided by C.I.E., C.I.E. never came in to the premises to inspect or carry out repairs, neither did they have a key to the premises. The applicant’s stock for his shop was stored at all times within the premises. In all respects this was a self-contained business, save that the applicant and his staff were able to avail of toilet facilities within the station complex.
43. There is no doubt that in 1991 the applicant invested heavily in this business venture. He paid £75,000 by way of premium to the Respondent. He expended, according to his evidence, approximately £25,000 on fitting out the premises, and committed himself to a substantial annual sum (to use a neutral term). There is also no doubt, however, that while he clearly would have preferred a lease of the premises, he accepted what was on offer from C.I.E., namely the licence agreement. He was a clearly an energetic and motivated young man who was prepared to take a risk that at the end of ten years he might have to vacate the premises and close the business.
44. However, I am satisfied that the agreement represents far more than “personal privilege” referred to by Mr. Gaffney in order to bring this case within the ratio of the decisions in Irish Shell and P.B. Limited v. John Costello, and the decision in Shell-Mex v. Manchester Garages Limited (1971) 1 W.L.R.612.
45. I am satisfied that there is nothing within the document itself, apart from Clause 10 and the use of certain words such as licence agreement, licencor, licencee and licence fee, that can distinguish the document from a tenancy agreement. If the Court had been handed the same document, but excluding clause 10 and replacing the licence labels by tenancy labels, it would bear a significant resemblance to any normal tenancy agreement.
46. The Courts have on a number of occasions being called upon to decide whether the terms of agreement between parties constitute a tenancy or a licenced occupier. I have been referred to a number of these cases such as Gatien Motor Company Limited v. Continental Oil Company of Ireland Limited (1979) I.R. 406; Irish Shell and P.B. Limited v. John Costello Limited (1981) I.L.R.M. 66; Texaco (Ireland Limited v. Mark Murphy (unreported), Barron J. 17th July, 1991; and Governors of the National Maternity Hospital v. Anne McGouran (1994) 1 I.L.R.M. 521.
47. While none of these cases is on all fours with the present case, they nevertheless confirm, if that were needed, that the occupation of a premises can constitute a tenancy even though one or even both of the parties were aware that what they were signing was a licence agreement. There is nothing in any of these cases which suggests that a view of the matter contrary to the Judgment of Lord Templeman in Street v. Mountford (1985) 1A.C. 809 would be taken. I refer again to Professor Wylie’s comment already referred to that it was likely that the Irish Courts would approve the approach shown in Street v. Mountford. Curiously there is no reference in Texaco v. Murphy or the McGouran case to that Judgment in Street v. Mountford, although the latter case was decided in 1985.
48. I propose dealing with the case of Street v. Mountford in some detail because of its significance for my conclusions. As appears from the judgment of Lord Templeman commencing at page 814, the facts of the case were simple enough. By an agreement dated the 7th of March, 1983, Mr. Street granted Mrs. Mountford the right to occupy furnished rooms at St. Clement’s Gardens from the 7th of March 1983 at a rent of £37 per week subject to termination by fourteen days written notice and subject to certain conditions set forth in the agreement. As he states, the question raised in the appeal is whether the agreement created a tenancy or a licence. At page 816 he states:
“There is no doubt that the traditional distinction between a tenancy and a licence of land lay in the grant of land for a term at a rent with exclusive possession.”
49. He goes on to give examples of certain instances where possession was not to be regarded as exclusive possession such as in the case of Taylor v. Cauldwell (1863) 3 B & S 826 where the Defendant agreed to let the plaintiff have the use of the Surrey Gardens and Music Hall on four specified days giving a series of four concerts and day and night fetes at the gardens and hall on those days in exchange for a payment of £100 per day. This was held not to be a right to exclusive possession but merely a right to use the land for limited purposes and was therefore a licence. He also referred to the status of a lodger in residential accommodation as opposed to a tenant. At page 818 he states:
“The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own”.
50. He goes on:
“If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasis the fact that the grantee is entitled to exclusive possession and is a tenant. In the present case it is conceded that Mrs. Mountford is entitled to exclusive possession and is not a lodger. Mr. Street provided neither attendance nor services and only reserved the limited rights of inspection and maintenance and the like set forth in Clause 3 of the agreement. On the traditional view of the matter, Mr. Mountford not being a lodger must be a tenant”.
51. At page 819 Lord Templeman states:
“In the present case the agreement dated the 7th of March, 1983 professed an intention by both parties to create a licence and their belief that they had in fact created a licence. It was submitted on behalf of Mr. Street that the Court cannot in these circumstances decide that the agreement created a tenancy without interfering with the freedom of contract enjoyed by both parties. My Lords, Mr. Street enjoyed freedom to offer Mrs. Mountford the right to occupy the rooms comprised in the agreement on such lawful terms as Mr. Street pleased. Mrs. Mountford enjoyed freedom to negotiate with Mr. Street to obtain different terms. Both parties enjoyed freedom to contract or not to contract and both parties exercised that freedom by contracting on the terms set forth in the written agreement and on no other terms. But the consequences in law of the agreement, once concluded can only be determined by consideration of the effect of the agreement. If the agreement satisfied all of the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the affect of the agreement by insisting that they only created a licence. The manufacture of a five-pronged implement for manual digging results in a fork, even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade”.
52. At page 820 of the Judgment, Lord Templeman refers to a decision of Errington v. Errington and Woods (1952) 1 KB 290 which concerned a contract by a father to allow his son to buy the father’s house on payment of the instalments of the father’s Building Society loan. In that case, he quotes from the judgment of Lord Denning at pages 297-298 of that Judgment as follows:
“The result of all these cases is that, although a person who is let into exclusive possession is prima facie to be considered a tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy. Words alone may not suffice. Parties cannot turn a tenancy into a licence merely by calling it one. But if the circumstances and the conduct of the parties show that all that was intended was that the occupier should be granted a personal privilege, with no interest in the land, he will be held to be a licencee only.”
53. Referring to Lord Denning’s Judgment in Errington, Lord Templeman states at page 821:
“There were exceptional circumstances which negatived the prima facie intention to create a tenancy notwithstanding that the occupier enjoyed exclusive occupation. The intention to create a tenancy was negatived if the parties did not intend to enter into legal relationships at all, or where the relationship between the parties was that of vendor and purchaser, master and service occupier, or where the owner, a requisitioning authority, had no power to grant a tenancy”,
54. The last mentioned exceptional circumstance is of relevance in the present case in the light of one of Mr. Gaffney’s submissions, namely that it would have been ultra vires the powers of the Respondent in the instant case to grant a lease in view of the fact that the premises in question are not, in his submission, superfluous to the operational needs of the Respondent. I shall return to that matter in due course.
55. At page 824 Lord Templeman refers to Shell-Mex and P.B. Limited v. Manchester Garages Limited (1971) 1 W.L.R 612. In that case, the defendant was allowed to go into occupation of the plaintiff’s premises solely for the purpose of selling the plaintiff’s brands of petrol and the defendants undertook to use every endeavour and due diligence to sell and foster the sale of the plaintiff’s products. The plaintiffs also were entitled to considerable rights of access to the premises for the duration of the agreement. He refers to a passage from Lord Denning’s judgment where it states:
“Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence), or whether it grants an interest in land (in which case it is a tenancy). At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether. Primarily on whether it is personal in its nature or not.”
This case is of relevance to Mr. Gaffney’s submission on behalf of the respondent that the applicant’s occupation of the premises the subject of the instant agreement is in the nature of a personal privilege. I do not accept that submission. The expression “personal privilege” seems to emanate from the Shell-Mex decision and it is clear from that judgment that there were limitations to that defendant’s occupation, in the way referred to, which rendered the occupation to be non-exclusive, in much the same way as Morris J. (as he then was) found the defendant’s occupation of the plaintiff’s premises in the hospital to be non-exclusive. At page 825 of his Judgment, Lord Templeman states:
“If exclusive possession at a rent for a term does not constitute a tenancy then the distinction between a contractual tenancy and a contractual licence of land becomes wholly unidentifiable”.
56. Finally, Lord Templeman concludes at page 826 of his judgment as follows:
“My Lords, the only intention which is relevant is the intention demonstrated by the agreement to grant exclusive possession for a term at a rent. Sometimes it may be difficult to discover whether, on the true construction of an agreement, exclusive possession is conferred. Sometimes it may appear from the surrounding circumstances that there was no intention to create legal relationships. Sometimes it may appear from the surrounding circumstances that the right to exclusive possession is referable to a legal relationship other than a tenancy. Legal relationships to which the grant of exclusive possession might be referable and which would or might negative the grant of an estate or interest in land include occupancy under a contract for sale of the land, occupancy pursuant to a contract of employment or occupancy referable to the holding of an office. But where as in the present case the only circumstances are that residential accommodation is offered and accepted with exclusive possession for a term at a rent, the result is a tenancy.”
57. Before reaching a final conclusion in the present case, it is necessary to consider Mr. Gaffney’ submission that for the respondent to either to grant a lease, or enter into any agreement which could be interpreted as creating a tenancy, the Respondent would be acting ultra vires its powers. It will be recalled that in Errington v. Errington and Woods (1952) 1 KB 290, Lord Denning referred to a number of “exceptional circumstances which negatived the prima facie intention to create a tenancy, notwithstanding that the occupier enjoyed exclusive occupation.” One of those exceptional circumstances was where the owner had no power to grant a tenancy.
58. The question which arises therefore is whether the creation of a tenancy by the respondent was ultra vires its powers. In this regard, Mr. Gaffney has submitted that the property in which the subject premises are situated was acquired by the respondent under a Special Act of 1884, which I have identified earlier in this judgment as the Dublin, Wicklow and Wexford Railway (City of Dublin Junction Railway) Act, 1884. That act enabled the Dublin, Wicklow and Wexford Railway Company to construct connecting railways between Westland Row terminus and the Railways of the Great Northern Railway (Ireland) and the Midland Great Western Railway (Ireland) on the Northside of the River Liffey to be called the City of Dublin Junction Railways, and within three years from the passing of that Act to compulsory acquire certain lands and buildings, or portions thereof as may be necessary for the construction of the railway line in question. That provision appears at Section 10 of the Act. Throughout the 19th Century there were a large number of private or special acts of parliament passed to enable various local railway companies to construct a railway line and those companies were empowered to acquire land for that purpose. In almost all cases, the land concerned was rural land whereas the Act of 1884 referred to by Mr. Gaffney was clearly land or property situated in the City of Dublin. This is of relevance to what is meant by the term “superfluous lands”. It is necessary to understand that term in order to deal with Mr. Gaffney’s submission. Almost all the other Railway Acts to which I have referred contain a clause similar, if not identical, to the following which I have extracted from an Act of 1844 namely 7 & 8 Vict. C headed in the margin thereof “lands not wanted to be sold”:
“CCXXIII. And for the purpose of making provision respecting the sale of lands acquired by the Company under the provisions of this Act, but which shall not be required for the purposes thereof, be it enacted that the Company shall sell all such superfluous lands in such manner as they may deem most advantageous, and convey the same to the purchasers thereof by deed under the Common Seal of the Company; and a receipt under such Common Seal shall be a sufficient discharge to the purchaser of any such lands for the purchase money in such receipt expressed to be received; and such sales and conveyances shall take place within ten years after the passing of this Act.”
59. The following clause is also typical of a clause in other Railway Acts and which I have taken from the aforementioned Act
“CCXXIV. And be it enacted, that if the company do not sell such superfluous lands within the period aforesaid, then such lands remaining unsold at the expiration of such period shall thereupon vest in and become the property of the owners of the lands adjoining thereto, in proportion to the extent of their lands respectively adjoining the same.”
60. There are no such clauses in the Special Act of 1884 to which Mr. Gaffney referred, but even if they can be implied, they cannot, in my view, be of any relevance to the present case. They were clearly inserted into acts which were enabling a railway company to compulsorily acquire rural land. Having acquired such land and having constructed the railway upon it, it was always going to be clear that, even allowing for extensions to the line, additional sidings etc, the company would be left with certain areas of the land acquired which they could not reasonably require in the future. It was in those circumstances that the company was empowered to revest those superfluous lands in the adjoining owner, or to the owner from whom they were originally purchased. That scenario clearly has no relevance of property acquired in the region of Tara Street in the City of Dublin. Mr. Gaffney’s contention that the area beneath the arch below the railway line at Tara Street Station could not be regarded as “superfluous” and therefore is incapable of being the subject of a sale or granting of tenancy rights, is misplaced. In support of this finding, I need to refer to two cases to which Mr. Gaffney himself refers in his written submissions namely Foster –v- London Chatham and Dover Railway Company (1985) 1 QB 711 and an Irish decision in Hamilton –v- Dublin Wicklow and Wexford Railway Company (1895) 28 ILTR 76. In his written submissions, Mr. Gaffney states that “the principle is that no letting of land acquired by Special Act can validly be made by a railway company save for temporary convenience”. The Hamilton case to which I have just referred concerned land consisting of approximately 10 acres at Shanganagh in South County Dublin. It appears that the company having utilised part of the lands for the construction of railway lines, made a letting of the land not utilised for the purpose of the railway lines. The tenant in due course applied to have a fair rent fixed and an order was duly made. That order was appealed on the basis that the holding was let only for temporary convenience and was therefore excluded from the operation of the Land Act of 1881. This judgment refers to the fact that the company was not given any special powers as to alienating any portion of the lands so acquired and that it was therefore subject to the provisions of Section 127 of the Land Clauses Act of 1885. At p.77 of the judgment it is stated
“And it would appear therefore that if any land acquired by the company was not required for the purpose of its undertaking it should have been absolutely sold and disposed of before the 25th of July 1865. No evidence was given on behalf of either the tenant or the company for the purpose of showing that the lands constituting the present holding were or were not superfluous. The fact that these lands have not been used for the purposes of the railway up to the present time is not itself conclusive that they have become superfluous …… all lands taken by a railway company are presumptively intended to be used for the purposes of the company’s undertaking, and if they are alleged to be superfluous the onus of proving that they are lies upon the party making the allegation. If the lands are not superfluous and may at sometime be required for the purposes of the company, it is hardly necessary to observe that no letting can be made by the company except one of a temporary character”.
61. The judgment goes on to refer to the fact that if the land is superfluous, and the railway company does not sell and dispose of it absolutely within the statutory period the land vests in the adjoining owner or owners and the title of the company to it comes entirely to an end.
62. I refer to this judgment to demonstrate the context in which the term “superfluous lands” is used in the various Special Acts of the 19th century. It does of course decide that lands which are not superfluous can be let only for temporary convenience. I question whether the inability of a railway company to dispose of or grant a tenancy in land or property other than superfluous land or property can be construed reasonably as meaning that the respondent in the instant case cannot create a tenancy in respect of the space beneath an archway at Tara Street without being found to be acting ultra vires. In this regard, I refer to the case of Foster –v- London Chatham and Dover Railway Company (1895) 1 QB 711, which, as I have said, was referred to by Mr. Gaffney in his written submissions. It is a case very similar to the present case. The head note states as follows:-
“A railway company authorised by their Special Act to acquire land for the purposes of the railway and works have also the implied power of using land so acquired in any manner which is not an infringement of the rights of other persons and which is not inconsistent with the purposes for which the company was constituted.
A railway company acquired in fee simple, under their compulsory powers, a strip of land on which they constructed a railway carried over a series of arches. The company afterwards let the interior of the arches for shops and other business purposes to diverse persons upon short tenancies, reserving power to resume possession when they deemed it necessary for the purposes of the railway so to do”.
63. It was held in that case that such a letting of the arches was not inconsistent with the purposes for which the company was constituted. What had happened was that the defendant company had made lettings of certain archways beneath the railway. The plaintiff owned land immediately adjoining the arches and clearly regarded the presence of the traders in the arches as a nuisance and sought an injunction to restrain the defendants from continuing the letting of the arches. The plaintiff contended that the defendants, having taken the land in question compulsorily for the purpose of their railway, had no right to let the arches or the pieces of land behind them for business purposes and that he was entitled to restrain them from doing so. At p. 718 Lord Halsbury states:-
“I have now to see whether there is anything in the Act of Parliament which prevented this use of the railway arches; and I think the question must come to that. If the company have the right to let the railway arches it is impossible to contend that they cannot let these little pieces of land, which give additional accommodation to the railway arches in the form in which they are let. I for one entirely deny that there is any established proposition of law which prevents the railway company using this land and their arches for some collateral purpose that may give profit to them. A great variety of examples have been given by various judges of things which may be done by railway companies besides their own particular business. It is familiar to us all that coal stores and book stalls, and a great variety of things may be set up by railway companies which, although not actually used in the business of carrying passengers and goods, are nevertheless things which they may do and yet carry on their own particular business quite consistently. I for one should be sorry to place any restriction on their power to make, to the best of their ability, their undertaking profitable to their shareholders and a convenience to the public.”
64. Lindley L.J. in his judgment at p. 719 refers to the plaintiff’s contention that the railway company have exceeded their statutory powers by making the lettings of the archways. In considering that matter, he refers to the fact that the law on the point “is now well settled”. In that regard he quotes from the judgment in Attorney General –v- Great Eastern Railway Company, 5 App Cas 473 in which Lord Selborne stated:-
“It appears to me to be important that the doctrine of ultra vires as it was explained in that case should be maintained. But I agree with James L.J. that this doctrine ought to be reasonably, and not unreasonably, understood and applied and that whatever may fairly be regarded as incidental too, or consequentional upon, those things which the legislature has authorised ought not, (unless expressly prohibited) to be held by judicial construction to be ultra vires.”
65. Lord Halsbury went on to say at p. 720:-
“There is nothing in the company’s Act which expressly authorises the letting of these arches. Then comes the question whether it is to be fairly implied, and if so, what is the limit of power? Now it appears to me that with the exception of one single case before Mallins VC. all the authorities are consistent with the proposition that any mode of enjoying a company’s own land is impliedly permitted if it is not inconsistent with the provisions of the company’s Acts, and is not an infringement of the rights of other persons”.
66. In the light of the judgment in Foster above, I am completely satisfied that it is not necessary to decide whether the arch which the applicant occupies at Tara Street is or is not “superfluous lands” in the context in which that phrase is used in the old Acts, in order to decide whether or not the respondent is acting ultra vires in creating a tenancy. The creation of a tenancy within the arch at Tara Street is clearly within the activities of the company to which Lindley L.J. refers at p. 20 of his judgment in Foster. There is no modern day reality in any contention made by the respondent that the creation of a tenancy in the arch in question in some way affects the ability of the respondent to operate a railway company. It was never the intention of the old special Acts, such as the Act of 1884 referred to, to prevent the railway company from gaining revenue from a source such as the renting of the space beneath an archway.
67. Having found that the agreement dated the 4th of December 1991, the subject matter of these proceedings, is a tenancy agreement, and that it is not ultra vires the powers of the Respondent I allow the appeal and substitute for the order of the Circuit Court, an order pursuant to Section 21(2) of the Landlord and Tenant (Amendment) Act 1980 declaring the applicant entitled to a new tenancy in the premises described in the schedule to his application dated the 29th day of June 2001, the terms of which are to be fixed in accordance with the provisions of Section 3 of the Landlord and Tenant (Amendment) Act 1980. In that regard, subject to hearing further submissions, I propose allowing the parties an opportunity to agree the terms of such new tenancy and in the absence of such agreement, liberty to re-enter the matter in the Circuit Court for determination.
68. Lastly, I dismiss the respondent’s cross appeal dated the 22nd of January 2002.
Temple Bar Properties Ltd. v. Kavanagh
[2001] IEHC 129 (5th September, 2001)
JUDGMENT of Mr. Justice Kearns delivered the 5th day of September, 2001.
1. The first named Plaintiffs were at all material times the owners of premises at 27, Temple Lane South, otherwise known as 53, Dame Street in the city of Dublin. The first named Plaintiffs purchased these premises from CIE in July 1991. The premises in question incorporate Nico’s restaurant on the ground floor, the proprietors of which are the second and third named Plaintiffs, who purchased the entire premises from Temple Bar Properties in 1997, subject to certain covenants with regard to the occupancy of the upstairs premises by various individuals as artists studios.
2. Going back to 1986, individual studios on the first – fourth floors of 53 Dame Street were made available to various artists (who styled themselves the “Atelier Group”) by way of temporary letting agreement from month to month from the 8th day of October, 1986, which said agreement was not intended to exceed a period of two years.
3. The artists and group had as its initial co-ordinator or representative a Mr. John Brobbel and the Defendant was one of the first artists to occupy a studio, being one on the first floor. With the passage of time, and without objection from the owners of the property, the Defendant’s occupation extended, it has been agreed herein, to three rooms.
4. Rather than deal with all the artists individually, CIE and Mr. Brobbel agreed that the group would for convenience purposes form themselves into a co-operative of an informal nature. The idea was that the artists would pay their monthly rent into an Atelier account in the Bank of Ireland in Baggot Street, into and from which the landlords rent could be paid by direct debit. However, within a short space of time, it became apparent to Mr. Brobbel that problems were going to arise, because only two of the artists signed up to direct debits themselves and, as he told the Court, “I could see problems coming”. He pulled out in 1988, and in November of that year a further caretakers agreement was drawn up whereby the various artists, including the Defendant, undertook individually to pay all “rates, taxes and other outgoings due and payable in respect of the said occupied premises as and from November 1, 1988.” The Defendant took over Mr. Brobbel’s role and made himself responsible for collecting and transmitting the monies payable by the artists to CIE.
5. A new monthly lease was drawn up in November, 1989 between CIE and the Defendant alone for the monthly letting for £300 of the premises by way of temporary convenience. This agreement expressly acknowledged that at that particular time CIE were considering plans for the development of these and other premises as a bus and rail terminal.
6. At a certain point in time, the Defendant moved into residential occupation of one of the studios which gave rise to certain concerns in CIE, culminating in a request for an undertaking and acknowledgement in writing dated 30th March, 1990, furnished and signed by the Defendant which is expressed in the following terms:-
“I, Arthur Kavanagh, Administrator of “Co-operative Atelier”, 27 Temple Lane, hereby state that the premises are not being used for residential or commercial purposes by the undersigned tenants.”
7. This document was also signed at the time by all the other artists comprised in the Atelier co-operative.
8. When CIE’s development plans for the area ended, a notice to quit was served by CIE on Mr. Kavanagh as a sale of the property to the first named Plaintiffs was then in prospect. However, no action was taken on foot of such Notice to Quit, the same being served purely to resolve any title difficulties, it always being the intention, both of CIE and Temple Bar properties, to preserve this building and others in the nearby area for the use and occupation of artists on favourable financial terms. It is clear that from the outset in this matter ordinary business criteria were not applied to the dealings between either CIE and the artists concerned, nor indeed by the first named Plaintiff to this group from 1991 onwards.. Mr. Kavanagh was largely left to his own devices on a day by day basis. It was he who dealt with both CIE and Temple Bar on behalf of the other occupants. It was he who determined who should gain access to any studio which might become vacant in the premises. It was he who was responsible for collecting in and paying over occupants, monies; he also paid the electricity and took care of the maintenance and good order of the premises. He received no remuneration for this work, either from CIE or Temple Bar, nor from the other occupants of the studios. The only suggested benefit, from Mr. Kavanagh’s point of view, from these arrangements was the fact that over a period of time he became the occupier of three studios at a knockdown rent. He ran art classes in one studio. He was also permitted to use one studio as a residence despite the undertaking of March, 1990.
9. In July 1991, the purchase by Temple Bar went through. Thereafter on the 23rd of September, 1991 the Defendant wrote to Mr. Quillinan who was then the property executive in Temple Bar dealing with the premises. In his letter, Mr. Kavanagh applied for permission for the arrangements concerning the occupants of 53 Dame Street to continue. He asked in his letter, expressed to be on behalf of the Atelier group, for permission to continue to “administrate, and also to continue as studying artists in 27 Temple Lane”. Mr. Kavanagh also had some meetings around that time with Mr. Hickey, who was then property director of Temple Bar, and who was anxious to reassure the artists that their continued occupation of their studios was secure.
10. These exchanges translated into a number of agreements which were drawn up in December 1991. It is perhaps important to stress that prior to that date, Mr. Quillinan advised the Court that he called to Mr. Kavanagh at 53 Dame Street with these (as yet unexecuted) written agreements and got from him a list of the then occupants of the various studios, so that the identity of the various occupants was not merely ascertainable, but was actually known by reference to individual names as of October 1991. Mr. Quillinan in evidence produced his handwritten contemporaneous note, the accuracy of which was not challenged by Mr. Kavanagh.
11. The first of these written agreements is an agreement to grant a lease in the future in the form of a draft annexed to the agreement. This agreement, dated the 9th of December 1991, was made between Temple Bar Properties Limited of the one part and “Arthur Kavanagh In trust for Atelier artists” of the other part. The agreement recognised that the tenant had lately held the premises specified in the schedule (and therein described as the upper floors of 27 Temple Lane South) and it was acknowledged by Mr. Kavanagh that any previously existing tenancy had been validly terminated by CIE by a Notice to Quit dated 21st December, 1990.
12. The agreement went on to recite the purposes for which Temple Bar Properties had been formed and recited that it was intended to develop this and other premises in the Temple Bar area in accordance with the objectives of the Temple Bar Area Renewal and Development Act. As part of this plan, Temple Bar expressed its intention to offer some properties within the Temple Bar areas to existing lessees by way of lease for various terms of years. It further recited that Temple Bar Properties would permit the tenant to remain in the premises on foot of a temporary convenience letting until such time as the landlord was ready to proceed with the redevelopment of the premises. The agreement further recited that the tenant would either obtain his new lease in respect of the existing premises or in a property adjacent to the premises.
13. By memorandum of agreement made on the same day, a temporary convenience letting of the same premises was made to the Defendant (again, in trust for Atelier artists) from month to month, commencing on the 1st of August, 1991 at the annual rent of £3,600. This temporary letting agreement also provided that the tenant should be liable for the rates and insurance on the premises.
14. The third document, the intended lease, was undated and unexecuted and did not describe any premises intended to be demised, but was clearly expressed to be a 35 year lease which, I am satisfied from the evidence, was intended to be at economic rents which would be within the capacity of individual occupants to meet. The first two agreements were executed by the Defendant, but were not executed by Temple Bar until 1994. They were not furnished to the individual occupants.
15. Moving to 1992, difficulties began to arise at 57 Dame Street because various artists were not honouring their obligations to remit their rent to Temple Bar via Mr. Kavanagh. There were also ‘disciplinary problems’ which led to a meeting between Temple Bar, the Defendant and the occupants in January, 1992 to which I will shortly refer. Mr. Quillinan gave evidence (which was not challenged) to the effect that at this meeting all occupants were clearly advised that they were the beneficiaries of the agreement for lease. In the years that followed some negotiated for new leases in other premises owned by Temple Bar in the area. The Defendant wrote a number of letters to the first named Plaintiffs in the period 1992 – 93 highlighting ongoing problems, mainly to do with rent. A letter dated 26th August, 1992 written by Mr. Kavanagh to John Quillinan refers to rent outstanding and owing both to the first named Plaintiffs and to “me personally”. On the 28th of September, 1993 he wrote to the first named Plaintiffs inviting them to “give me a free hand to deal with the matter as I see fit”.
16. It seems clear that with the passage of time the Defendant was beginning to see himself as something more than a mere agent or spokesman for the Atelier group, but rather as an individual who was running a business of providing studios for artists in conjunction with the first named Plaintiffs to whom he would turn as and when required for assistance in dealing with the various occupants. This state of mind on the part of the Defendant was undoubtedly fostered to a certain degree by the first named Plaintiffs and their Solicitors who took no steps to disabuse Mr. Kavanagh of his mistaken beliefs, nor to place their relationship with him on any sort of commission or business footing or to take any steps to identify the actual occupants at particular points in time or control the manner in which they were allowed access to the various studios. All of this was left to Mr. Kavanagh. On the 31st January, 1994, Messrs. P.F. O’Reilly & Co, the first named Plaintiffs Solicitors, executed the Agreement for Lease and Letting Agreement. The title of the covering letter returning same makes no reference to Atelier artists, albeit the letter recited that Temple Bar wished to have the names of the parties on behalf of whom the agreement was signed by Mr. Kavanagh. The Court has been told by Mr. O’Shaughnessy, conveyancing solicitor for Temple Bar, that leases would not have issued until the names of the occupants were given to Temple Bar.
17. These omissions are surprising, given that problems and disputes between the occupants and Mr. Kavanagh had been notified to Temple Bar. The allegations from the other occupants which were aired at the January, 1992 meeting were essentially to the effect that Mr. Kavanagh was acting in a high handed manner, changing locks on doors and generally acting in excess of what the other occupants believed his authority to be. Matters drifted on and on the 6th of September 1992, the Defendant furnished a full list of people who then shared and occupied studios. Negotiations then followed both with Mr. Kavanagh and some of the individual occupants for the creation of new leases. All payment of rent to Temple Bar ceased in September, 1993. Various options were put to Mr. Kavanagh, including a compensation offer of £15,000 “to move out” in November 1994, by which time he was obviously seen as a ‘problem’ by Temple Bar.
18. At around this time, the Defendant changed Solicitors. Virtually the first event to follow that change was the registration by the Defendant of ‘Atelier artists’ as a business name in the Companies Office. In February 1995 Mr. Kavanagh, acting, he says, on the advice of his new Solicitors served Notices to Quit on the various artists of Atelier operating from 27 Temple Lane South.
19. In view of these actions, the Plaintiff in turn served a Notice to Quit on the Defendant, following which an assortment of legal proceedings then ensued between the various parties, including ejectment proceedings brought by the Defendant against the various occupants, all of which said proceedings have been stayed pending the resolution of these proceedings.
20. In the course of the proceedings before this Court, the parties have agreed that the primary issue for determination is the status of the Defendant in the premises. Is he entitled to hold himself out as a ‘landlord’ in respect of the occupants of the premises, or is he now, and was he at all material times, simply the spokesman or representative on behalf of the occupying artists, otherwise known as Atelier artists?
21. Various indications were given to the Court during the hearing as to what might happen in relation to arrears of rent and rates which would follow certain findings by the Court. Equally, various matters raised in the Defendant’s counterclaim seemed to me to be matters which can be deferred for further consideration in the aftermath of a ruling on this primary issue.
22. Insofar as the second and third named Plaintiffs are concerned, the arrangements between Temple Bar and these Plaintiffs were that the entire premises were sold to the second and third named Plaintiffs in 1997, subject to covenants on the part of the second and third named Plaintiffs to develop eight rooms as studios, reserving to Temple Bar the right to nominate tenants to all these rooms. As the Defendant during these proceedings maintained that Temple Bar had no authority to maintain same following the sale to the 2nd and 3rd Plaintiffs, these Plaintiffs were joined as co-plaintiffs by Temple Bar in July, 1998.
SUBMISSIONS OF THE PARTIES
23. The Plaintiffs dispute the Defendant’s claim that, notwithstanding the express terms of the temporary convenience letting, he is and was tenant of the Plaintiff in the entire first four floors of 27 Temple Lane South. The Plaintiff relies on Section 3 of the Landlord and Tenant (Ireland) Act, 1860 (Deasy’s Act) which provides as follows:-
“The relation of landlord and tenant shall be deemed to be founded on the express or implied contract of the parties, and not upon tenure or service, and a reversion shall not be necessary to such relation, which shall be deemed to subsist in all cases in which there shall be an agreement by one party to hold land from or under another in consideration of any rent.”
24. It is submitted that a tenancy cannot be created by stealth or by adverse possession. There are two essential ingredients which must be present to found an agreement for a tenancy, namely, the right to exclusive possession in return for the payment of rent. If these elements are not present there can be no tenancy ( Gatien Motor Company Limited -v- Continental Oil Company of Ireland Limited (1979) I.R. 406).
25. It was clear from the aforementioned case that in order to ascertain whether there is a valid contract of tenancy, it is necessary to enquire into the intention of the parties as expressed in the contract. Insofar as the terms of the agreement may not be fully or properly expressed, the Court must:-
“…look at the transaction as a whole and at any indications that are to be found in the terms of the contract between the two parties”
(per Griffin J at p. 414).
26. The Plaintiff also relied on Irish Shell and BP Limited -v- Costello Limited (1984) I.R. 511, where Henchy J., stated (p. 517):-
“In all cases it is a question of what the parties intended, and it is not permissible to apply an objective test which would impute to the parties an intention which they never had. It is open to either party to give evidence of the true circumstances of the payments. Thus, if it were shown that such payments as were made by the former tenant were merely provisional payments and had been made in the expectation that a new tenancy would be expressly granted, the payments would not be treated as supporting the presumption of a new tenancy; to treat them as supporting that presumption would be to impute to the parties an agreement which in fact they had never reached.”
27. It is further submitted that the Defendant was never granted exclusive possession of the entire of the premises. Even taking the Defendants evidence at its best, there is no suggestion that he had in fact control of the entire of the four floors at any time which could be construed in any way as supporting his claim for a tenancy in that much of the premises. Further, there is no evidence to suggest that the Defendant ever paid rent for any portion of the premises other than that which he was entitled to occupy as tenant of the Plaintiffs, namely, two rooms on the first floor and one room on the second floor.
28. Furthermore, the Defendant at all times held himself out as taking the benefit of the 1991 agreements in trust for a number of beneficiaries (including himself) and not for his own exclusive benefit. It is the Defendants case that there was no trust because the Plaintiff did not know precisely who the other beneficiaries were at the material time and thereafter they treated the Defendant as a sole tenant. Having regard to the evidence of Mr. Quillinian who prepared the written list of occupants in October 1991, this had to be seen as demonstrably groundless. Even if that list was not precisely correct as and of the 9th of December 1991, it is nonetheless sufficient to form the basis of a trust for the following reason. A trust will fail for uncertainty only if the objects intended to be benefited cannot be ascertained with precision. However the members of the class can be ascertained with certainty. As pointed out in Keane (Equity and the Law of Trusts in the Republic of Ireland – par 7.04):-
“If the trustees can compile a list of all the persons beneficially entitled at the inception of the trust without undue trouble or expense, the trust will not fail for uncertainty.”
29. The trust is valid because there were no more than eight other beneficiaries in occupation at the time of the creation of the trust and the precise list of names could have been easily and accurately ascertained if it was not known to the Plaintiff at the time.
30. Furthermore, a true sub-letting involves a sub grant by the tenant to the sub tenant, usually for a term less than the main term of the lease. The actual temporary convenience letting contained an express covenant prohibiting sub letting without the prior written permission of the first Plaintiff. In this case there are no subtenancy agreements, nor any indication of the terms of what any such subtenancy might consist of. If valid sub- tenancies existed, there would be no need for the Defendant to regularly invoke the first named Plaintiff when, as the correspondence shows, he ran into difficulties with the other occupants. Furthermore, the Defendant did not challenge the Plaintiffs’ right to obtain an injunction restraining the Defendant from ejecting the other occupants of the premises on this ground at the interlocutory stage.
31. On behalf of the Defendant, it is submitted that the Defendant is the sole tenant of the four floors of the premises in question and that he was sub-letting to artists and receiving rent. The contract for the sale of the premises between CIE and Temple Bar made it a condition of the contract that the property was sold subject to whatever rights might exist in favour of existing occupiers whether arising as tenant or otherwise. The Schedule of Occupiers in the contract for sale described the occupants as “Arthur Kavanagh and others”. The remarks column of the Requisitions on Title stated:-
“It appears that this particular part of 53 Dame Street/27 Temple Lane South is occupied by a group of artists who are probably paying rent to Arthur Kavanagh.”
32. Arthur Kavanagh’s name did not appear on the ‘schedule of caretakers’ annexed to that contract. Accordingly, it followed that when Temple Bar purchased the property from CIE it was on notice of Mr. Kavanagh’s special position, which was that of sale tenant.
33. Even if Mr. Quillinan collected a list of the names of the occupants in October 1991, no letter was sent by Temple Bar to the Defendant clarifying that it intended to benefit this class or category of persons prior to the execution of the agreement by Mr. Kavanagh. The list of names was not furnished to Mr. O’Shaughnessy, the Solicitor in P. F.O’Reilly who was responsible for conveyancing. If any sort of trust for a definite class or category had been intended, it was inconceivable not to incorporate a schedule of the beneficiaries in the December, 1991 agreements.
34. Between 1992 – 1994, Temple Bar never wrote to Mr. Kavanagh correcting him on what it now alleges were his misconceptions, nor did Temple Bar write to the subtenants setting out the situation which Temple Bar says now exists. In April 1994, the Plaintiffs’ Solicitors had written to the Rates Department of Dublin Corporation informing them that under the terms of a temporary convenience letting, Arthur Kavanagh occupied the property and was responsible for the payment of the rates on the property and the insurance premium in respect of same. There was no mention in that letter of any trust, co-tenants or caretakership. In the events which followed, Mr. Kavanagh had been sued for the entirety of the rates arrears, and indeed the entirety of the rent arrears which was a position quite inconsistent with the case now being made by and on behalf of the first named Plaintiffs. At no stage had the first named Plaintiffs sought arrears of rent from any of the other occupants. Indeed, when one occupant, Paul Ferriter, tried to pay rent to Temple Bar, it was refused. Further, the various occupants served notices to claim relief under Section 20 of the Landlord and Tenant (Amendment) Act, 1980 on the Defendant following termination of their sub- tenancies by Mr. Kavanagh, a course of action which was consistent with recognition of Mr. Kavanagh as their landlord.
35. Insofar as the creation of a trust is concerned, there must be certainty of intention, subject matter and objects ( Chambers -v- Fahy (1931) I.R. 17). In this case the only known object or beneficiary of the trust was Arthur Kavanagh, being the only identifiable person connected to Atelier artists. Various occupants had come and gone since 1991. Some of the 1994 occupants were quite different from those in December 1991. Most of the occupants gave no evidence of joining any organisation or body entitled Atelier artists.
CONCLUSIONS
36. Like many high minded endeavours, the initiative of firstly, CIE and later Temple Bar Properties to create a working environment for artists in Temple Bar was not marked by the careful business or legal attention or scrutiny which would in the normal course accompany a commercial transaction. It is one of the features of this case which render it particularly unfortunate from both sides point of view.
37. From the point of view of both CIE and Temple Bar Properties, it must be acknowledged that a high premium was placed on protecting and fostering the activity of the various artist occupants of the premises in question. From the evidence of Mr. Hickey and Mr. Quillinan in particular, whose evidence on all disputed facts I prefer to that of Mr. Kavanagh, I am satisfied that this high priority continued well beyond 1991 right up to the point where various legal developments and legal proceedings took centre stage in 1995.
38. While I have considerable sympathy with Mr. Kavanagh, I have no doubt that he has laboured under a misconception as to his real position in 27 Temple Lane South. I am quite satisfied, taking the evidence as a whole, and particularly the evidence in relation to the agreements prior to and including 1991, and most particularly his own written acknowledgement of the 3rd March 1990, that Mr. Kavanagh, must have realised that his actual status was and remained that of spokesman, representative or agent of the other occupants in the building. I am fortified in this view by evidence given by Mr. Patrick Lawlor, the rate collector for Dublin Corporation, who sued Mr Kavanagh for arrears of rates payable in respect of the premises and obtained a decree against the Defendant in the District Court. He was present in the Circuit Court when Mr. Kavanagh, he says, gave evidence in the course of an appeal that he occupied the premises in the capacity of caretaker. I accept the accuracy of Mr. Lawlor’s recollection on this specific point. I also accept the evidence of the various occupants, and in particular, Mr. Cahill, Mr. Ferriter and Mr. Robbins, all of whom occupied individual studios, to the effect that at no stage did they understand Mr. Kavanagh to be their landlord, nor did he ever hold himself out as such to them. As far as they were concerned, he was simply transmitting their rent to the landlord who was, and always remained, Temple Bar properties. It is undeniable that his willingness to work for the success of the initiative without commission or payment from CIE or Temple Bar is a highly unusual arrangement, given that Mr. Kavanagh received no commission or payment from the other occupants and fellow artists in the premises. He became and remained, in his own words, “a general dogsbody” serving the interests both of the property owners and the other occupants, albeit he was allowed the use of three studios at the knockdown rent payable and was not pressed in respect of arrears of rent from September 1993 onwards when all payments ceased.
39. However, the conclusion I have reached is that much of the muddle in Mr. Kavanagh’s mind, bearing in mind what he described as his limited education, springs from the inactivity and failure of the Plaintiffs and their legal advisors to regulate the legal arrangements in a more clearly and formally defined way. More particularly, by their conduct from 1992 onwards, Temple Bar did nothing to disabuse Mr. Kavanagh of his misconception about his role and status in the premises. That lack of clarity bore tainted fruits from that time, not the least being that Mr. Kavanagh found himself being sued for the entirety of the rent and rates arrears in respect of the four floors, a course of action which the Plaintiffs now accept was in effect retaliatory rather than one based on careful analysis of the true position.
40. For the purpose of the exercise in which the Court is presently engaged, namely to ascertain the status of Mr. Kavanagh in the premises as of 1991, the Court is not called upon to decide whether any issue of estoppel arises by virtue of events after 1991. No such issue has been raised on the pleadings.
41. However, even if such an issue had been raised by way of a shield or defence on Mr. Kavanagh’s part, I do not believe it could have succeeded because I accept Mr. Counihan’s point that a tenancy cannot be created by stealth or by accident, or, one might add, by ineptitude. While the actual thinking of Temple Bar Properties as expressed from day to day in relation to these premises is somewhat contradictory insofar as internal memos and correspondence may be concerned, the overall basic intention as of 1991 is, in my view, unmistakable. It was clearly intended, and I so hold, that in the run up to December 1991, Temple Bar Properties and Mr. Kavanagh intended to make various agreements for and on behalf of the group of artists known as Atelier artists, of whom Mr. Kavanagh was one himself. At no stage was it intended to elevate Mr. Kavanagh to some superior status other than that of co-ordinator or spokesman on behalf of the group, nor, in my view, was it ever intended that the entirety of the premises (being the four floors) be demised to Arthur Kavanagh in a personal capacity, so that the other occupants would be his sub tenants thereafter. It is inconceivable that such a far reaching measure would have been in contemplation without some express contemporaneous and written reference to such an idea or proposal which simply does not exist.
42. I also accept Mr. Counihan’s submission that for the trust to be valid and effective, he need only show that the beneficiaries of the particular class were ascertainable as of the time of the making of the trust instrument. That was clearly the case in December 1991 and indeed Mr. Kavanagh in evidence confirmed that precisely the same occupants were in situ in December 1991 as per the list given by him to Mr. Quillinan in October 1991. The words “in trust” are clearly highlighted in the agreements, as indeed are the intended beneficiaries, the Atelier group. I am satisfied that all the requirements of a valid trust have been met in this case.
43. That being so, I hold in favour of the Plaintiffs on the primary issue placed before this Court for determination.
44. Various other collateral and incidental issues have arisen which I will, if necessary, deal with by means of a further hearing. However, the indications which were given to the Court during the course of submissions made at the conclusion of the evidence convince me that I should proceed no further at this juncture and rather trust instead to the good sense of both parties and their respective legal advisors to bring matters now to a final conclusion. I therefore do not propose to make any other determination at this point in time, other than to receive such application as may arise in respect of the costs of the second and third named Plaintiffs.
Governors of the National Maternity Hospital Dublin v Ann McGouran
High Court
3 November 1993
[1994] 1 I.L.R.M. 521
(Morris J)
MORRIS J
delivered his judgment on 3 November 1993 saying: The issues which arise in this case are as follows. The plaintiffs (hereinafter referred to as the ‘hospital’) contend that the agreements which they entered into with the defendant (Mrs McGouran) [and in one case her husband] constituted no more than a licence to use certain parts of the hospital premises as a hospital shop and as a coffee shop. Mrs McGouran contends, on the contrary, that in the circumstances in which she became entitled to run these business ventures, she was granted or acquired a leasehold interest or a tenancy in the area which she occupied.
A secondary point arises, and it is this. In the event of the court determining that all that Mrs McGouran got was a licence, is the hospital entitled to immediate possession of the premises or alternatively, as contended for by Mrs McGouran is she entitled to a year’s notice of the determination of the licence so as to enable her to remove her equipment from the premises and possibly make other arrangements?
Insofar as the determination of these issues is concerned I propose to deal with the case on the basis that while Mr McGouran was a party to one of the two agreements executed on 9 August 1989, being that relating to the hospital shop, his interest merged with that of Mrs McGouran and that it is she who effectively is to be treated as either the licensee or the tenant of the premises. I do that on the basis that whereas Mr McGouran’s possible interest was referred to during the course of the hearing no point was made that the proceedings were improperly constituted naming only Mrs McGouran as defendant, and the defences were put forward only on Mrs McGouran’s behalf.
The relevant facts insofar as this action is concerned I find to be as follows. Prior to May 1986 the hospital provided for the requirements of the patients in the hospital by authorising a Mr and Mrs Healy to operate a trolly shop within the hospital. In May 1986 they gave up this enterprise and the hospital, in the person of Mr Dunleavey, the then secretary manager of the hospital, approached Mrs McGouran who ran a shop near to the hospital and inquired if she would be interested in running a shop in the hospital premises. The hospital considered that the trolly shop was not entirely satisfactory and proposed to convert the old housekeeper’s office into a shop. Mrs McGouran was interested in the project. I am satisfied that at times during these discussions, references were made to *524 the ‘rent’ which would be required for the occupation of the premises for the running of the shop and I am also satisfied that references were made to the ‘lease’ or ‘tenancy’ which Mrs McGouran would obtain. These words arose both in the course of discussions between the hospital authorities and Mrs McGouran and also were used in the course of correspondence. They were, in particular, used when Mr Dunleavey contacted the hospital’s solicitors instructing them to ‘prepare a lease for the proposed tenant’. The hospital’s solicitors immediately identified and advised Mr Dunleavey of the dangers which the granting of a lease would create and warned them that such a step might give rise to Landlord and Tenant Act rights in favour of any such lessee. However, in accordance with their instructions they forwarded to the hospital draft leases.
On 16 June 1986 they also forwarded a caretaker’s agreement to the hospital for signing by Mr and Mrs McGouran with a view to holding the position and this caretaker’s agreement was signed by Mr and Mrs McGouran. On 1 June 1986 prior to that date they had commenced trading.
The shop was extremely successful. The hospital found itself in a position where the ‘old nursery’ became available and it considered that this was a more appropriate location for the shop. At the same time it proposed opening a coffee shop in the hospital. It invited Mrs McGouran, among others, to tender for the franchise to run the coffee shop and she did so on 8 September 1988. She was successful and she opened the coffee shop on 4 November 1988. At about this time the position of the hospital shop was transferred to a new location.
Again I am satisfied that during the discussions between the hospital and Mrs McGouran, relating to the coffee shop, references were made to ‘rent’ and also to the proposed ‘lease’ which she would get for the coffee shop. I am satisfied that again the hospital’s solicitors, when informed of the proposal to grant a lease, warned the hospital against doing so on the grounds that it might give the lessee rights under the Landlord and Tenant Act unless care was taken to ensure that the lease did not continue beyond two years and nine months, however again in compliance with instructions draft leases were sent to the hospital. These were not signed.
At about this time Mr Dunleavey was replaced as secretary manager of the hospital by Mr Pat Cannavan and one of the matters requiring the attention of Mr Cannavan on taking office was the position relating to the occupancy of the coffee shop and the hospital shop by Mrs McGouran. Both of these businesses were operating and arrangements were made for the hospital’s solicitor, Mr Timothy Crowley to attend at the hospital for the purpose of discussing this matter and Mr Crowley attended at the meeting bringing with him draft licences which he felt were appropriate. Mrs McGouran was requested to and did attend that meeting and I accept the evidence of Mr Crowley that at that meeting he explained in detail to Mrs McGouran the fact that the hospital would not be prepared to grant Mrs McGouran a lease and in addition explained to Mrs *525 McGouran the reasons why they would not grant a lease but would only grant her a licence. I accept also as a fact that Mr Crowley gave her the draft licences for execution but suggested to Mrs McGouran that she should consult her solicitor. I am also satisfied that Mrs McGouran did contact her solicitor and brought with her the drafts of the licences which Mr Crowley had given her. While it may well be that Mrs McGouran was confused by the situation as explained to her by Mr Crowley I am satisfied that she is a business-like person and I am satisfied that she got legal advice in relation to this matter.
The licences not having been returned executed, a reminder was sent to Mrs McGouran and the licences were duly executed by the parties and dated 9 August 1989. The licence in respect of the coffee shop was granted to Mrs McGouran only and under the terms of this licence a licence fee of £5,000 per annum was payable and the licence was to run for a period of one year from 31 December 1988. In the case of the shop the licence was granted to both Mr and Mrs McGouran at a licence fee of £3,000 per year and it was to run from 1 November 1988 to 31 October 1989.
After the dates referred to in the two agreements of 9 August 1989 Mrs McGouran continued to trade in the two premises.
Agreements were reached to increases in the amounts which were to be paid in respect of such occupation and these were reflected in two different sets of new agreements sent to Mrs McGouran. In fact she never signed any of these but continued on running the two businesses paying the increased sums as agreed.
On the new Master being appointed to the hospital Mrs McGouran’s occupation of the two premises was reconsidered and she was written to on 3 March 1993 and it was pointed out that the franchise would be put out to tender. Mrs McGouran replied on 8 March 1993 expressing the view that she was a tenant in the premises and on 23 March 1993 the hospital wrote to her in the following terms:
I regret to note that you are seeking to claim that you were in occupation of the above premises as a tenant rather than a licensee. This is patently not the case. In view of your refusal to agree to an extension referred to in our letter and/or to your removal of your items and equipment I wish to advise you that your continued use of the above premises is unlawful and without permission. I would be grateful if you would confirm that you will cease to use the said premises within seven days of the date hereof. In the event that you shall not cease such use within seven days of the date hereof we shall have no alternative but to institute proceedings.
The hospital continued to accept payments made by Mrs McGouran in respect of the premises until 31 December 1992. Thereafter her cheques were returned.
Mrs McGouran in the course of her evidence stated that at the time when she *526 executed the caretaker’s agreement on her commencing business in the original shop that she was reassured by Mr Dunleavey that this was a mere formality and it was suggested that it in no way altered the fact that she would get a lease of the premises. I do not accept that even if this were the case it would be material to the issues as the basis of her defence is that she is a tenant of the existing shop and coffee shop. The original caretaker’s agreement related to the old housekeeper’s office and not to the existing shop or coffee shop.
Counsel for Mrs McGouran has invited the court to adopt the same approach, when considering the agreements to which this case relates, as the Supreme Court did in Irish Shell and B.P. Ltd v. John Costello Ltd [1981] ILRM 66 and for this purpose has identified the following significant elements of these agreements:
(a) In both agreements the definition of the licensee is not confined to Mrs McGouran (or her husband) but extends to ‘successors and assigns’.
(b) He points to, what he says, are incorrect statements of fact contained in the recitals namely that while the agreement states the contrary, Mrs McGouran and her husband did have exclusive use of the premises and the possession of the premises was not retained by the hospital.
(c) He points to the fact that the agreement contains covenants and that covenants are appropriate to a lease and not to a mere licence.
(d) He points to the fact that there is a covenant against assignment and he says that this would not be necessary if this was a licence granted to the licensee personally.
(e) He points to the fact that under the terms of the agreement Mrs McGouran is to insure for public liability and that liability would be based upon occupancy. He says that this is an acknowledgement that the premises in question was in the sole occupancy of Mrs McGouran and that accordingly that element supports the suggestion that the document is a lease.
(f) He points to the fact that the agreement contains a full repairing covenant which is appropriate only to a lease.
(g) He points to the fact that under the terms of the agreement Mrs McGouran is expected to pay the rates and even though she may not have done so it is another element to support the contention that the agreement is in fact a lease.
In his judgment in Irish Shell and B.P. Ltd v. John Costello Ltd Griffin J cited with approval the judgment of Lord Denning MR in Shell Mex and BP Ltd v. Manchester Garages Ltd [1971] 1 WLR 612 at p. 615. The extract from Griffin J’s judgment incorporating in part Lord Denning’s judgment is as follows:
Although a document may be described as a licence it does not necessarily follow that, merely on that account, it is to be regarded as amounting only to a licence in law. Whether the transaction is a licence or a tenancy does not depend on the label which is put on it. It depends on the nature of the transaction itself:
*527
see Addiscombe Garden Estates Ltd v. Crabbe. Broadly speaking, we have to see whether it is a personal privilege given to a person, in which case it is a licence, or whether it grants an interest in land, in which case it is a tenancy. At one time it used to be thought that exclusive possession was a decisive factor, but that is not so. It depends on broader consideration altogether. Primarily on whether it is personal in its nature or not. PerLord Denning MR in Shell Mex v. Manchester Garages [1971] 1 WLR 612 at p. 615.
One must look at the transaction as a whole and at any indications that one finds in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of landlord and tenant or that of licensor and licensee — ibid. per Lord Buckley LJ at p. 618, Gatien Motor Co. Ltd v. Continental Oil Company of Ireland Ltd [1979] IR 406.
Griffin J identifies the function of the court as follows:
It is therefore right and indeed necessary to look at the substance of the matter. Looked at in this way, what do the ‘licensees get?’
While undoubtedly there are numerous provisions and elements to be found in the agreement which bear all the hallmarks of a lease, I am of the view that there are three clauses in the agreements which make it clear beyond doubt that what is being granted by the hospital and taken by Mrs McGouran is no more than a licence. The first and most obvious provision is, of course, clause 3 of the agreement, which provides:
The provisions of this agreement are intended to constitute a licence only. Possession of the premises shall be retained for the hospital subject to the rights granted by and to the provisions of this agreement and nothing in this agreement is intended to confer any tenancy on the licensee.
Nothing could be clearer.
The second clause is clause 2B and this provides that:
The licence hereby granted shall be granted on a non exclusive basis and the licensees shall be entitled to use the premises in common with the licensor and her duly authorised representatives and any person deriving title from her for the purposes of the licensee’s business of running a coffee shop in the hospital.
A similar clause appears in the licence relating to the shop. There is clearly confusion in the use of the words licensor and licensee. However, it is clear even with this confusion that the overall meaning of the clause is that both the hospital and Mrs McGouran would each have the use of the premises. It has been contended on behalf of Mrs McGouran that in fact she did have exclusive occupation and possession of the shop. That is true to the extent that she was the *528 sole key holder. However, the reality is that the hospital continued to operate and exercise dominion over the running of the coffee shop in as much as they required that Mrs McGouran provide a price list for the patrons, they fitted safety catches to the windows to prevent patients from having an accident, they supplemented fans to the smoke extractor unit fitted by Mrs McGouran, they regulated the hours of opening to some extent so as not to clash with the hospital canteen. It is my view that in as much as the hospital required to do so they exercised a dominion over the premises. Moreover even if this were not the case the mere fact that in practice the occasion did not arise whereby the hospital required to use the premises in conjunction with Mrs McGouran does not take from their entitlement specified in clause 2B.
Thirdly there is clause 6 which provides:
It is hereby agreed that the hospital shall have the right at all times during the continuance of this agreement on giving reasonable notice to the lessee to substitute for the premises any other premises reasonably equivalent in the premises within the location of the National Maternity Hospital at Holles Street Dublin.
In my view this provision could not be found in a lease.
It appears that the Supreme Court in the resolution of the issue before it was swayed to a larger extent by the fact that clause 8 of the agreement which provides ‘nothing herein contained shall be deemed to confer upon the hirer the right to exclusive possession of the premises or to create the relationship of landlord and tenant or of partners between the company and hirer’ was omitted from the final agreement which the Supreme Court had to consider. Griffin J considered that to be ‘one of the most significant clauses in the agreement’.
A similar clause is to be found in the agreements which are the subject matter of these proceedings and in my view the fact that they have been included and have been accepted by Mrs McGouran must be taken as an acknowledgement that the hospital had the right to use the premises irrespective of whether they sought to exercise that right or not.
I am left in no doubt that the documents which I have to consider in this case constitute no more than a licence and the clauses inconsistent with a licence cannot be taken to override the provisions of clause 3 which make it clear that the agreements created no more than a licence to use the premises in favour of Mrs McGouran.
Having decided this to be the case it falls to consider whether the plaintiffs are entitled to immediate possession following upon its letter of 23 March 1993.
It is Mrs McGouran’s counsel’s submission that the provisions of clause 7 clearly envisage not less than one calendar year’s notice of termination. A request for such a provision is to be found in Mrs McGouran’s letter of 8 September 1988 when she said ‘if my offer is accepted I would make a small *529 request to protect my investment. I would ask for six months’ to a year’s notice to terminating my contract.’
In my view the correct construction of clause 7 of the agreement is that at the expiration of the licence granted by the agreement Mrs McGouran may seek a renewal for one year and no more. The provisions of clause 8 relate to some extent to clause 7 and provide that Mrs McGouran will have first refusal ‘of any offer of the licensed premises on termination of this agreement by reason of a fluctuation of time and no other reason’. In the case of the coffee shop the agreement terminated on 31 December 1989. In the case of the shop it terminated on 31 October 1989. Such rights of renewal as are contained in clauses 7 and 8 in my view are now expired and on such expiry Mrs McGouran remained there without the protection (if any) provided by clauses 7 and 8 or either of them.
Accordingly in my view the hospital were entitled to terminate the licence as they did on 23 March 1993 and I am of the view that Mrs McGouran’s right to remain on the premises has ceased.
I accordingly make the order in the terms of paragraphs 1 and 2 of the general endorsement of claim on the plenary summons. However I propose to put a stay on that order for six months from today’s date to enable Mrs McGouran to remove her equipment and make all necessary plans and as a condition of the stay I direct that she pay all arrears of payments under the licence agreement and continue to pay pro rata for the period of the stay.
Bor v Hayes
King’s Bench Division.
2 February 1914
[1914] 48 I.L.T.R 108
Palles L.C.B., Gibson, Molony JJ.
Palles, L.C.B., in delivering judgment, said that in his opinion the Court ought to reverse this judgment and enter judgment for the defendant. Mr. Tyrrell confessed in his evidence that he recognised Hayes and his successor for eight years as being in lawful possession of those lands. Could that possession have been that of caretaker, in which at least his obligation would have been to pay all receipts to the landlord, and not to retain any of the crops or proceeds for his own. Yet he had never accounted for any of these, but had treated them consistently as his own, and the landlord had done the same. In his Lordship’s experience the position of master and caretaker was very often relied upon under written agreements and printed documents when the acts of the parties showed that that position could not have existed. He did not say that the evidence was complete and the tenancy determined by the acts of 1905, but he was of opinion that there was from 1905 until 1913 a holding of possession by consent of Mr. Tyrrell on the understanding that something was to be paid for that possession. It was not open to them to decide that if there was such an understanding *109 with reference to a rent not yet settled, the landlord, after the lapse of eight years, could recover under the agreement as caretaker. He thought that there might have been some such agreement as that there should be a tenancy though the rent should not be fixed. He thought that all these relations between the parties were carried out on the basis of the old rent, and the rent of £41 was the rent contemplated, especially as there were negotiations towards reducing the rent to £30 a year, which were refused. He, therefore, adopted the argument of Serjeant Sullivan that the true relationship between the parties during these eight years had been that of a tenancy subject to the old terms in so far as they were not varied by subsequent agreement.
Gibson, J., in delivering judgment, said that his attitude towards this case was not free from doubt. There was some evidence of a new tenancy on the terms of the old. Mr. Murphy’s argument, however, had impressed him greatly. He thought that if the parties had been in negotiation all through the period from 1905 it would be exceedingly difficult to say that there was a tenancy. What was the true position of the parties all through? In what character did the defendant crop the lands and treat the proceeds as his own property. There were three possible hypotheses to account for this arrangement. First, he might have done so under a licence. It was improbable, however, that a licence of such value would be continued over so long a period. Secondly, he might have done so under an implied continuation of his old tenancy. As he had already indicated, he found difficulty in accepting that explanation. Thirdly, he might have done so as a tenant at will. The acts of the parties during that period were more consistent with the existence of a tenancy at will than with either of the other two alternatives which he had suggested, since there had been no special agreement between them as regards rent, which would seem to him almost incredible if a yearly tenancy of any sort had been in their minds. Still, having regard to the extreme doubt which he felt on the whole subject, he would not venture to dissociate himself from the decision of the Lord Chief Baron.
Molony, J., in concurring, said that he thought that on the 28th October, 1905, this man had been installed as caretaker. They therefore had to consider what was the legal effect of their subsequent dealings with one another, and especially of the various payments extending over eight years. In his opinion it was impossible to attribute these payments to the caretaker’s agreement. He had been considering what was the attitude of Mr. Tyrrell in his own mind as to the position occupied by the Hayes’ during that period. He thought great light was thrown on that point by the extract read by Serjeant Sullivan from a letter written by Mr. Tyrrell in reference to the matter in February, 1913. There he said:—“They now owe £223 for arrears.” How had he arrived at that figure? Ignoring shillings and pence, and taking the rent at the old figure of £41 a year from October, 1905, to February, 1913, there would be over seven and a half years’ rent, say £315 in all. To that there had to be added the amount due at the former date—£90 odd. That made £405, from which payments on account to the amount of £181 had to be subtracted, leaving practically the figures given by Mr. Tyrrell. The only view on which that sentence was intelligible, therefore, was that Mr. Tyrrell considered the old rent as still subsisting.
Order to the effect that the lands were held on a new tenancy on the terms of, and at the rent of, the old tenancy.
Sauerzweig v. Feeney
[1986] IR 226
Finlay C.J.
7th July 1986
I will ask Mr. Justice Henchy to deliver the first judgment.
Henchy J.
This is a case stated by Judge Smith sitting in the Dublin Circuit Court. It arises out of an appeal before him from a decree for possession given in the District Court. That decree was in respect of premises at 11 George’s Avenue, Blackrock, County Dublin. The facts are not in dispute. They show that the plaintiff claimed possession as the successor in title of a landlord who, in 1942, entered into a written contract of tenancy with the defendant, whereby the defendant acquired a tenancy from week to week in the premises at a rent of 15 shillings a week. The plaintiff acquired the landlord’s interest on the death of her father in 1962.
It appears that the tenant has paid no rent since 1950. About 1956 there were negotiations for the purchase of the landlord’s interest by the defendant, but those negotiations came to nothing. In 1956 the defendant made efforts to pay the rent, but he was dissuaded from doing so by the landlord’s solicitor, on the gr ound landlord’s interest were still pending. As I have said, the defendant paid no rent since 1950, and the only steps taken by the landlord in regard to the collection of the rent were three letters written by her solicitorin August, 1977, August, 1978, and February, 1981requesting payment of the rent. Moreover, it is the tenant who has paid the ground rent and the rates since 1960.
The plaintiff, having served a notice to quit determining the weekly tenancy, brought proceedings in the District Court by way of a civil process for overholding and got a decree for possession. When an appeal by the defendant against that decree came before Judge Smith in the Circuit Court, the case argued on behalf of the defendant was that, because he had not paid any rent since 1950, and because he had not since then acknowledged the plaintiff’s title, he has acquired the plaintiff’s title by adverse possession. This case stated, which has been stated under s. 16 of the Courts of Justice Act, 1947, requires this Court to rule on the validity of that submission.
The question does not fall to be determined under s. 17, sub-s. 2 of the Statute of Limitations, 1957, which is in the following terms:
“(a) A tenancy from year to year or other period, without a lease in writing, shall, for the purposes of this Act, be deemed to be determined at the expiration of the first year or other period.
(b) The right of action of a person entitled to land subject to a tenancy from year to year or other period, without a lease in writing, shall be deemed to have accrued at the date of the determination of the tenancy, unless any rent or other periodic payment has subsequently been received in respect of the tenancy, in which case the right of action shall be deemed to have accrued on the date of the last receipt of rent or other periodic payment.”
This is a case, not of a tenancy from year to year, but of a tenancy from week to week with a lease in writing; for the documentary tenancy from week to week ranks as a lease for the purpose of the Act. There is therefore no artificial determination of the tenancy under section 17.
Faced with that difficulty, counsel for the defendant has submitted that, in the circumstances of the case, the tenancy should be deemed to have been determined by abandonment. For that purpose he relies on the old case of Stagg v. Wyatt (1838) 2 Jur. 892. In Stagg v. Wyatt there had been a demise of the premises in question for ninety-nine years. The lease having run out in 1808, there then arose an implied tenancy from year to year, and rent under that tenancy was last paid in 1821. In the subsequent sixteen years before the action was brought, none of the persons who were successively in possession paid any rent. It was held that the failure to demand rent during that period was evidence on which the termination of the tenancy could be presumed.
Even if it were held that Stagg v. Wyatt (1838) 2 Jur. 892 was correctly decided, it is not, in my view, authority for the proposition for which it is put forward in this case. Although the report of the case does not refer to the then relevant statute of limitations (the Real Property Limitation Act, 1833), it is clear that the facts were covered by s. 8 of that Act, which is the equivalent of s. 17 of the Act of 1957. The position is quite different when, as here, the tenancy in question is a documentary one. Moreover, the defendant is the original tenant under the documentary tenancy from week to week entered into in 1942. He paid his rent under the tenancy up to 1950, and would have resumed payment in 1956 were it not that he was then negotiating for the purchase of the landlord’s interest. The landlord showed that she had not determined or abandoned the tenancy when she made formal demands in writing for the payment of the rent in August, 1977, in August, 1978, and again in February, 1981. To none of those demands did the defendant reply that the tenancy had no application to him.
The only proper conclusion in those circumstances is that the tenancy was not determined until the service of the notice to quit in the present proceedings. What the plaintiff, as landlord, has lost is not her title to the property but her right to recover rent after the expiration of six years from the date when the arrears became due (see s. 28 of the Act of 1957). I would answer the question in the case stated accordingly.
Finlay C.J.
I agree.
McCarthy J.
I agree.
Scully v. Corboy.
[1950] IR 140
Gavan Duffy P.
GAVAN DUFFY P. :
22 July 1949
I affirm with costs the decree of the, learned Circuit Court Judge in favour of the plaintiff.
I accept the plaintiff’s evidence of his contract with the defendant for meadowing and the payment made on account. I hold that the difficulty under s. 2 of the Statute of Frauds (Ir.), 1695, from the absence of writing is removed here by the definition of “goods” in s. 62 of the Sale of Goods Act, 1893, as including things attached to, or forming part of, the land, which are agreed to be severed under the contract of sale, and s. 4, sub-s. 1, of that Act is met by the payment on account. (Cp. Cheshire and Fifoot’s “Law of Contract”(1945), at p. 116.)