Recovery of Rent
Cases
Irish Life Assurance Plc v Quinn
[2009] IEHC 153
. JUDGMENT of Ms. Justice Dunne delivered on the 31st day of March, 2009
The plaintiff herein has sued the defendant herein on foot of a guarantee entered into between the plaintiff of the one part and the defendant of the other part. The plaintiff is the landlord of a limited liability company called L’Avenue Decleor Limited which is the tenant of premises at Irish Life Mall, Irish Life Centre, Dublin 1. The sum of €73,263.60 is alleged to be due and owing by the defendant to the plaintiff on foot of the said guarantee in respect of arrears of rent and service charges.
A summary summons was issued on behalf of the plaintiff to recover the said sum. Following the entry of an appearance on behalf of the defendant, an application was made to the Master of the High Court for liberty to enter final judgment. Following the exchange of affidavits, the matter was adjourned to the judge’s list for hearing. The matter came before me from hearing on 20 March, 2009.
In essence, there was no dispute in relation to the amount alleged to be due in respect of rent. There was some dispute in respect of the calculation of the figures due in respect of the sum claimed by way of service charge. In that regard, it was submitted on behalf of the defendant that there was no entitlement to look for the service charge until such time as the amount of the service charge was certified annually by a certificate signed by the auditors of the landlord. It was claimed that the certificate for the years 2006 and 2007 had not been provided. That is correct. Since the commencement of the proceedings, the certificate for 2006 has been supplied. The certificate for 2007 is still awaited. In regard to this argument, reliance was placed on the provisions of the lease. The issue of the service charge is dealt with in the lease at clause 3.2. It provides under the tenant’s covenants:
“To pay the landlord without any deduction by way of further and additional rent
(a)… a reasonable percentage of the expenses and outgoings incurred by the landlord in the repair maintenance, renewal and insurance of the common parts of the areas and buildings from time to time designated by the landlord as the “centre” and the provisions therein and the other heads of expenditure set out in part one of the second schedule…
(b)… a reasonable percentage of the expenses and outgoings incurred by the landlord in the repair, maintenance, renewal and insurance of the areas and buildings from time to time designated by the landlord as the “mall” and the provision of services they are in and the other heads of expenditure set out in part two of the second schedule…”
The lease continues that the payment of the service charges is subject to the following terms and provisions:
“(i) the amount of the service charge shall be ascertained and certified annually by a certificate (hereinafter called the “certificate”) signed by the auditors of the landlord so soon after the end of the landlord’s financial year as may be practicable and shall relate to such here in manner hereinafter mentioned.”
Relying on the provisions set out above, counsel on behalf of the defendant argued that the plaintiff herein could not issue proceedings in respect of the amount of the service charge claimed until such time as the certificate signed by the auditors of the landlord had been made available to the defendant. I have to say that that argument seems to me to be untenable in the light of the provisions of clause 3.2 (vii) which provides that:
“On every gale day of every year during the term the tenant shall pay to the landlord such a sum (hereinafter called the “advance payment”) in advance and on account of the service charge for the quarter thence next ensuing as the landlord or its agents shall from time to time specify at its or their discretion to be fair and reasonable provided that subject and without prejudice to the foregoing provisions the amount of the advance payment for the quarter current at the date of the grant thereof shall be such amount as shall be certified by the landlord or its agents as fair and reasonable in all the circumstances.”
Clause 3.2 (ix) provides:
“It is hereby agreed and declared that the landlord shall not be entitled to re-enter under the provisions in that behalf hereinafter contained by reason only of non-payment by the tenant of any advance payment of the service charge as aforesaid prior to the signature of the certificate but nothing contained in this clause or these presents shall disable the landlord from maintaining an action against the tenant in respect of non-payment of any such advance payment notwithstanding that the certificate had not been signed at the time of the proceedings subject nevertheless to proof in such proceedings by the landlord that the advance payment demanded and unpaid is of a fair and reasonable amount having regard to the prospective service charge ultimately payable by the tenant.”
It is clear from the above provisions of the lease herein that the landlord is entitled to pursue a claim for the service charge notwithstanding that the animal certificate has not been signed by the auditors. I am satisfied therefore that there is no merit in the argument that the amount due in respect of the service charge cannot be the subject of proceedings until such time as the certificate has been provided. The amount in respect of the service charge is subject to verification of the precise amount due in respect of the year 2006, having regard to the certified amount.
The second issue raised by the defendant is an allegation that the plaintiff is in breach of its obligations of good estate management. The gist of the complaint is that the anchor tenant in the centre left and was not replaced by a tenant of similar quality and that one third of the other units are vacant. Thus, it is claimed that the business of the tenant suffered, thereby causing a loss. The level of the loss is not quantified in any way. On this basis, the defendant claims to be entitled to counterclaim for such loss and to set off the loss against the sums claimed herein.
A number of points were made on behalf of the plaintiff about this issue. The first point made is that the lease expressly stipulates that the payment of rent and service charge shall be made “without any deduction”. Reliance was also placed on the provisions of s. 48 of the Landlord and Tenant Amendment Ireland Act 1860 (Deasy’s Act) which provides:
“All claims and demands by any landlord against his tenant in respect of rent shall be subject to deduction or set off in respect of all just debts due by the landlord to the tenant.”
The provisions of Deasy’s Act and in particular s. 48 were considered in the case of MacCausland and Kimmitt v. Carroll and Dooley, [1938] 72 I.L.T.R. 158, at p. 159 where Maguire P. stated as follows:
“It seems to me that that rule taken with the wording of section 48 of the Landlord and Tenant (Ireland) Act 1860, makes it clear that the right of set off in 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 rules and it seems it is only a claim for a liquidated amount that can be set off, as the rules says the defendant must lodge money in court at the time of entering his defence. Therefore the tenant here in proceedings for the rent would not be allowed to set off any Counterclaim from damages for Breach of contract based on the failure of the landlord to carry out the repairs.”
By way of response to the plaintiff’s arguments, it was contended that the defendant did not seek to rely on the statutory right of set-off contained in s. 48 of Deasy’s Act but relied on the equitable right of set-off.
Reliance was placed on the decision in the case of Moohan and Anor. v. S & R Motors (Donegal) Ltd., (Unreported, High Court, Clarke J., 14th December, 2007). In the course of his judgment in that case, Clarke J. referred to the judgment in Prendergast v. Biddle, (Unreported, Supreme Court, 21st July, 1957), saying:
“It is clear from Prendergast v. Biddle (Unreported, Supreme Court, 21st July, 1957, Kingsmill Moore J.), that the test as to whether a cross claim gives rise to a defence in equity, depends on whether the cross claim stems from the same set of facts (such as the same contract) as gives rise to the primary claim. If it does, then an equitable set off is available so that the debt arising on the claim will be disallowed to the extent that the cross claim may be made out.
On the other hand if the cross claim arises from some independent set of circumstances then the claim (unless it can be defended on separate grounds) will have to be allowed, but the defendant may be able to establish a counterclaim in due course, which may in whole or in part be set against the claim. What the position is to be in the intervening period creates difficulty as explained by Kingsmill Moore J., in Prendergast v. Biddle in the following terms: —
‘On the one hand it may be asked, why a plaintiff with a proved and perhaps uncontested claim should wait for a judgment or execution of judgment on this claim because the defendant asserts a plausible but improved (sic) and contested counterclaim. On the other hand it may equally be asked why a defendant should be required to pay the plaintiff’s demand when he asserts and may be able to prove that the plaintiff owes him a larger amount.’
The court’s discretion as to be exercised on the basis of the principles set out by Kingsmill Moore J. later in the course of the same judgment in the following terms:-
‘It seems to me that a judge in exercising his discretion may take into account the apparent strength of the counterclaim and the answer suggested to it, the conduct of the parties and the promptitude with which they have asserted their claims, the nature of their claims and also the financial position of the parties. If, for instance, the defendant could show that the plaintiff was in embarrassed circumstances it might be considered a reason why the plaintiff should not be allowed to get judgment, or execute judgment on his claim, until after the counterclaim had been heard, for the plaintiff having received payment might use the money to pay his debts or otherwise dissipate it so that judgment on the counterclaim would be fruitless. I mention only some of the factors which a judge before whom the application comes may have to take into consideration in the exercise of his discretion.’
It seems to me that it also follows that a court in determining whether a set off in equity may be available, so as to provide a defence to the claim itself, also has to have regard to the fact that the set-off is equitable in nature and, it follows, a defendant seeking to assert such a set-off must himself do equity.”
I accept that the defendant herein is not entitled to a right of set-off by reason of s. 48 of Deasy’s Act. However, it appears that the defendant may be entitled to a set-off in equity in relation to a cross claim arising out of the same contract. I do not accept that the phrase “without any deduction” means that the defendant contracted out of the right to an equitable set-off.
In those circumstances, the question arises as to whether the defendant in this case has done equity such that he is entitled to an equitable set-off. I propose therefore to assess the cross claim in this case having regard to the decision of Kingsmill Moore J. in Prendergast v. Biddle and Clarke J. in Moohan and Anor. v. S & R Motors (Donegal) Ltd.
The defendant herein in his grounding affidavit stated as follows:
“I say that the company … runs a hair and beauty salon from the premises. I say that the company entered into the lease with the plaintiff on the basis that the plaintiff would run a high end shopping mall with anchor tenants and full occupancy of the retail units so as to bring in large numbers of customers or “footfall”. I say that the plaintiff has totally failed in this regard in relation to its obligation of good estate management. By way of example I say that one of the main anchor tenants Iceland Food Ltd the frozen foods supermarket chain has been allowed to vacate its premises in the mall and rather than replacing it with another anchor tenant of a similar nature, the plaintiff has replaced it with a chemist shop. In addition I say that a number of the units are totally empty. I say that for the last number of years at any one time only about 10 of the 15 units are occupied. I say that the impact this is having on the company’s business is devastating as the foot fall of customers into the mall is now extremely low. I say that it is obvious that allowing the anchor tenant to vacate its premises and allowing one third of the units to be empty means that there is no incentive for members of the public to attend at the mall. I say and believe that the plaintiff is in breach of its obligation of good estate management in this regard. As set out above the lease was entered into on behalf of the company on the basis that the mall would continue to have a substantial anchor tenant and full occupancy of its units so as to attract customers, unfortunately the plaintiff has failed to ensure that this is the case and as a result the company and other tenants are suffering losses and financial hardship.
In addition to this I say that the plaintiff is in breach of its obligations as set out in the second schedule of the lease. I say that the quality of the flooring and lighting in the common areas of the mall is very poor and results in the mall looking very shabby and uninviting to customers. This again has resulted in very poor customer numbers attending the mall.”
There is no evidence before this Court to suggest that the issue now complained of by the defendant had been put forward previously as a basis for the non-payment of rent and service charges. There is very little evidence on affidavit to assist the court as to the strength of the cross claim. There is little in the way of evidence to suggest that such a claim would succeed. There is no attempt to quantify the loss alleged. There is no suggestion that following the demand for payment herein that the defendant engaged in any attempt to raise the issue of a breach of the obligation of the plaintiff of good estate management as a defence to the plaintiff’s claim. It appears to be very much a last ditch effort on the part of the defendant to avoid his obligations under the terms of the guarantee entered into by him in respect of the company. Obviously, if this had been an issue raised in correspondence prior to the issue of these proceedings, one would attach more weight to the matter.
Clarke J. in the Moohan case referred to above also commented on the lack of any meaningful attempt to quantify the claim in that case:
“The most striking feature of the cross claim now put forward by S & R Motors is the extent to which it has only been formulated with any precision in very recent times indeed. It was only on the filing of an affidavit of 29 November, 2007 (just a few days before the motions came on for hearing) that any attempt to establish that the cross claim might be such as would extinguish the claim was attempted.”
In the present case, it is the position that the defendant has failed to make any effort whatsoever to attempt to quantify the claim. Accordingly there is no evidence of any kind whatsoever before this Court to suggest that the amount of any cross claim would be such as to meet and extinguish the plaintiff’s claim herein. That being so, it is difficult to see why the plaintiff should not be entitled at this point in time to judgment for an amount to which it is clearly entitled and in respect of which, there is no bona fide defence.
Bearing in mind the fact that the issue of good estate management does not appear to have arisen prior to the affidavit sworn herein by the defendant, the fact that it is not clear on the evidence that the defendant has any reasonable prospect of success in the cross claim and that there has been no attempt whatsoever to quantify the cross claim, I do not think it would be appropriate to delay the plaintiff in entering judgment in circumstances where it is clear that there is no bona fide defence to the claim. The defendant is not precluded in any way from pursuing a claim that the plaintiff herein is in breach of its obligations under the lease in respect of good estate management. However, I do not think that in equity the defendant is entitled to do so in the course of these proceedings. In those circumstances, I am satisfied that the plaintiff is entitled to judgment in the amount claimed herein subject to verification of the figures having regard to the amounts set out in the certificate for the year 2006.
Watters v Creagh and Nolan
Circuit Court
11 December 1957
[1958] 92 I.L.T.R 196
Judge, Deale
Judge Deale
The plaintiff in these actions was the landlord and the defendants were her tenants of the premises consisting of a yard, shed and offices at rere of Seapoint Stores, Bray, Co. Wicklow. In one action she claims damages for breach of a condition in the tenancy agreement for the repair of the premises, in the other she claims arrears of rent from the 31st December, 1954, to 31st July, 1956.
The plaintiff let the premises to the defendants under an agreement in writing dated 14th August, 1953, which created a term of three years from 1st August, 1953. It contained an unusual provision, clause 4 of the agreement, which I must interpret, for upon it depends the outcome of the action for rent, and, to some extent, of the action for damages.
Clause 4 is as follows:—“It is hereby agreed that in the event of the tenants’ business not prospering they may terminate this agreement at any time during the term by giving the landlord three months’ notice in writing on any gale day”
Two questions arise on the true meaning of this clause, namely (1) what is meant by the words “the tenants’ business not prospering” and (2) what is the gale day?
The business was that of coal, timber and general fuel merchants, no other general business having been carried on. It was a new business, and I am satisfied on the evidence of the defendants and of their accountant that for the period 1st August 1953, to 31st August, 1954, the business lost money. Much evidence was gone into on this question which I need not set out, and the only comment called for is that the books and records kept by the defendants were sketchy. Nevertheless, the final picture is clear and I am satisfied that the business made no profit in that period.
Dr. Baker submitted that a period of thirteen months was insufficient to test whether a new business could be said to prosper, and referred me to the accountant’s evidence that a test period of two or three years would be required before it could be said that a new business did not prosper. This submission, which as a general proposition may be valid, is, I think, disposed of in this case by the fact that the parties obviously had in mind a shorter test period since clause 4 entitled the tenants to terminate the agreement at any time during the three years term. Whilst a period of a month or two might be much too short even on the wording of clause 4, I am of opinion that thirteen months was more than sufficient as a test.
The words “the tenants’ business not prospering” mean, in my opinion, simply *198 that the business would not have prospered if after a reasonable time—less than three years—it failed to produce a reasonable net profit for those engaged in it, and I have already found that it produced a loss in a reasonable period. I am of opinion, accordingly, that the business did not prosper within the meaning of clause 4.
The defendants served two notices on the plaintiff pursuant, as they believed, to clause 4 The first one was dated 8th July, 1954, and gave three months’ notice of termination, expiring on the 9th October, a Saturday, the second one was dated the 30th September, and gave three months’ notice, expiring on the 31st December, a Friday The tenants quitted the premises in November, 1954. The question is was either notice served on a gale day?
Clause 1 of the agreement provides that the letting is to be for a term of three years from the 1st August, 1953, a Saturday “at the weekly rent of £2 5s 0d, such rent to be paid two months in advance, the first payment to be made on the signing hereof” On the signing of the agreement eight weeks’ rent was paid, and the parties appear to have treated the period of two months as being really eight weeks as a matter of convenience in calculating the amount of rent which was to be paid in advance. Dr. Baker says that this provision means that the day for payment of each instalment of rent in advance was every eighth Saturday— therefore the gale day was every eighth Saturday. If he is right in this submission, the two notices are bad, and the tenancy continued in fact for the full term of three years, and the action for rent succeeds.
In my opinion, this submission is not valid for two reasons. Firstly the term of the tenancy is three years, that is, one hundred and fifty-six weeks. If the gale day is every eighth Saturday, there are gale days for only one hundred and fifty-two weeks (nineteen multiplied by eight), nineteen gale days in all But there is no gale day in respect of the last four weeks of the term. There is something wrong here obviously, for there should be a gale day for every payment of rent throughout the term.
Mr. Geraghty’s submission supplies the other reason. He points out that the rent is a weekly rent, not a two-monthly or eight-weekly rent. The only reference to the two-monthly period is the payment of rent in advance for that period Accordingly, after the first advance payment had been made on the signing of the agreement, the tenants, if they had chosen, could have paid a weekly rent on the 8th August, and on every succeeding Saturday, and by doing this would have always been eight weeks in advance with the rent. The alternative method was also open to them, and this in fact they adopted, of paying the eight weeks rent in advance in one sum in every eighth week. But if they had chosen to make the payments weekly, it is clear that the first day for such payments was the 8th August, a Saturday, and that the gale day was a Saturday.
In my opinion, the gale day was a weekly one, a Saturday, and the second notice of surrender by the tenants was therefore good, and the tenancy was determined on the 31st December, 1954. All rent due to that date was paid and, accordingly, the action for rent fails, and I dismiss it with costs.
The action for non-repair claims damages in respect of the state of the premises up to the 1st August, 1956, but as I have held that the tenancy determined on the 31st December, 1954, the plaintiff can only recover in respect of such damages as relate to the state of the premises on the latter date.
Clause 2 (b) of the agreement provides that the tenants agree “to repair at their own expense the main gates leading to the main road from the said yard and to keep the said yard, the shed and office and approach to said yard in a good state of repair and to deliver it up in that good and proper repair and condition at the termination of this tenancy”.
When the defendants took the premises they were not in good repair. The shed and gates were old, and the latter were in serious need of repair The shed was in what I think may reasonably be described as adequate repair, but no more. However, it sufficed for the purpose of the defendants’ business. But a storm in 1954 caused roof damage which the defendants were bound to make good. They failed properly to repair it, sending one of their employees to the premises with inadequate materials for the purpose. If the work had been properly done then I think some of the subsequent damage would not have occurred; but it is difficult to relate the condition on 31st December, 1954, since the architect did not examine the premises between 1951 and January, 1957, and the evidence of the parties on the condition of the shed on 31st December, 1954, is conflicting and lacking in precision. *199
The gates were in a bad way when the tenancy began, and were put into working order by the defendants. They are now as bad as ever, or worse, but I do not know what their condition was in December, 1954. However, they have been in use for many years and have long since passed their useful life.
In considering this matter, I must have regard to the nature of these premises—a coal yard with a shed and office on it—and their age, which is considerable. I think the defendants have some liability in respect of the gates, but it is not high. New gates would cost £40 to £42 approximately. I think a sum of £10 would be reasonable for this item.
The shed is a more substantial item. But here again the plaintiff cannot prove with any degree of precision what damage is fairly attributable to the defendants’ breach of contract, and what damage is due to the combined effects of age, and neglect by the plaintiff of the premises since 31st December, 1954, when the tenancy ended. She appears to have done nothing to the property since, and the wind and weather have disimproved it. The architect’s evidence relates to a full repair of the shed and if the defendants were liable for this—which they are not—the cost would be about £70 or £80.
I think a sum of £25 would be a reasonable allowance for the defendants’ liability for non-repair.
Accordingly, I give a decree for £35 with costs.
Ronan McNamee and Jacqueline
McNamee v Estherfield Ltd and Hickey’s Pharmacy Ltd
[2014] IEHC 205 Barrett J.
JUDGMENT of Mr. Justice Barrett delivered on the 1st day of April, 2014
1. This is an application for summary judgment brought by the plaintiffs, Mr. and Ms. McNamee, in respect of rent that they claim is owed to them jointly and severally by Estherfield Limited, the first named defendant, and Hickey’s Pharmacy Limited, the second named defendant, under a lease and license arrangement pursuant to which Hickey’s Pharmacy Limited operates a pharmacy on the plaintiffs’ premises at the junction of Grafton Street and Duke Street in Dublin City.
Facts
2. By Indenture of Lease dated 26th March, 1992, Dublin City Properties Limited, as landlord, and Spellbound Limited, as tenant, entered into a 35-year lease in respect of the premises referred to above. The plaintiffs acquired the premises from Dublin City Properties Limited on 28th January, 2003. The second-named defendant is currently in occupation of, and operates a pharmacy on, the premises. By virtue of the lease and a subsequent licence entered into between the plaintiffs, Spellbound Limited and the defendants, on 3rd April, 2003, the defendants are jointly and severally liable for rents owing under the lease. Certain rents not having been paid, the plaintiffs have commenced the instant proceedings. The defendants have raised a number of defences to the claim and contend that this is a matter that ought to be remitted to plenary hearing. In essence, the defences raised are as follows: first, the defendants dispute the amounts claimed; second, the defendants contend that an allegedly unauthorised development by the plaintiffs at a premises that does not adjoin the demised premises will adversely affect the business operated at the demised premises; and third, they dispute that they can be found liable in these proceedings for amounts of rent that became owing after the notice of motion grounding these proceedings issued.
3. Based on the evidence contained in the pleadings, the court finds that the various amounts sought by the plaintiffs by way of outstanding rent are correctly accounted for. That means of the three defences raised to these summary proceedings, only those as to planning and the recovery of post-notice of motion sums survive for consideration.
The planning law issue
4. The hurdle that must be surmounted by the defendants as regards obtaining leave to defend at plenary hearing is a low one. As Hardiman J. stated in Aer Rianta c.p.t. v. Ryanair Limited [2001] 4 IR 607 at 623:-
“In my view, the fundamental questions to be posed on an application such as this remain: is it ‘very clear’ that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant’s affidavits fail to disclose even an arguable defence?”
5. In Harrisrange Limited v. Michael Duncan [2003] 4 IR 1 at 7, McKechnie J. summarised the principles that he considered to be relevant when a court approaches the issue of whether to grant summary judgment or leave to defend, viz:-
“(i) the power to grant summary judgment should be exercised with discernible caution;
(ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case …
(iii) in so doing the court should assess not only the defendant’s response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff…
(iv) where truly there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use;
(v) where however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure;
(vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought is evidently not required for a better determination of such issues;
(vii) the test to be applied, as now formulated is whether the defendant has satisfied the court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, ‘is what the defendant says credible? ‘…
(viii) the test is not the same as and should not be elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence;
(ix) leave to defend should be granted unless it is very clear that there is no defence;
(x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action;
(xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally;
(xii) the overriding determinative factor, bearing in mind the constitutional basis of a person ‘s right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter judgment or leave to defend, as the case may be.”
6. In the present case, the planning law issue raised by the defendants is more in the nature of a cross-claim or counterclaim, rather than a defence to the summary proceedings. What is the court to do in a case where a defendant raises a cross-claim in defence to a motion for summary judgment? The classic precedent in this regard is the Supreme Court decision in Prendergast v. Biddle (Unreported, Supreme Court, 31st July, 1957), the principles identified therein having been recently amplified upon in Moohan v. S & R Motors (Donegal) Limited [2008] 3 IR 650. In that later case, Clarke J. summarises the approach to be adopted by a court where a defendant raises a cross-claim as follows at 656:-
“(a) …In order for the asserted cross-claim to amount to a defence as such, it must arguably give rise to a set off in equity and must, thus, stem from the same set of circumstances as give rise to the claim but also arise in circumstances where, on the basis of the defendant’s case, it would not be inequitable to allow the asserted set off;
(b) if and to the extent that a prima facie case for such a set off arises, the defendant will be taken to have established a defence to the proceedings and should be given liberty to defend the entire (or an entire proportion of) the claim …
(c) if the cross-claim amounts to an independent claim, then judgment should be entered on the claim but the question of whether execution of such judgment should be stayed must be determined in the discretion of the court by reference to the principles set out by Kingsmill Moore J. in Prendergast v. Biddle…”
7. Clarke J. concluded in Moohan that a set-off was available there, the default position being that a party is entitled to a set-off in equity in relation to any cross claim arising out of the same contract. In the present case, the court finds that no such set-off is available. The cross-claim in these proceedings is concerned with a matter that has nothing to do with the rents owing under the lease. Taking the defendants’ case at its height, even if a claim in respect of a purportedly unauthorised development at a property owned by the plaintiffs but not adjoining the demised premises was entirely successful, this is a matter so unconnected to the issue of rent owing under the lease pertaining to the demised premises as not to yield any right of set-off in equity. This is not a case where, as in Moohan, a single construction contract has yielded a claim for monies due and a counterclaim for defective works. In truth, the court struggles to see that there is any substantive connection between the issue of the rents claimed by the plaintiffs and the planning issue raised by the defendants except for the somewhat tenuous connection that the various relevant properties are ultimately in common ownership. The cross-claim here amounts to an entirely independent claim and that, per Clarke J. in Moohan, has the result that judgment should be entered on the plaintiffs’ claim with the question as to whether execution ought to be stayed falling to be determined by reference to the principles set out in Prendergast. In that earlier case, Kingsmill Moore J., at 7, stated that:-
“If… the Defendant, while admitting that he has no direct defence to the claim, puts forward a plausible counterclaim a difficult problem must arise. Though the necessary evidence to support the claim is already before the Court and judgment on the claim can be given at once, there must usually be delay in formulating the counterclaim in a pleading, in preparing the evidence to support it at a hearing (if it be contested), and in waiting for a trial. On the one hand it may be as/red why a Plaintiff with a proved and perhaps uncontested claim should wait for judgment or execution of a judgment on his claim because the Defendant asserts a plausible but improved [unproved?] and contested counterclaim. On the other hand it may equally be asked why a Defendant should be required to pay the Plaintiff’s demand when he asserts and may be able to prove that the Plaintiff owes him a larger amount. To such questions there can be no hard and fast answer. It seems to me that a judge in exercising his discretion may take into account the apparent strength of the counterclaim and the answer suggested to it, the conduct of the parties and the promptitude with which they have asserted their claims, the nature of their claims and also the financial position of the parties.”
8. The starting-point of Kingsmill Moore J’s observations is that a defendant has a plausible counterclaim. It is not at all clear that in the present case the defendants in fact have a plausible counterclaim. Certainly there is little evidence on affidavit to assist the court as to the strength of the counterclaim and there is no evidence to suggest that it would succeed. Nor is there any attempt to quantify the loss alleged. Indeed, it might perhaps be contended that the counterclaim raised in these proceedings is nothing more than a last-ditch effort on the part of the defendants to construct a defence that is adequate to satisfy the low hurdle identified in Aer Rianta and Harrisrange for remittal of summary proceedings to plenary hearing. However, the court considers that even the low hurdle identified in Aer Rianta and Harrisrange has not been satisfied. Moreover, even if the defendants’ counterclaim was plausible, the court does not consider that the Prendergast principles require that any entitlement of the plaintiffs to recover the outstanding rent monies be postponed until the conclusion of plenary proceedings in which the substance and strength of an as yet barely formulated counterclaim of uncertain plausibility is tested.
Claims for rents arising after proceedings commenced
9. The defendants have disputed that they can be found liable in these proceedings for amounts of rent that became owing after the notice of motion grounding these proceedings issued. A consideration of the recent jurisprudence of the court, in particular the decision of Clarke J. in Dublin Docklands Development Authority v. Jermyn Street Limited and Black Tie Limited [2010] IEHC 217 and O’Neill J. in Quarryvale Two Limited and Quarryvale Three Limited v. Stephen Beere and Graeme Beere [2012] IEHC 546 indicates that the defendants are mistaken in this contention.
10. In Jermyn Street, the Dublin Docklands Development Authority brought proceedings seeking to recover rent and other charges against Jermyn Street and in relation to the guarantee of that rent and other charges against Black Tie. With regard to the Authority’s claim in respect of continuing, and rising, arrears of rent and other charges, the defendants claimed, much as the defendants in this case, that it is not permissible to maintain a claim in respect of ongoing rent or charges in summary proceedings. Writing in this regard Clarke J. stated, at 12, that:-
“The basis for that contention is that it is said that each failure to pay rent (or indeed other charges) as they fall due, gives rise to a separate cause of action. Thus, it is argued, sums due in respect of rent which have not arisen as of the time of issuing of proceedings relate to causes of action not then extant such that the same cannot be maintained in the same proceedings. It was accepted on behalf of Jermyn Street that ….continuing interest can be claimed in summary summons proceedings where the interest is provided for and ascertainable under the terms of the relevant contract or is fixed by statute. It is clear, therefore, that continuing interest can be claimed even though that interest accrues after the date when a summary summons is issued. It seems to me that there is no reason in principle why continuing rent cannot be claimed on the same basis.”
11. In Quarryvale, O’Neill J. approved the reasoning in Jermyn Street and allowed a claim for amounts additional to those contained in the original summary summons, stating, at paras. 23 and 24, that:-
“The additional claims sought to be made in these proceedings are so closely associated with the original claims made in the summary summons that it makes complete sense, both in terms of procedural efficiency and the avoidance of unnecessary cost, to have these claims dealt with in the one set of proceedings. Indeed, the converse, namely that as each quarter of rent and/or services charges fell due and into arrears, afresh set of proceedings was required, offends any sensible notion of procedural efficiency and would lead to much greater and unnecessary cost in making these types of claims.
…I am quite satisfied that within the summary summons procedure, where serial or sequential claims arise out of circumstances similar to and closely associated with the causes of action raised in the endorsement of claim on the summary summons, additional claims can be the subject matter of the application for liberty to enter final judgment if such additional claims are appropriately set out and supported by affidavit evidence. Needless to say, these additional claims could only be for liquidated sums.”
12. This Court respectfully agrees with the reasoning adopted respectively by Clarke J. and O’Neill J. in the Jermyn Street and Quarryvale cases. To borrow from the phraseology of O’Neill J., the claims for post-notice of motion arrears made in the instant proceedings clearly arise out of circumstances similar to and closely associated with the causes of action raised in the endorsement of claim on the summary summons: what is being sought is simply more rent owing under the same lease and licence arrangements. In terms of procedural efficiency and the avoidance of unnecessary cost, it would be absurd if the court was to hold that only rent owing at the time of issuance of these proceedings could be claimed and that the commencement, hearing and determination of fresh proceedings in which precisely the same issues as have arisen before this Court would need to take place before later- owing rents could be recovered by the plaintiffs.
Conclusion
13. For the reasons stated above, the court does not consider that these summary proceedings should be referred to plenary hearing and grants judgment to the plaintiffs for the amount sought, being €557,780.93 plus interest and costs.
Murphy & anor v A.R.F. Management Ltd & ors
[2019] IEHC 802 (22 November 2019)
JUDGMENT of Mr. Justice Meenan delivered on the 22nd day of November, 2019Introduction1. This judgment concerns the provisions of the Rules of the Superior Courts (RSC) thatprovide for the renewal of a summons. The relevant rule is Order 8, which was amendedby S.I. 482 of 2018: Rules of The Superior Courts (Renewal Of Summons) 2018. I willconsider the terms of the amendment to Order 8, in order to determine whether it is stillpermissible for a court to renew a summons on more than one occasion, as was permittedby the original wording of Order 8. The amended rule came into operation on 11 January2019.Background2. These proceedings relate to an alleged misappropriation by the first named defendantand/or its former directors in the sum of €3,376,255. The plaintiffs seek damages for,inter alia, fraud, deceit and/or misrepresentation, breach of fiduciary duty, breach ofcontract, negligence and breach of duty. The plenary summons was issued on 28 April2017.3. On 22 October 2018, the court made an Order renewing the summons for a period of sixmonths. This application was made under the original Order 8.4. On 12 April 2019, the court made an Order further renewing the summons for a period ofthree months to permit the plaintiffs to issue a request for service abroad of thesummons, in accordance with the Convention on the Service Abroad of Judicial andExtrajudicial Documents in Civil or Commercial Matters, on one of the director defendantswho resides in the Russian Federation.5. On 8 July 2018, the court made an Order further renewing the summons for a period ofthree months to allow service to be effected in accordance with the said Convention. Thecourt held that “special circumstances” existed which justified a further renewal, thereasons being “complexities and delays involved in the service of proceedings on some ofthe defendants residing outside the jurisdiction.” However, the issue as to whether, underthe amended Order 8, such a renewal was permissible does not appear to have been inissue. Finally, on 7 October 2019, this Court made an Order further renewing thesummons for a period so as to enable legal submissions to be made in respect of theeffects of the revision of Order 8.Order 8 R.S.C.6. The original Order 8(1) provides: -Page 2 ⇓“1. No original summons shall be in force for more than twelve months from the day ofthe date thereof… but if any defendant therein named shall not have been servedtherewith, the plaintiff may apply before the expiration of twelve months to theMaster for leave to renew the summons. After the expiration of twelve months, anapplication to extend time for leave to renew the summons shall be made to theCourt. The Court or the Master, as the case may be, if satisfied that reasonableefforts have been made to serve such defendant, or for other good reason, mayorder that the original or concurrent summons be renewed for six months from thedate of such renewal inclusive, and so from time to time during the currency of therenewed summons…”The amended Order 8 provides: -“(1) No original summons shall be in force for more than twelve months from the day ofthe date thereof… but if any defendant therein named shall not have been servedtherewith, the plaintiff may apply before the expiration of twelve months to theMaster for leave to renew the summons.(2) The Master on an application made under sub-rule (1), if satisfied that reasonableefforts have been made to serve such defendant, or for other good reason, mayorder that the original… be renewed for three months from the date of suchrenewal inclusive.(3) After the expiration of twelve months, and notwithstanding that an order may havebeen made under sub-rule (2), application to extend time for leave to renew thesummons shall be made to the Court.(4) The Court on an application under sub-rule (3) may order a renewal of the originalor concurrent summons for three months from the date of such renewal inclusivewhere satisfied that there are special circumstances which justify an extension,such circumstances to be stated in the order.(5) …”It seems to me that the following are the material amendments: -(i) The period of renewal is reduced from 6 months to 3 months;(ii) The words “and so from time to time during the currency of the renewed summons”in the original Order 8 are not repeated in the amended Order 8;(iii) The original rule provides that the court may order a summons “be renewed”whereas the amended rule provides that the court may order “a renewal” of thesummons; and(iv) Under the original rule the court may renew a summons “if satisfied that reasonableefforts have been made to serve such defendant, or for other good reason” whereasPage 3 ⇓the amended rule provides that “The court…may order a renewal of the…summons… where satisfied that there are special circumstances which justify anextension…”Submissions of the plaintiff7. Counsel for the plaintiff referred to the decision of Finlay Geoghegan J. in Chambers v.Kenefick [2007] 3 I.R. 526, where she stated: -“…proper approach of this Court to determining whether or not it should exercise itsdiscretion under O., 8 r. 1 where the application is based upon what is referred totherein as “other good reason” is the following. Firstly, the court should consider isthere a good reason to renew the summons. That good reason need not bereferrable to the service of the summons. Secondly, if the court is satisfied thatthere are facts and circumstances which either do or potentially constitute a goodreason to renew the summons then the court should move to what is sometimesreferred to as the second limb of considering whether, because of the good reason,it is in the interests of justice between the parties to make an order for the renewalof the summons. Thirdly, in considering the question of whether it is in the interestsof justice as between the parties to renew the summons because of the identifiedgood reason, the court will consider the balance of hardship for each of the partiesif the order for renewal is or is not made.”This approach was followed by Feeney J. in Bingham v. Crowley and Others [2008] IEHC453. Feeney J. also held that any application for a renewal, after a six-month renewal hadbeen granted, had to be made “during the currency of the renewed summons”.8. On the issue as to whether the amended Order 8 still allows for multiple renewals,Counsel for the plaintiff submitted that if it was intended that the amended Order 8 wouldonly allow for one renewal this would have been clearly stated. As multiple renewals are acommon feature in litigation, such an amendment would represent a considerable change.This point was illustrated, it was submitted, by the following passage from the SupremeCourt decision in the application of Liam Liston (1996) 1 I.R. 501 where, Keane J. (as hethen was), delivering the judgment of the Supreme Court on an issue concerning theeffect of a provision in the Income Tax Act, 1967 on the Finance Act, 1983, stated: -“If the intention of the Oireachtas was that the deeming provision in questionshould be confined in the manner suggested, the draughtsman would have used theusual formula at the beginning of the subsection, i.e. ‘for the purposes of thissection’. No reason has been advanced as to why, in the absence of any suchindication, the section should be construed in the manner suggested.”Consideration of submissions9. In interpreting Order 8 RSC, I must look to the plain meaning of the text. I adopt thefollowing passage from the judgment of Finlay C.J. in McGrath v. McDermott [1988] I.R.258 where, at p. 276, he stated: -Page 4 ⇓“The function of the courts in interpreting a statute of the Oireachtas is, however,strictly confined to ascertaining the true meaning of each statutory provision,resorting in cases of doubt or ambiguity to consideration of the purpose andintention of the Legislature to be inferred from other provisions of the statuteinvolved, or even of other statutes expressed to be construed with it. The courtshave not got a function to add to or delete from express statutory provisions so asto achieve objectives which to the courts appear desirable. …”10. In interpreting Order 8 RSC, as amended, two issues have to be considered. Firstly, thecircumstances under which a court can renew a summons and, secondly, how often acourt can renew a summons. As to the first issue, the amended Order 8 has broughtabout a change in that under the original Order 8 the court may order a summons berenewed “if satisfied that reasonable efforts have been made to serve … but for othergood reason” whereas now a court has to be satisfied “that there are specialcircumstances” which justify a renewal. Assuming that the court is satisfied that specialcircumstances exist to order a renewal, this raises the second issue as to whether such anorder can be made by a court on more than one occasion. This requires an interpretationof the wording of the amended rule.11. The fact that the period of renewal has been reduced, from six months to three months,may indicate an intention to tighten procedures, but it does not provide an answer as towhether multiple renewals are still permissible. Of significance is the fact that the words“… and so from time to time during the currency of the renewed summons” have beendeleted from the amended Order 8. It was these words that enabled multiple renewals bythe court, provided that the application was made during the currency of the renewedsummons. The absence of these words clearly indicates that more than one renewal is nolonger permissible. I refer to the following passage from Feeney J. in Bingham v. Crowleyand Others where he stated: -“19. …The Court is obliged to give effect and meaning to the wording of Order 8, Rule 1and that includes to the words ‘during the currency of the renewed summons’. Theonly interpretation which can be given to the words ‘the currency of the renewedsummons’ is the period identified as being the six month period of renewal providedfor in an order to renew the summons. The rule provides a more stringentrequirement in relation to a second or subsequent renewal in that after the firstrenewal, a summons will be incapable of further renewal unless an application torenew is made within the currency of the renewed summons.”12. Further, the original Order 8 referred to “…may order that the original …summons berenewed…”. The amended Order 8 refers to “a renewal of the … summons” as opposed to“renewal” which could be both in the singular and the plural (see s. 18 of theInterpretation Act, 2005). To my mind, this interpretation is consistent with the effects ofthe deletion of the words in the original rule, which I have already referred to, whichpermitted renewals on more than one occasion.ConclusionPage 5 ⇓13. By reason of the foregoing, I am satisfied that, on its true construction, the amendedOrder 8, as provided for by S.I. 482 of 2018, provides that a court can only renew asummons on one occasion. It is no longer permissible for a court, having already reneweda summons, to order a further renewal.
Result: It was ruled that it is no longer permissible for a court to renew a summons on more than one occasion.
Irish Life Assurance PLC -v- Quinn
[2009] IEHC 153
Dunne J.
JUDGMENT of Ms. Justice Dunne delivered on the 31st day of March, 2009
The plaintiff herein has sued the defendant herein on foot of a guarantee entered into between the plaintiff of the one part and the defendant of the other part. The plaintiff is the landlord of a limited liability company called L’Avenue Decleor Limited which is the tenant of premises at Irish Life Mall, Irish Life Centre, Dublin 1. The sum of €73,263.60 is alleged to be due and owing by the defendant to the plaintiff on foot of the said guarantee in respect of arrears of rent and service charges.
A summary summons was issued on behalf of the plaintiff to recover the said sum. Following the entry of an appearance on behalf of the defendant, an application was made to the Master of the High Court for liberty to enter final judgment. Following the exchange of affidavits, the matter was adjourned to the judge’s list for hearing. The matter came before me from hearing on 20 March, 2009.
In essence, there was no dispute in relation to the amount alleged to be due in respect of rent. There was some dispute in respect of the calculation of the figures due in respect of the sum claimed by way of service charge. In that regard, it was submitted on behalf of the defendant that there was no entitlement to look for the service charge until such time as the amount of the service charge was certified annually by a certificate signed by the auditors of the landlord. It was claimed that the certificate for the years 2006 and 2007 had not been provided. That is correct. Since the commencement of the proceedings, the certificate for 2006 has been supplied. The certificate for 2007 is still awaited. In regard to this argument, reliance was placed on the provisions of the lease. The issue of the service charge is dealt with in the lease at clause 3.2. It provides under the tenant’s covenants:
“To pay the landlord without any deduction by way of further and additional rent
(a)… a reasonable percentage of the expenses and outgoings incurred by the landlord in the repair maintenance, renewal and insurance of the common parts of the areas and buildings from time to time designated by the landlord as the “centre” and the provisions therein and the other heads of expenditure set out in part one of the second schedule…
(b)… a reasonable percentage of the expenses and outgoings incurred by the landlord in the repair, maintenance, renewal and insurance of the areas and buildings from time to time designated by the landlord as the “mall” and the provision of services they are in and the other heads of expenditure set out in part two of the second schedule…”
The lease continues that the payment of the service charges is subject to the following terms and provisions:
“(i) the amount of the service charge shall be ascertained and certified annually by a certificate (hereinafter called the “certificate”) signed by the auditors of the landlord so soon after the end of the landlord’s financial year as may be practicable and shall relate to such here in manner hereinafter mentioned.”
Relying on the provisions set out above, counsel on behalf of the defendant argued that the plaintiff herein could not issue proceedings in respect of the amount of the service charge claimed until such time as the certificate signed by the auditors of the landlord had been made available to the defendant. I have to say that that argument seems to me to be untenable in the light of the provisions of clause 3.2 (vii) which provides that:
“On every gale day of every year during the term the tenant shall pay to the landlord such a sum (hereinafter called the “advance payment”) in advance and on account of the service charge for the quarter thence next ensuing as the landlord or its agents shall from time to time specify at its or their discretion to be fair and reasonable provided that subject and without prejudice to the foregoing provisions the amount of the advance payment for the quarter current at the date of the grant thereof shall be such amount as shall be certified by the landlord or its agents as fair and reasonable in all the circumstances.”
Clause 3.2 (ix) provides:
“It is hereby agreed and declared that the landlord shall not be entitled to re-enter under the provisions in that behalf hereinafter contained by reason only of non-payment by the tenant of any advance payment of the service charge as aforesaid prior to the signature of the certificate but nothing contained in this clause or these presents shall disable the landlord from maintaining an action against the tenant in respect of non-payment of any such advance payment notwithstanding that the certificate had not been signed at the time of the proceedings subject nevertheless to proof in such proceedings by the landlord that the advance payment demanded and unpaid is of a fair and reasonable amount having regard to the prospective service charge ultimately payable by the tenant.”
It is clear from the above provisions of the lease herein that the landlord is entitled to pursue a claim for the service charge notwithstanding that the animal certificate has not been signed by the auditors. I am satisfied therefore that there is no merit in the argument that the amount due in respect of the service charge cannot be the subject of proceedings until such time as the certificate has been provided. The amount in respect of the service charge is subject to verification of the precise amount due in respect of the year 2006, having regard to the certified amount.
The second issue raised by the defendant is an allegation that the plaintiff is in breach of its obligations of good estate management. The gist of the complaint is that the anchor tenant in the centre left and was not replaced by a tenant of similar quality and that one third of the other units are vacant. Thus, it is claimed that the business of the tenant suffered, thereby causing a loss. The level of the loss is not quantified in any way. On this basis, the defendant claims to be entitled to counterclaim for such loss and to set off the loss against the sums claimed herein.
A number of points were made on behalf of the plaintiff about this issue. The first point made is that the lease expressly stipulates that the payment of rent and service charge shall be made “without any deduction”. Reliance was also placed on the provisions of s. 48 of the Landlord and Tenant Amendment Ireland Act 1860 (Deasy’s Act) which provides:
“All claims and demands by any landlord against his tenant in respect of rent shall be subject to deduction or set off in respect of all just debts due by the landlord to the tenant.”
The provisions of Deasy’s Act and in particular s. 48 were considered in the case of MacCausland and Kimmitt v. Carroll and Dooley, [1938] 72 I.L.T.R. 158, at p. 159 where Maguire P. stated as follows:
“It seems to me that that rule taken with the wording of section 48 of the Landlord and Tenant (Ireland) Act 1860, makes it clear that the right of set off in 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 rules and it seems it is only a claim for a liquidated amount that can be set off, as the rules says the defendant must lodge money in court at the time of entering his defence. Therefore the tenant here in proceedings for the rent would not be allowed to set off any Counterclaim from damages for Breach of contract based on the failure of the landlord to carry out the repairs.”
By way of response to the plaintiff’s arguments, it was contended that the defendant did not seek to rely on the statutory right of set-off contained in s. 48 of Deasy’s Act but relied on the equitable right of set-off.
Reliance was placed on the decision in the case of Moohan and Anor. v. S & R Motors (Donegal) Ltd., (Unreported, High Court, Clarke J., 14th December, 2007). In the course of his judgment in that case, Clarke J. referred to the judgment in Prendergast v. Biddle, (Unreported, Supreme Court, 21st July, 1957), saying:
“It is clear from Prendergast v. Biddle (Unreported, Supreme Court, 21st July, 1957, Kingsmill Moore J.), that the test as to whether a cross claim gives rise to a defence in equity, depends on whether the cross claim stems from the same set of facts (such as the same contract) as gives rise to the primary claim. If it does, then an equitable set off is available so that the debt arising on the claim will be disallowed to the extent that the cross claim may be made out.
On the other hand if the cross claim arises from some independent set of circumstances then the claim (unless it can be defended on separate grounds) will have to be allowed, but the defendant may be able to establish a counterclaim in due course, which may in whole or in part be set against the claim. What the position is to be in the intervening period creates difficulty as explained by Kingsmill Moore J., in Prendergast v. Biddle in the following terms: —
‘On the one hand it may be asked, why a plaintiff with a proved and perhaps uncontested claim should wait for a judgment or execution of judgment on this claim because the defendant asserts a plausible but improved (sic) and contested counterclaim. On the other hand it may equally be asked why a defendant should be required to pay the plaintiff’s demand when he asserts and may be able to prove that the plaintiff owes him a larger amount.’
The court’s discretion as to be exercised on the basis of the principles set out by Kingsmill Moore J. later in the course of the same judgment in the following terms:-
‘It seems to me that a judge in exercising his discretion may take into account the apparent strength of the counterclaim and the answer suggested to it, the conduct of the parties and the promptitude with which they have asserted their claims, the nature of their claims and also the financial position of the parties. If, for instance, the defendant could show that the plaintiff was in embarrassed circumstances it might be considered a reason why the plaintiff should not be allowed to get judgment, or execute judgment on his claim, until after the counterclaim had been heard, for the plaintiff having received payment might use the money to pay his debts or otherwise dissipate it so that judgment on the counterclaim would be fruitless. I mention only some of the factors which a judge before whom the application comes may have to take into consideration in the exercise of his discretion.’
It seems to me that it also follows that a court in determining whether a set off in equity may be available, so as to provide a defence to the claim itself, also has to have regard to the fact that the set-off is equitable in nature and, it follows, a defendant seeking to assert such a set-off must himself do equity.”
I accept that the defendant herein is not entitled to a right of set-off by reason of s. 48 of Deasy’s Act. However, it appears that the defendant may be entitled to a set-off in equity in relation to a cross claim arising out of the same contract. I do not accept that the phrase “without any deduction” means that the defendant contracted out of the right to an equitable set-off.
In those circumstances, the question arises as to whether the defendant in this case has done equity such that he is entitled to an equitable set-off. I propose therefore to assess the cross claim in this case having regard to the decision of Kingsmill Moore J. in Prendergast v. Biddle and Clarke J. in Moohan and Anor. v. S & R Motors (Donegal) Ltd.
The defendant herein in his grounding affidavit stated as follows:
“I say that the company … runs a hair and beauty salon from the premises. I say that the company entered into the lease with the plaintiff on the basis that the plaintiff would run a high end shopping mall with anchor tenants and full occupancy of the retail units so as to bring in large numbers of customers or “footfall”. I say that the plaintiff has totally failed in this regard in relation to its obligation of good estate management. By way of example I say that one of the main anchor tenants Iceland Food Ltd the frozen foods supermarket chain has been allowed to vacate its premises in the mall and rather than replacing it with another anchor tenant of a similar nature, the plaintiff has replaced it with a chemist shop. In addition I say that a number of the units are totally empty. I say that for the last number of years at any one time only about 10 of the 15 units are occupied. I say that the impact this is having on the company’s business is devastating as the foot fall of customers into the mall is now extremely low. I say that it is obvious that allowing the anchor tenant to vacate its premises and allowing one third of the units to be empty means that there is no incentive for members of the public to attend at the mall. I say and believe that the plaintiff is in breach of its obligation of good estate management in this regard. As set out above the lease was entered into on behalf of the company on the basis that the mall would continue to have a substantial anchor tenant and full occupancy of its units so as to attract customers, unfortunately the plaintiff has failed to ensure that this is the case and as a result the company and other tenants are suffering losses and financial hardship.
In addition to this I say that the plaintiff is in breach of its obligations as set out in the second schedule of the lease. I say that the quality of the flooring and lighting in the common areas of the mall is very poor and results in the mall looking very shabby and uninviting to customers. This again has resulted in very poor customer numbers attending the mall.”
There is no evidence before this Court to suggest that the issue now complained of by the defendant had been put forward previously as a basis for the non-payment of rent and service charges. There is very little evidence on affidavit to assist the court as to the strength of the cross claim. There is little in the way of evidence to suggest that such a claim would succeed. There is no attempt to quantify the loss alleged. There is no suggestion that following the demand for payment herein that the defendant engaged in any attempt to raise the issue of a breach of the obligation of the plaintiff of good estate management as a defence to the plaintiff’s claim. It appears to be very much a last ditch effort on the part of the defendant to avoid his obligations under the terms of the guarantee entered into by him in respect of the company. Obviously, if this had been an issue raised in correspondence prior to the issue of these proceedings, one would attach more weight to the matter.
Clarke J. in the Moohan case referred to above also commented on the lack of any meaningful attempt to quantify the claim in that case:
“The most striking feature of the cross claim now put forward by S & R Motors is the extent to which it has only been formulated with any precision in very recent times indeed. It was only on the filing of an affidavit of 29 November, 2007 (just a few days before the motions came on for hearing) that any attempt to establish that the cross claim might be such as would extinguish the claim was attempted.”
In the present case, it is the position that the defendant has failed to make any effort whatsoever to attempt to quantify the claim. Accordingly there is no evidence of any kind whatsoever before this Court to suggest that the amount of any cross claim would be such as to meet and extinguish the plaintiff’s claim herein. That being so, it is difficult to see why the plaintiff should not be entitled at this point in time to judgment for an amount to which it is clearly entitled and in respect of which, there is no bona fide defence.
Bearing in mind the fact that the issue of good estate management does not appear to have arisen prior to the affidavit sworn herein by the defendant, the fact that it is not clear on the evidence that the defendant has any reasonable prospect of success in the cross claim and that there has been no attempt whatsoever to quantify the cross claim, I do not think it would be appropriate to delay the plaintiff in entering judgment in circumstances where it is clear that there is no bona fide defence to the claim. The defendant is not precluded in any way from pursuing a claim that the plaintiff herein is in breach of its obligations under the lease in respect of good estate management. However, I do not think that in equity the defendant is entitled to do so in the course of these proceedings. In those circumstances, I am satisfied that the plaintiff is entitled to judgment in the amount claimed herein subject to verification of the figures having regard to the amounts set out in the certificate for the year 2006.
Castletown Foundation Ltd. v Magan
[2018] IEHC 653
Judgment of Mr. Justice Robert Haughton delivered on the 21st day of November, 2018
Paragraph Title
1 Introduction
2 Background facts
16 The Jersey Proceedings
22 The Bermuda Proceedings
24 Notices of Termination
31 Reference to the Residential Tenancies Board
38 Proceedings under the Landlord and Tenant (Amendment) Act 1980
42 Plaintiff’s Motion for Summary Judgment in Respect of Arrears of Rent
52 Counterclaim for Maintenance/Upkeep
68 Counterclaim for Damages/Aggravated Damages
73 Conclusion on Application for Summary Judgment
74 The Defendant’s Application to Dismiss
81 Validity of Second Termination Notice
87 The Claim for a Declaration that the Defendant is Not Entitled to a New Tenancy
104 Discussion
109 Urgency
112 Conclusion
114 Summary
Introduction
1. This judgment relates to two applications in these proceedings which were commenced by plenary summons dated 3rd July, 2018, and admitted to the Commercial Court by my order made on 9th July, 2018. The proceedings concern a property known as Castletown Cox House and Estate, County Kilkenny. In the first application the plaintiff seeks summary judgment against the defendant in the sum of €571,893 together with interest pursuant to statute in respect of arrears of rent. In a cross motion issued on 20th July, 2018 the defendant seeks orders dismissing, or placing a permanent stay on, the proceedings pursuant to the inherent jurisdiction of the court, or pursuant to O. 19 r. 28 of the Rules of the Superior Courts, on the basis that there is no jurisdiction, or that they are frivolous and vexatious, or an abuse of the process and bound to fail.
2. At the outset counsel for the defendant confirmed that the defendant was not maintaining a claim that the High Court did not have jurisdiction to hear the plaintiff’s claim for arrears of rent, but would argue that it had a bona fide defence by way of counterclaim and entitlement to equitable set off such that the application for summary judgment should be refused.
3. As there was significant overlap in terms of background, relevant facts and affidavit evidence, I determined that both motions should be heard together. Separate written legal submissions were filed in respect of each motion by both sides, and were considered along with the affidavit evidence. Oral argument in respect of both motions was heard on 25th October, 2018. The hearing of a third motion – the defendant’s application for discovery – was postponed pending the delivery of this judgment.
Background Facts
4. In or about 1991 the defendant, who is a life peer, purchased Castletown House, also known as Castletown Cox, through Castletown Estates Ltd (“CEL”). Through the 1990s he purchased the surrounding farmlands resulting in a total acquisition, to include the house, of 513 acres, through a company Castle Farms Ltd. Castletown House is one of Ireland’s few surviving great Georgian houses, having been built in or about 1776. Since 1999 significant sums have been spent on refurbishment and modernisation of Castletown House.
5. The defendant arranged for the transfer of Castletown House and Estate into a trust – Eaglehill Trust – for two of his children, Henrietta Black (nee Magan) and Edward Magan. The current trustee – having been appointed on 4th April, 2013 – is Yew Tree Trustees Ltd (formerly DW Trustees Ltd). The trust is administered in Jersey. The plaintiff is a limited liability company registered in the British Virgin Islands, and is the actual owner of Castletown Cox House and Estate, but it is a company owned and controlled by the trustee, Yew Tree Trustees Ltd. CEL is a management company that manages Castletown Cox House on behalf of the Eaglehill Trust.
6. Of tangential relevance is that the same trustee operates a separate trust, which is settled by the defendant for the benefit of his third child, Patrick Magan. That trust is known as the Clonearl trust and has other holdings in the United Kingdom and elsewhere.
7. While the defendant has a place of residence in London, Castletown Cox has been a secondary home for the Magan family. The defendant also variously describes himself as Lord Magan of Castletown/Baron Magan of Castletown.
8. By Letting Agreement dated 15th December, 2010 the plaintiff let “Castletown House on lands consisting of 53.61 acres statute measure at Castletown Demesne in the County of Kilkenny as shown delineated on the map annexed hereto” for a term from 13th December, 2010 to 12th December, 2013 at a rent of €100,000 per annum together with VAT, payable by monthly instalments (“the Letting Agreement”). The Letting Agreement appears to have replaced an existing business tenancy concluded between the parties in 2004. The terms of the Letting Agreement are central to both applications, and certain clauses are particularly relevant:-
• Under Clause 2.1 the defendant agreed “to pay the rent at the time and in the manner specified, the first payment being made on the date of this agreement.”
• In Clause 2.7 the defendant agreed “not to reduce any payment of rent by making any deductions from it or by setting any sum off against it.”
• In Clause 2.17 the defendant agreed that “to use the property as a residence only for the named tenant and his dependants.”
• Clause 4, insofar as relevant reads:
“4. The parties agree:
4.1 whenever the tenant:
4.1.1 is seven days late in paying any rent, even if it was not formally demanded:…
4.2 the landlord may end this tenancy. He must first give the Tenant not less than 4 weeks written notice ending on any day. This tenancy shall end on that day but this will not cancel any outstanding obligations which the Tenant owes the Landlord.”
• In Clause 3.2 the landlord agrees “to do the repairs to the property which the Housing (Standards for Rented Houses) Regulations, 1993 and Section 12(i)(b) of the Residential Tenancies Act, 2004 require.”
Notwithstanding Clause 2.17, the plaintiff did not register the tenancy with the Residential Tenancy Board (“RTB”) under the Residential Tenancies Act, 2004.
9. It is common case that on the expiry of the term of the Letting Agreement on 12th December, 2013 the defendant continued in occupation under the terms of the Letting Agreement on foot of a tenancy from year to year, arising by implication.
10. The last payment or contribution to rent made by the defendant was in July 2012, nothing has been paid since the plaintiff was appointed trustee in April 2013. The principal grounding affidavit sworn by Mr. Jonathan Richard Benford, director of the plaintiff, on 4th April, 2018 shows accumulated arrears of rent due at 12th April, 2018 in the total sum of €571,893 exclusive of interest. There is no express provision in the Letting Agreement in relation to the payment of interest on arrears of rent. These figures are not disputed by the defendant.
11. Castletown Cox also has a world class collection of fine art, paintings and furniture. Most of these are owned by a separate trust, the subject matter of a separate Chattels Agreement dated 9th March, 2011 between the plaintiff and the defendant which is a licence which provides for the safekeeping by the defendant in Castletown House subject to a fee from time to time. A sum of GBP £1,626,496.80 is claimed by the plaintiff to be due by the defendant under the Chattels Agreement, and is the subject matter of another dispute, and the plaintiff has a further claim against the defendant for GBP £1,996,124 in respect of loans granted by the plaintiff to the defendant to meet personal creditors and expenditure unrelated to Castletown Cox.
12. Against this background the running expenses of Castletown Cox are significant, being in the order of €500,000 per annum. The defendant asserts at para. 5 of his replying affidavit sworn on 31st August, 2018 that the parties entered into an agreement for the upkeep and maintenance of Castletown House in 2005. Mr. Benford in his second affidavit sworn on 21st September, 2018 describes it as “an understanding with Castletown Estates Ltd (a company controlled by the defendant) that both the plaintiff and the defendant would contribute to [CEL] for the upkeep and maintenance of the property”, but Mr. Benford adds (at para. 15) that:
“There was never any suggestion that the plaintiff was obliged to reimburse the defendant in relation to his contribution.”
13. The defendant avers that the plaintiff has failed to pay any sum in respect of upkeep and maintenance from June 2017 onwards, whereas during that period he has paid €361,167.72, and he has raised a counterclaim for breach of contract in respect of this amount.
14. Due to the trustee’s financial concerns, a process of consultation with the defendant and beneficiaries started in mid-2015. The backdrop was that the primary lender to the trust, Sancus, was, according to Mr. Benford, expressing serious concern in respect of accumulating debt, and indicated that unless a resolution was found, it would call in the security held, namely Castletown Cox estate.
15. Following these consultations, on 3rd October, 2016 the defendant in a letter addressed to the then trustees informed them that “arrangements are being progressed whereby the Castletown Estate would be acquired at fair market value out of the present Trust ownership; in most likelihood through a financing of the Irish Heritage Preservation Trust (IHPT).” He went on to state:
“It is assumed that through these arrangements the assets of the IHPT would be available as collateral, namely the Castletown Estate itself, the fine art collection of the IHPT, and the significant private equity investment held in the IHPT. It is the intention that these financing arrangements should be completed by Easter 2017, i.e. by Good Friday 14th April, 2017 – if not earlier.
If by Friday 14th April, 2017 the sale of the Castletown Estate on the basis outlined above has not been concluded, I recognise that in all probability, and in the absence of other more creative refinancing proposals, that the Trustees would need to seek a sale to a third party.
I also recognise that, if a sale of the Castletown Estate, by whatever means, has not been concluded by mid-April 2018, then in all probability the Trustees would need, as an alternative strategy, to secure a third party sale of the Ellesmeere Estate.”
The Jersey Proceedings
16. The Easter 2017 deadline passed without refinancing, but the defendant and one of the beneficiaries, his son Edward Magan, wished the plaintiff to proceed with an alternative option of selling certain UK real estate instead of Castletown Cox. The plaintiff did not agree with this stance and, in the light of the foregoing, brought proceedings in the Royal Court of Jersey, Record No. 2017/164, seeking approval in principle for a sale of Castletown Cox. Those proceedings were heard on 4th July, 2017, and the defendant and Edward Magan were both represented. The court ordered as follows:
“1. In respect of the Jurisdiction Challenge, declared that this Court has jurisdiction and is clearly the most convenient forum for Representations;
2. Approved the decision of Representor not to retire from both or either of the Clonearl Trust or the Eaglehill Trust;
3. Ordered that the Representor shall remain as trustee of the said trusts until further order of this Court;
4. Approved the decision of the Representor to market Castletown Cox (“the property”);
5. Ordered that the Settlor and the Convened Beneficiaries shall take all reasonable steps within their power to facilitate the marketing of the property and to take all reasonable steps within their power to allow access to the property when reasonably required by the Representor and/or the appointed agents for that purpose;
6. Ordered that the Representor’s costs of the proceedings shall be paid from the trust funds on the usual trustee indemnity basis, with payment apportioned at two/thirds from the Eaglehill Trust and one/third from the Clonearl Trust; and
7. Otherwise adjourned the said Representation with liberty to apply.”
17. Two days later Mr. Edward Magan instituted proceedings in the Irish High Court seeking to restrain the marketing and sale of Castletown Cox, entitled Magan v DW Trustees Ltd [2017] No. 6369 P. Those proceedings were initially stayed pending mediation which took place in London, and led to a mediation agreement on 26th September, 2017. This allowed the plaintiff to continue marketing, but gave Mr. Edward Magan (and the defendant) the opportunity to put forward for consideration any refinancing proposal on the basis that the property would not be sold until any such proposal had been considered.
18. On the basis that no realistic refinancing proposal was forthcoming, in October 2017 the plaintiff again applied to the Royal Court of Jersey in proceedings 2017/164 to approve a sale. At that point in time the indebtedness charged on Castletown Cox was St£11,500,000 and was due for repayment on 21st December, 2017, and the running costs were in the order of St£500,000 per annum. Having satisfied itself that all appropriate parties were represented or on notice (all the adult beneficiaries were on notice; the settlor – the defendant herein – and his elder son were represented and opposed) the court made the following order on 31st October, 2017:
“1. Blessed the decision of the Representor as recorded in its resolution dated the 25th October, 2017, and as amended on the 31st October, 2017, namely that:-
(i) The said property be sold at a price not less than €19 million and;
(ii) The Representor shall exercise its powers, as sole shareholder of Castletown Foundation Ltd, to procure that the Representor enters into an agreement to sell the property for the best price that the directors of the Representor considers obtainable, in excess of €19 million, upon an offer satisfying that condition being received;
2. Ordered that the Representor’s costs of the proceedings shall be paid from the trust funds on the usual trustee indemnity basis, with payment apportioned at two/thirds from the Eaglehill Trust and one/third from the Clonearl Trust, and
3. Adjourned the hearing of the said Representation.”
19. In November 2017 the plaintiff agreed to heads of term for a sale in principle to a third party for a price in excess of €19 million. Mr. Benford avers in his principal affidavit (para. 38) that “this was vital because Sancus had provided a final deadline of 21 December, 2017 for the repayment of the loan if a sale had not been agreed”.
20. The injunction proceedings brought by Mr. Edward Magan were set for hearing on 6th December, 2017, but did not proceed, and have not advanced since then.
21. It should be noted that on 5th October, 2017 the Royal Court of Jersey delivered a full reasoned judgment on jurisdiction, explaining its order of 10th July, 2017, and rejecting the defendant’s application for a stay. Commissioner Clyde-Smith held that the following factors justified the conclusion that “Jersey was the most appropriate forum”:
• The trustee was resident in Jersey;
• The trust was administered in Jersey;
• Four out of five of the trustee’s directors were resident in Jersey;
• The majority of beneficiaries and the settlor were U.K. domiciled;
• There were no assets in Bermuda;
• The relief sought by the Trustee was directions as to its own conduct;
• Requiring the Trustee to litigate in Bermuda at its own initial expense would impose an unfair additional cost burden;
• The only connection with Bermuda was the proper law of the trust.
The Bermuda Proceedings
22. Notwithstanding the order of the Jersey court of 10th July, later in July 2017 the defendant initiated proceedings in Bermuda seeking to remove the plaintiff as trustee, and seeking to set aside the decision by the plaintiff to sell Castletown Cox. The court had first to decide whether the Bermudian courts had jurisdiction and if so whether it was the appropriate forum. The Supreme Court of Bermuda in its ruling of 13th November, 2017 (Chief Justice Ian R.C. Kawaley) held that while it had jurisdiction to remove the trustee it would be an abuse of the process for the defendant to relitigate in Bermuda issues which had already been determined by the Jersey court following inter partes hearings, and inconsistent with comity for the Bermudian court to permit its processes to be used to undermine the exercise by the Jersey court of its lawful supervisory personal jurisdiction over trustee’s resident within its jurisdiction. The chief justice stated at para. 24:
“The [Magans] have identified no coherent (and legitimate) juridical advantages which they would gain from having the removal issue determined in Bermuda while it is obvious that the Trustee would be disadvantaged in costs terms. It is also obvious that keeping the Bermuda proceedings alive would potentially undermine the efficacy of the Jersey court’s orders in relation to the Property by creating unfounded legal doubts as to the Trustee’s authority to sell the Property under the proper law of the E Trust. In these circumstances I am bound to find that the further prosecution of the present action would be an abuse of the process of this Court. It follows that the Order of July 20, 2017 granting leave to serve out should be set aside as regards the removal of trustee head of relief as well and that the Writ should be struck out in its entirety.”
23. Following this on 7th March, 2018 the plaintiff was authorised by the trustee to exchange contracts for the sale of Castletown Cox for a price in excess of €19 million. The contract for sale was not exhibited for commercially sensitive reasons, and this was not challenged in the present applications. Mr. Benford avers (para. 44 of his principle affidavit) that the plaintiff was obliged to complete and deliver up vacant possession of the property by August 2018.
Notices of Termination
24. By Notice of Termination dated 22nd December, 2017 served by the plaintiff on the defendant, the plaintiff gave notice that – “the tenancy of the dwelling at Castletown House, Carrick-on-Suir, Co. Kilkenny will terminate of 3 August, 2018. You must vacate and give up possession of the dwelling on or before the termination date.”
25. The reason given for termination was “the fact that the landlord intends to enter into a binding contract for sale within three months of the termination of the tenancy”. The notice ended – “Any issue as to the validity of this notice or the right of the landlord to serve it, must be referred to the Residential Tenancies Board under Part 6 of the Residential Tenancies Act, 2004 to 2016 within 28 days from the date of receipt of it.” The defendant has not sought to challenge the validity of that notice before the RTB within the requisite 28 days or at all (the RTB has jurisdiction to extend time, but no application in that regard has been made).
26. On 21st March, 2018 the plaintiff served a notice headed “14 Day Warning Notice – Failure to Pay Rent – Notice served pursuant to Section 67(3) of the Residential Tenancies Act, 2004”. This reminded the defendant of his failure to pay rent, stating that arrears were now €568,559.90 as of 13th March, 2018, and indicating that if he failed to pay the rent within fourteen days the landlord “is permitted to terminate the tenancy giving 28 days’ notice and by serving a notice of termination on you”.
27. The notice was served “entirely without prejudice to the Notice dated 22 December 2017 served on you pursuant to Section 34(4) of the Residential Tenancies Act, 2004…”.
28. On 12th April, 2018 the plaintiff served a second Notice of Termination for “failure to pay rent”. This stated:
“Your tenancy …will terminate on Friday 11 May 2018.
You must vacate and give up possession of the Property on or before the termination date.
The reason for the termination of the tenancy is due to the breach of tenancy obligations in that you have failed to pay rent on the dates it fell due for payment.
You have the whole of the 24 hours of the termination date to vacate and give up possession of the above dwelling.
Any issue as to the validity of this notice or the right of the landlord to serve it, must be referred to the Residential Tenancies Board under Part 6 of the Residential Tenancies Acts 2004 to 2015 within 28 days from the date of receipt of it.”
29. It is not contested that the arrears of rent as of 12th April, 2018 totalled €571,893. In a letter sent on 9th May, 2018 by the defendant’s then solicitors Ivor Fitzpatrick & Co. to the plaintiff’s solicitors A & L Goodbody, there is an acknowledgement that the defendant was “faced with a Notice of Termination expiring this Friday, 11th May, 2018”.
30. The plaintiff makes the case that the Letting Agreement was validly terminated by the second Termination Notice on 11th May, 2018.
Reference to the Residential Tenancies Board
31. It subsequently transpired that the defendant’s solicitors had, without notice to the plaintiff, referred a dispute concerning the validity of the second Termination Notice to the RTB on 10th May, 2018. Neither the defendant nor his solicitors nor the RTB put the plaintiff or its solicitors on notice of the referral of the dispute prior to 24th May, 2018. The referral notice alleges that the second notice of termination was invalid on a number of grounds including that –
• Rent was not due or there was a dispute as to the amount.
• Insufficient notice was given.
• Uncertainty of the notice because it was expressed to be without prejudice to the previous termination notice with a termination date of 3rd August, 2018.
• That the landlord has not paid substantial sums due, in respect of which the tenant is issuing separate High Court proceedings claiming damages in excess of €600,000.
32. In a letter dated 15th May, 2018 Ivor Fitzpatrick solicitors wrote on the defendant’s behalf to the RTB referring to the dispute form lodged on the 10th May and stating –
“Please note that the said dispute was lodged without prejudice to our client’s assertion that the Landlord and Tenant Act, 1980 applies to our client and the subject property. We would request the RTB defer from further processing the dispute until such time as the Landlord and Tenant issues under the 1980 Act are resolved.”
33. On the morning of Wednesday 23rd May, 2018 the plaintiff through its agents re-entered and recovered possession of Castletown Cox and the lands the subject of the Letting Agreement, at a time when there were no members of the Magan family in occupation. There is no evidence before the court to suggest that the plaintiff or its solicitors had any notice of the dispute referenced to the RTB at the time of repossession, and Mr. Benford’s averments to the effect that the plaintiff had no notice are not contested. The defendant asserts that the repossession was unlawful, and further that under the Residential Tenancies Act, 2004 the plaintiff was precluded by the dispute referral from taking any further action pursuant to the second notice of termination until such time as the matter had been assessed and determined by the RTB.
34. When one considers the extent of the correspondence between the parties’ respective solicitors during the period 10th May – 23rd May, including five letters from Ivor Fitzpatrick solicitors, albeit that most of this correspondence related to files and documents requested by them from A & L Goodbody, it is remarkable that not once is there any mention of the filing of the dispute reference in relation to the second Termination Notice with the RTB. Ivor Fitzpatrick did write promptly on 24th May, 2018 protesting on the defendant’s behalf at the “unauthorised and unlawful entry by your servants or agents onto the Castletown Demesne and into Castletown House early yesterday morning”. That letter asserts that the defendant’s employee witnessed “a number of men using electronic cutting equipment to cut a metal chain which was securing the inner gate entrance to the property” to allow the ingress of vehicles and a group of men. The letter goes on to refer to the submission by them of the requisite form to the RTB dated 10th May, 2018 (submitted electronically on that date and followed by a letter to the RTB on 15th May, 2018). That letter called upon the plaintiff, its servants or agents, to leave the property, and requested an undertaking that the plaintiff would abide by the procedures of the RTB “in accordance with the Notice of Terminations heard on 11th April, 2018”. The penultimate paragraph stated –
“Should you refuse to grant the undertakings sought above in writing by 5pm today, 24 May 2018, our client will have no choice but to make an application to the High Court and we will rely on this letter to fix you with the costs of such an application.”
35. On 25th May, 2018 A & L Goodbody responded at some length and asserted that the defendant was engaged in an abuse of process. Reserving its position as to the defendant’s demand for an undertaking, A & L Goodbody on the plaintiff’s behalf proposed that the defendant and his family be permitted to stay at Castletown Cox until 3rd August, 2018 on the basis of certain terms including a written acknowledgment of the termination of their Chattels Agreement and a return of all items, and “a written undertaking to refrain from entering the property after 3rd August, 2018”.
36. This proposal was not accepted by the defendant. Further correspondence ensued, but the defendant did not bring proceedings seeking an injunction to restrain the alleged trespass by the plaintiff. The plaintiff asserts, through its solicitors and averments from Mr. Benford, that it was a peaceable re-entry and the steps that it took were appropriate and proportionate and undertaken in a manner to cause the least inconvenience.
37. By Notice of Intention to Claim Relief dated 14th June, 2018 the defendant served notice on the plaintiff of his intention to claim a new tenancy under Part II of the Landlord and Tenant (Amendment) Act, 1980 in respect of Castletown House and 53.61 acres, and in the alternative €10 million compensation for disturbance, and compensation for improvements. The Schedule in which details of improvements are to be set out states “details to be provided”.
Proceedings under the Landlord and Tenant (Amendment) Act 1980
38. After the requisite period of at least 28 days had elapsed, the defendant issued proceedings by Landlord and Tenant Civil Bill dated 19th July, 2018 entitled ” The Circuit Court County of Kilkenny between George Magan Plaintiff and Castletown Foundation Ltd Defendant. ” This seeks an order “determining the matters to which the [Notice of Intention to Claim Reliefs] relate”, an Order declaring that the plaintiff is entitled to a new tenancy in the property and fixing the terms of same, and alternatively compensation for improvements and/or disturbance, and consequential orders. The Indorsement of Claim at para. 3 pleads that the plaintiff has occupied the premises “continuously since 1991 and continuously since 1996 when the premises were demised to the plaintiff by Castletown Estates Ltd”. The following further pleas are then made:-
“4. Title to the Premises was subsequently transferred to the Defendant in 2004 and at the request of the Defendant, the Plaintiff executed a lease of the premises from the Defendant by way of “business letting agreement” dated 24th December, 2004.
5. By Lease dated 15th December 2010 (“the Lease”) the Plaintiff [ this is clearly intended to refer to Castletown Foundation Ltd ] herein demised the Premises to the Defendant [ this is a further error and clearly refers to George Magan ], together with the furniture and equipment thereon covered by the insurance policy arranged for the parties hereto (“the Tenement”).
6. The Plaintiff now holds the Premises under a yearly tenancy (still subsisting) at an annual rent of €100,000 arising on the expiry of a fixed term tenancy created by the Lease.
7. The Tenement is a tenement within the meaning of section 5 of the Landlord and Tenant (Amendment) Act of 1980 (as amended) (“the Act”).
8. The Premises has been continuously in the occupation of the Plaintiff within the meaning of the Landlord and Tenant Amendment Act of 1980 (as amended) and further, the Premises has bona fide been used, partly for the purpose of carrying on a business within the meaning of the Act.
9. By notice dated the 22nd December, 2017 the Defendant purported to terminate the tenancy held by the Plaintiff in the Premises as of 3rd August, 2018. By a further notice dated 12th April, 2018 expressly stated to be served pursuant to s. 67(2)(b)(ii) of the Residential Tenancies Act, 2004 the Defendant purported to terminate the tenancy held by the Plaintiff in the Premises upon the expiry of a notice period of one month pursuant to the provisions of the 2004 Act. It is expressly pleaded that the said notices are wholly invalid and have no lawful effect.
10. On or about 23rd May 2018, the Defendant its servants or agents unlawfully and in breach of the terms of the tenancy under which the Premises is held forcibly re-entered the Premises.
11. By Notice of Intention to Claim Relief dated 14th June 2018 …duly served on the Defendant the Plaintiff sought relief pursuant to the provisions of the Act.
12. The Plaintiff is entitled to a new tenancy in the Premises in accordance with the provisions of Part II of the Act and in particular s. 13 thereof.”
39. Section 13 of the Landlord and Tenant (Amendment) Act, 1980 as amended (“the 1980 Act”) provides for the right to a new tenancy in respect of a “tenement” in three situations – the first is a new business tenancy based on five years bona fide use wholly or partly for the purposes of carrying on a business, secondly a long occupation tenancy where there has been continuous occupation for a period of twenty years, and thirdly where there have been improvements such that not less than one half of the letting value of the tenement is attributable to the improvements. At hearing, counsel for the defendant clarified that his claim is not based on long possession or improvements, but is based on the first limb i.e. business user. Although not particularised in the Circuit Court proceedings, counsel indicated that the business user relied upon is touched on in para. 9 of the affidavit of the defendant where he states –
“9. Throughout, I carried out extensive refurbishment of the Property, the surrounding properties and the estate gardens. Castletown House and Estate is one of Ireland’s few surviving great houses and estates and has been used as a residence for our family since 1991. I regularly hold events for international Georgian Societies and Horticultural Societies at Castletown House & Estate such is the quality and standard of the refurbishment work carried out. …”
Counsel pointed out that s. 3 of the 1980 Act defines “business” to mean “any trade, profession or business, whether or not it is carried on for gain or reward, any activity for providing cultural, charitable, educational, social or sporting services …” (emphasis added). Castletown Foundation Ltd has yet to raise particulars or deliver a defence in respect of the Landlord and Tenant Civil Bill.
40. It will be noted that there is a tension between the claim for a new business tenancy, and the covenant at Clause 2.17 of the Letting Agreement “to use the property as a residence only for the named tenant and his dependants.”
41. By letter dated 24th September, 2018 sent by the trustee to inter alia the defendant, notification of a change in the sale contract was given in the following terms:
“As you may know, last Friday (September 21) was the deadline for repayment of the Sancus loans. Sancus had formally warned that enforcement would follow in the event of non-payment. The effect of default with Sancus would have been to cause the loans from Barclays Bank and Falcon to fall into default also, under the cross – default provisions in the security documents, as well as raising the prospect of Sancus instructing an insolvency practitioner to realise trust assets.
I am therefore pleased to report that Sancus was paid this afternoon with a loan at 0% interest from the purchaser of the property. The loan is subject to retrospective repricing if the sale of Castletown does not complete in a timely manner.”
This was followed up with a letter of 2nd October, 2018 from A&L Goodbody solicitors for the plaintiff to Ivor Fitzpatrick explaining that “…there was a very real risk that Sancus would enforce its security to the severe detriment of the beneficiaries interests…” if this new agreement had not been reached. They further advised that these proceedings would be pursued “with vigour”, and that the purchaser had taken security over Castletown Cox “…and is in a position to exercise control over the asset upon short notice”.
Plaintiff’s Motion for Summary Judgment in Respect of Arrears of Rent
42. The principles to be applied by the court in determining whether or not to grant summary judgment, or refer on the issue to plenary hearing, were not in dispute. Per Ackner L.J. in Banque de Paris v de Naray [1984] 1 Lloyd’s Law Reports 21, at p. 23, approved by Murphy J. in First National Commercial Bank Plc v Anglin [1996] 1 IR 75, at p. 79, the essence of the test is: “Is there a fair or reasonable probability of the defendants having a real or bona fide defence?”.
43. This test was endorsed by the Supreme Court by Hardiman J. in Aer Rianta cpt v Ryanair Limited [2001] 4 IR 607 where he stated at p. 623:-
“In my view, the fundamental questions to be posed on an application such as this remain: is it “very clear” that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant’s affidavits fail to disclose even an arguable defence?”
44. The principles to be applied by the court in determining whether to grant judgment or give leave to defend were subsequently addressed by McKechnie J. in the High Court in Harrisgrange Limited v Michael Duncan [2003] 4 IR 1, at p. 7.
“9. From these cases it seems to me that the following is a summary of the present position:-
(i) the power to grant summary judgment should be exercised with discernible caution;
(ii) in deciding upon this issue the court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done;
(iii) in so doing the court should assess not only the defendant’s response, but also in the context of that response, the cogency of the evidence adduced on behalf of the plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting affidavit evidence;
(iv) where truly there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use;
(v) where however, there are issues of fact which, in themselves, are material to success or failure, then their resolution is unsuitable for this procedure;
(vi) where there are issues of law, this summary process may be appropriate but only so if it is clear that fuller argument and greater thought is evidently not required for a better determination of such issues;
(vii) the test to be applied, as now formulated is whether the defendant has satisfied the court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, “is what the defendant says credible?”, which latter phrase I would take as having as against the former an equivalence of both meaning and result;
(viii) this test is not the same as and should be not elevated into a threshold of a defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence;
(ix) leave to defend should be granted unless it is very clear that there is no defence;
(x) leave to defend should not be refused only because the court has reason to doubt the bona fides of the defendant or has reason to doubt whether he has a genuine cause of action;
(xi) leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally;
(xii) the overriding determinative factor, bearing in mind the constitutional basis of a person’s right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter judgment or leave to defend, as the case may be.”
45. Counsel for the defendant emphasised the first of these principles, arguing that the court should proceed with particular caution because of the consequences that summary judgment would have on possibly affording the plaintiff a defence to the defendant’s claim for a new tenancy, by reason of s. 17(1)(a)(i) of the 1980 Act, which provides:-
“A tenant shall not be entitled to a new tenancy under this Part if—
(i) the tenancy has been terminated because of non-payment of rent, whether the proceedings were framed as an ejectment for non-payment of rent, an ejectment for overholding or an ejectment on the title based on a forfeiture…”
It was pointed out that Mr. Fanning, counsel for the plaintiff, had frankly stated the plaintiff’s real concern in seeking summary judgment was to deliver a “knock out blow” to the defendant’s claim to be entitled to a new tenancy, thus facilitating the completion of the sale.
46. While having regard to this submission in principle it seems to me that the court should not have regard to the consequences for a particular defendant of granting summary judgment where such is the plaintiff’s entitlement. Nor can I see why harbouring another motive for seeking summary judgment, provided it is not unlawful, could afford a reason in itself for refusing summary judgment in respect of a proven liquidated debt where it is clear that no bona fide defence is shown. These factors might however have a bearing on whether, in the exercise of the court’s discretion, a stay on the judgment should be granted. It is also noteworthy that in a submission made by the defendant’s other senior counsel in support of the motion to dismiss, counsel argued that the plaintiff is not in any event entitled to rely on s. 17(1)(a)(i) because there are no ejectment proceedings in being.
47. In para. 5 of his replying affidavit, the defendant raises three suggested bona fides defences. Two of these were not pursued and may be dealt with summarily.
48. The first was that the High Court has no jurisdiction to consider the arrears of rent in claim because it was “currently the subject of a referral to the [RTB].” This is a reference to the referral dated 10th May, 2018 mentioned above. However, this jurisdictional point is disposed of by s. 182(1) of the Residential Tenancy Act, 2004, which provides: –
“On and from the commencement of Part 6, proceedings may not be instituted in any court in respect of a dispute that may be referred to the Board for resolution under that Part unless one or more of the following reliefs is being claimed in the proceedings—
(a) damages of an amount of more than €20,000,
(b) recovery of arrears of rent or other charges, or both, due under a tenancy of an amount, or an aggregate amount, of more than €60,000 or such lesser amount as would be applicable in the circumstances concerned by virtue of section 115(3)(b) or (c)(ii).”
49. Assuming for present purposes – and this is also the subject of contention – that the 2004 Act applies to the Letting Agreement, it is quite clear that the High Court has jurisdiction by virtue of s. 182(1)(b) to hear and determine the claim for rent, which far exceeds the threshold of €60,000.
50. Secondly the defendant asserted that where rents were paid directly to a person whose usual place of abode is outside of Ireland (and the plaintiff is a BBI registered company) the claimant is obliged to deduct income tax at the standard rate from the payment (s. 104 of the Taxes Consolidation Act, 1997) (as amended) – the standard rate of withholding taxes is currently 20%. Although withholding tax is payable, this was withdrawn as a ” bona fide defence” in the defendant’s written submissions.
51. The defendant relied on two further matters:-
(1) The “agreement” for the upkeep and maintenance of Castletown House reached in 2005, and payments which he avers that he expended in the sum of €361,167.72 in the period June, 2017 to date, which he counterclaims.
(2) The claims for damages, including aggravated/exemplary damages, for trespass/ “forcible entry” on and since 23rd May, 2018.
Counterclaim for Maintenance/Upkeep
52. The factual basis for this is dealt with at paras. 12 – 21 in the defendant’s replying affidavit. He relies on an exhibited document “Castletown Estates Split of Irish expenses year ended 31st December, 2005” which he asserts sets out the percentages that each of the “parties hereto” were to make towards the maintenance and upkeep of Castletown Estate since 2005. It is far from clear precisely what agreement this affected, or between whom. However, there is other evidence to support an agreement such as the defendant suggests existed. In his second affidavit Mr. Benford states –
“15. As the Defendant himself concedes, the Plaintiff had an understanding with Castletown Estates Limited (a company controlled by the Defendant) that both the Plaintiff and the Defendant would contribute to Castletown Estates Limited … for the upkeep and maintenance of the property. There was never any suggestion that the Plaintiff was obliged to reimburse the Defendant in relation to his contribution.”
53. Notwithstanding this response, the defendant did not file any further affidavits to suggest that he, as opposed to CEL, has a counterclaim under this heading against the plaintiff.
54. At para. 14 of his affidavit, the defendant avers to certain payments that he made towards some maintenance and upkeep of Castletown -since 2010 (€56,201.59 plus VAT), and further contributions of €265,397.97 plus VAT since 2004. It is not clear whether these were the defendant’s payments, or in fact meant to refer to payments by the plaintiff, because two paragraphs further on the defendant states: “16. I am advised that payments made by me towards the upkeep and maintenance of Castletown House from 2010 to date amount to the sum of €1,612,563.65.”
55. None of these payments are broken down by subject matter or date, nor is there any vouching exhibited.
56. Mr. Benford at para. 82 of his principal affidavit accepted that the trustee had an agreement with the defendant and that it would contribute to CEL to help him in the maintenance and preservation of Castletown Cox, including the payment of wages of staff connected with the property. This suggests some form of collateral agreement such that the defendant may be entitled in law to sue/counterclaim directly against the plaintiff (or perhaps the trustee, who is not a party to the proceedings) in respect of breach of contractual commitment to CEL.
57. However, Mr. Benford indicates that the defendant’s annual contribution was to be in order of €475,000, made up of €100,000 rent and €375,000 to the related costs of running Castletown Cox. In an exhibited ‘Schedule of Payments’, the plaintiff claims that it has spent in excess of €22.5 million in acquisitions and significant refurbishments in assembling, modernising and improving Castletown Cox since 1999. At para. 84(c) Mr. Benford avers –
“From April, 2008 to April, 2017, the defendant’s proportion of the expenses owed to Castletown Estates Limited for distribution to staff and other third parties who provided services was €3,646,847. The Trustee’s records indicate that the Defendant has only made contributions of €1,121,564 for this period although it is acknowledged that it is unclear to the Trustee whether any payments were made by the Defendant in 2008 and 2009.”
58. Returning to this theme in para. 17 of his second affidavit, Mr. Benford notes that the defendant did not refute this in his replying affidavit, and he adds –
“17.1.2 the defendant has substantially failed to cover his share of expenses. In my previous affidavit I pointed out that the defendant had only paid €1,121,564 of a total of €3,646,847. The Defendant has not meaningfully refuted this. Rather according to paras. 14 and 16 of his affidavit, he has contributed a total of €1,934,163.20. Even if it is accepted that the defendant did make a contribution in the sum claimed (and that is denied by the plaintiff) it is still substantially short of the €3,646,847 total due from the defendant.
17.1.3 The Plaintiff has made contributions to [CEL] (in the manner particularised in my grounding Affidavit in para. 83) in excess of what the plaintiff’s obligation was pursuant to the understanding between the plaintiff and CEL by an amount of €872,696 as at 5th April, 2017. That is a sum which CEL, controlled by the defendant, owed to the plaintiff at that date (and I refer to para. 84 of my grounding affidavit in that regard).
17.1.4 Rents were paid by the owners of cottages and other premises in Castletown Cox to CEL in the amount of €527,310 for the period 2008-2017 that should have been remitted to the plaintiff as the owner of Castletown Cox – but were not.”
59. It is significant that the defendant has not filed any further affidavit refuting Mr. Benford’s averments. This is surprising because it seems inevitable that if the counterclaim in respect of these contributions went to plenary hearing, the court would be required to consider evidence covering contributions made, not just since June 2017, but going back to 2008 and possibly further to 2005, in order to determine the dispute.
60. While the court should not encourage trial by affidavit, and must be mindful of the limitations inherent in the exchange of affidavits, it cannot ignore the significance of Mr. Benford’s evidence in two affidavits, and the absence of any coherent or persuasive response. The Court is left with uncontested evidence of contributions by the plaintiff towards maintenance that far exceed those that may have been made by the defendant over time. In the absence of any meaningful response by the defendant the averments in his affidavit as to his contributions carry little weight and are reduced to the point of being “mere assertions”. Thus while it is arguable the defendant could rely on a collateral contract as the legal basis for a counterclaim against the plaintiff (as opposed to CEL or the trustee), I am not satisfied that there is any evidential basis for any bona fide defence or counterclaim under this heading.
61. There is a second and separate reason for coming to this view, even if the defendant could show a bona fide counterclaim for maintenance payments. The defendant claims that such a counterclaim would entitle him to an equitable set off. In written submissions Counsel refers to McGrath v O’Driscoll [2007] 1 ILRM 203 in which Clarke J. (as he then was) held –
“Two separate questions appear to arise. The first is as to whether the counterclaim can be said to amount to a defence. It is clear from Prendergast v Biddle and also from Axel Johnson Petroleum A.B. v Mineral Grou p [1992] 1 WLR 270, that where a counterclaim arises out of circumstances which are sufficiently connected to a claim, a set off in equity arises because it would be inequitable to allow the plaintiff’s claim without taking the defendant’s cross claim into account.”
In Moohan v S.& R. Motors (Donegal) Ltd [2008] 3 IR 650, at para. 4.6, Clarke J. elaborated on the approach the court should take:
“4.6 On that basis the overall approach to a case such as this (involving, as it does, a cross-claim) seems to me to be the following: –
(a) it is firstly necessary to determine whether the defendant has established a defence as such to the plaintiff’s claim. In order for the asserted cross-claim to amount to a defence as such, it must arguably give rise to a set off in equity and must, thus, stem from the same set of circumstances as give rise to the claim but also arise in circumstances where, on the basis of the defendant’s case, it would not be inequitable to allow the asserted set off;
(b) if and to the extent that a prima facie case for such a set off arises, the defendant will be taken to have established a defence to the proceedings and should be given liberty to defend the entire (or an appropriate proportion of) the claim (or have same, in a case such as that with which I am concerned, referred to arbitration);
(c) if the cross-claim amounts to an independent claim, then judgment should be entered on the claim but the question of whether execution of such judgment should be stayed must be determined in the discretion of the court by reference to the principles set out by Kingsmill Moore J. in Prendergast v Biddle.”
A question arose in that case as to whether equitable set off was excluded by the terms of the contract between the parties. A similar question arises in the present case. Clarke J. approached this as follows: –
“5.6 it seems to me, therefore, that the overall test is as to whether, as a matter of construction of the contract taken as whole, it can properly be said that the parties have agreed that there can be no set off.”
62. First, I am not satisfied that the asserted counterclaim arises out of “the same set of circumstances as give rise to the claim”, or that it is “sufficiently connected” (per Clarke J. in McGrath v O’Driscoll ). The claim to arrears of rent, which is in effect not disputed, arises under the Letting Agreement agreed between the parties in 2010. By contrast the counterclaim for maintenance and upkeep arises under an agreement pleaded as being entered into in 2005. Moreover, the uncontested affidavit evidence from Mr Benford indicates that such “arrangement” was not made directly between the defendant and the plaintiff or the trustee, but rather was made between the defendant and CEL.
63. Secondly clause 2.7 of the Letting Agreement contains an agreement by the tenant “not to reduce any payment of rent by making any deductions from it or by setting any sum off against it.”
64. Counsel for the defendant argued that equitable set off of the counterclaim is not expressly excluded by clause 2.7, and reliance was placed on a passage from Wylie’s Landlord and Tenant Law , 3rd Edition (2014) where the author, after drawing the distinction between a counterclaim which is “in substance a separate action” and a right to deductions or set off, states “It is, therefore, wise for a landlord seeking to exclude such rights so far as possible in law to refer to all categories, e.g. by having the tenant covenant to pay all rent “without any set/off, counterclaim or deductions whatsoever”.
Professor Wylie in a footnote to this sentence references Laffoy J., Irish Conveyancing Precedents . While it may be prudent to adopt such wording, this does not assist the court in construing clause 2.7.
In the next sentence Prof Wylie states: “The courts have made it clear that if a lease refers only to “deductions” this does not include a right of set-off.” The footnoted authorities for this are Irish Life Assurance Plc. v Quinn [2009] IEHC 153; Westpark Investments Limited v Leisureworld Limited [2012] IEHC 343; Connaught Restaurants Limited v Indoor Leisure Limited [1994] 4 ALL ER 934 and Sheridan Millennium Limited v Village Theatres Limited [2008] NI Ch 9.
65. These authorities were not opened to the court, but having checked all except Sheridan , I find that they are concerned only with express clauses preventing a tenant from making “deductions”. In Irish Life Assurance Plc , Dunne J. was concerned with the deduction of service charges by a tenant, and stated (at pg 7): “I do not accept that the phrase “without any deductions” means that the defendant contracted out of the right to an equitable set-off.”
In Westpark , Hogan J. was concerned with alleged breach by the plaintiff of car park arrangements in respect of which the defendant raised a counterclaim, and he held that the phrase “without any deductions” was not necessarily inconsistent with the right to equitable set-off. Similarly in Connaught , the UK court was asked to construe a clause containing the words “without any deductions”, and found that it was ambiguous and insufficient to exclude a right to claim set off.
These authorities do not assist the defendant because they did not concern any clauses expressly excluding “set – off”.
66. The first rule of contractual construction requires that -“the words of a contract should be interpreted in their grammatical and ordinary sense in context, except to the extent that some modification is necessary to avoid absurdity, inconsistency or a pregnancy.”(See Bywater Properties Investments LLP v Oswestry Town Council [2014] EWHC 310 (Ch)).
67. In my view the words “by setting any sum off against it” in clause 2.7 by their plain and ordinary meaning clearly refer to any set – off, and are unambiguous. In this context I cannot discern any material difference between a set-off that a defendant is entitled to make at law e.g. under an express contract term, and a right to equitable set- off arising from a cross-claim. If they are to be differentiated it may be said that the defendant with a contractual right to set off should be in a stronger position than the defendant relying on an equitable set – off. Moreover, use of the word “any” shows the intention of the parties was that the tenant would not be entitled to rely on any set – off, regardless of the basis for such set – off. It must therefore be concluded that clause 2.7 precludes the defendant from equitable set off in respect of his cross-claim for maintenance/upkeep contributions.
Counterclaim for Damages/Aggravated Damages
68. I am satisfied that this also does not give rise to any bone fide defence to the claim for arrears of rent for a number of reasons.
69. First, insofar as the claim to damages might give rise to an equitable set – off, as with the claim for maintenance/upkeep contributions, this is expressly precluded by clause 2.7. It can only be raised as an independent counterclaim.
70. Secondly the Particulars pleaded in the Counterclaim base the claim on a wrongful taking of possession occurring at a time when the defendant had referred the validity of the second Termination Notice to the RTB. However the plaintiff was not put on notice of the referral until 24th May, 2018, one day after the repossession.
71. Thirdly the defendant has not particularised in the Defence/Counterclaim, or on affidavit, any special damages or losses said to have been caused by the alleged trespass, and no attempt has been made to quantify the claim to damages. This may not be that surprising as none of the Magan family were in occupation at the time of repossession, and the defendant has a residence in London.
72. I also bear in mind the open offer made by the plaintiff’s solicitors on 25th May 2018 allowing the defendant and his family to stay at Castletown Cox from then until 3rd August 2018, albeit on the basis that they would then vacate in order to allow the sale of the property to be completed, and on foot of certain related undertakings. Acceptance of this would have minimised the defendant’s losses (if any), and arguably would not have prevented or prejudiced the claim subsequently made by the defendant for a new tenancy under the 1980 Act.
Conclusion on Application for Summary Judgment
73. For the reasons given above the plaintiff is entitled to summary judgment against the defendant in respect of the arrears of rent up to and including 12th April 2018 in the sum of €571,893. I will hear counsel further in relation to –
(a) the framing of the order to reflect the obligation of the defendant to withhold and remit to the Collector General 20% by way of Withholding Tax;
(b) the claim to interest pursuant to the Courts Act 1981;
(c) whether there should be any stay on the judgment.
The Defendant’s Application to Dismiss
74. The defendant seeks to have dismissed all of the plaintiff’s claim as pleaded in the general indorsement of claim on the plenary summons (and as similarly pleaded in the Statement of Claim), with the exception of two reliefs sought (which will be addressed shortly), as follows:-
“General Indorsement of Claim
1. A declaration that the tenancy entered into between the Plaintiff and the Defendant dated 15 December 2010 (the Letting Agreement) in relation to the Property (more particularly described in the schedule hereto) has been validly terminated for, inter alia , the failure of the Defendant to pay rent due and owing thereunder.
2. A declaration that the Defendant is not entitled to seek a new tenancy or other relief pursuant to Part Il of the Landlord and Tenant Act, 1980 as amended by virtue of section 17 thereof including, but without limitation, because the Letting Agreement has been terminated because of non-payment of rent and/or breach of covenant
3. A declaration that the Defendants intended application to court for relief for a new tenancy pursuant to Part II of the Landlord and Tenant Act 1980 (as amended) is an abuse of process.
4. An injunction restraining the Defendant from applying to the Court to seek relief in relation to a new tenancy of the Premises pursuant to sections 20 and 21 of the Landlord and Tenant Act 1980 (as amended) on the grounds that same constitutes an abuse of process.
5. An injunction restraining the Defendant, his servants or agents, from entering the Property without the consent of the Plaintiffs and/or otherwise interfering with, obstructing, hindering or frustrating the sale of the Property and/or in dealing with same.
6. If necessary, an injunction, pending the arbitration of a dispute between the parties, restraining the Defendant, his servants or agents, from interfering with, obstructing, hindering or frustrating the Plaintiff in dealing with the objects and chattels at or in the Property.
7. Judgment in the sum of €571,1393, not including interest, representing arrears of rent due and owing prior to the termination of the Letting Agreement.
8. Damages for breach of contract.
9. Damages for unlawful interference with the Plaintiffs economic interests and contractual relations.
10. Damages for the tort of abuse of process.
11. Interest pursuant to the provisions of the Courts Act 1981, as amended.
12. Such further or other orders as this Honourable Court may deem fit.
13. Costs.”
75. The defendant did not pursue the relief sought at 7 above, accepting that the High Court had jurisdiction to hear and determine the claim in respect of rent. Counsel also did not seek to dismiss the relief sought at 6 above, which relates to matters pleaded at paras. 26 – 30 of the Statement of Claim in relation to the “Chattels Agreement”. In essence, the plaintiff claims that the defendant is in arrears in respect of monies due under the Chattels Agreement, and the dispute in relation to that, and whether the Chattels Agreement is valid, has been referred to arbitration, and the continued pursuit of this relief is dependent on the outcome of that arbitration.
76. The essence of the defendant’s argument in respect of the balance of the claim is, first, that the issue in relation to the validity of the second Termination Notice has been referred to the RTB and is a matter for it to decide, and, secondly, as the Circuit Court has exclusive jurisdiction to determine the defendant’s entitlement to a new tenancy pursuant to Part II of the Landlord and Tenant Act 1980, that is not a matter for the High Court – and the defendant argues that all these claims (and related reliefs) are, therefore, an abuse of the process.
77. In further support of this legal contention, counsel relies on what it asserts was a “forcible entry” in the “dawn raid” by the plaintiff’s agents on 23rd May, 2018, which it is suggested amounted to a criminal offence, and the continuing refusal to restore possession. It also relies on the failure of the plaintiff to register the defendant’s tenancy under the 2004 Act; that the trustee is in breach of fiduciary duty by enhancing the power of the purchaser to the detriment of the defendant and beneficiaries in allowing the purchaser to take over the Sancus security; and the absence of any replying affidavit to the grounding affidavit of Mr. Ivor Fitzpatrick sworn on 20th July, 2018.
78. This last point is nihil ad rem , because the plaintiff’s solicitor in a letter dated 5th September, 2018, indicated that the plaintiff would be relying on Mr. Benford’s affidavit sworn on 4th July, 2018, and the other affidavits sworn in the context of the plaintiff’s application for summary judgment, the pleadings and legal submissions. I am satisfied that this was an appropriate approach to take, being efficient and cost saving, and that the plaintiff can rely on those affidavits sworn, as they are, within the same proceedings.
79. As to the failure of the plaintiff to register the Letting Agreement as a residential tenancy – and assuming that it was indeed a residential tenancy for the purposes of the 2004 Act (a matter that is disputed) – pursuant to the obligation to register it arising under s. 134 of the 2004 Act, this would seem to have no real relevance. It has the effect, so far as a landlord is concerned, that s. 83(2) of the 2004 Act applies, and this simply provides that “…the Board shall not deal with a dispute in relation to a tenancy referred to it under this Part by the landlord of the dwelling concerned if the tenancy is not registered under Part 7”. However, no dispute between the parties has ever been referred by the plaintiff to the RTB.
80. As to the purchaser discharging the Sancus debt and acquiring the security, on a consideration of the evidence as a whole, including the judgment and orders of the Royal Court of Jersey where the defendant had an opportunity to be heard, I accept the plaintiff’s evidence that this arrangement had a legitimate objective namely to preserve the trust assets. In particular it was reasonable, having regard to the expressed concern that Sancus would foreclose, that the sale would be lost and the trust assets would have been at risk of being diminished if a “fire sale” ensued. For the purposes of this application I find that this new arrangement was properly undertaken for the preservation of the trust assets and with the best interests of the beneficiaries in mind.
Validity of Second Termination Notice
81. With regard to the defendant’s contention that the RTB is seised of the dispute over the validity of the second Termination Notice, the issue is whether, from the plaintiff’s perspective, it is arguable that this is not so, leaving it open to the High Court to determine the validity of the purported termination.
82. I am satisfied that if the second Termination Notice dispute has been properly referred to the RTB and falls within its jurisdiction, section 86(1)(c) of the 2004 Act has the effect that “a termination of the tenancy concerned may not be effected”. While subsection (2) does disapply s.86(1)(c) in certain circumstances, it in turn does not apply to a s.86(3) “dispute relating to the validity of the notice of termination”, which is therefore covered by s.86(1)(c).
83. The plaintiff however argues that this dispute has not been validly referred to the RTB, or that the RTB cannot adjudicate on it. The plaintiff relies on s.3 of the 2004 Act, which is concerned with the application of that Act. The basic provision is s.3(1):
“(1) Subject to subsection (2), this Act applies to every dwelling, the subject of a tenancy (including a tenancy created before the passing of this Act).”
Subsection (2) then lists tenancies to which the 2004 Act does not apply, and so far as relevant provides:
“(2) Subject to section 4(2), this Act does not apply to any of the following dwellings:
(a) a dwelling that is used wholly or partly for the purpose of carrying on a business, such that the occupier could, after the tenancy has lasted 5 years, make an application under section 13(1)(a) of the Landlord and Tenant (Amendment) Act 1980 in respect of it,
…
(i) a dwelling the subject of a tenancy granted under Part II of the Landlord and Tenant (Amendment) Act 1980 or under Part III of the Landlord and Tenant Act 1931 or which is the subject of an application made under section 21 of the Landlord and Tenant (Amendment) Act 1980 and the court has yet to make its determination in the matter.”
84. Notwithstanding that the Letting Agreement has an express user covenant providing that Castletown House be used as a residence only for the defendant and his dependants, the defendant’s claim to new tenancy is firmly based on a business user and qualification under section 13(1)(a) of the 1980 Act. If that claim is established it follows that the 2004 Act simply does not apply, and the High Court has jurisdiction to determine the issue of validity of the second Termination Notice.
85. But if there is any doubt about that, it is arguable that the dis-application of the 2004 Act is put beyond dispute by section 3(2)(i). In particular the second limb of that provision, from the word “or” onwards, arguably has the effect that the moment the defendant filed the Landlord and Tenant Civil Bill dated 18 July 2018 bringing an application under Part II of the 1980 Act for a new tenancy in the property, the 2004 Act ceased to apply to his tenancy.
86. While a determination on this is a matter for the trial judge, the plaintiff has made out an arguable case. It follows therefore, and I so determine, that the plaintiff’s claims in these proceedings related to the purported termination of the letting agreement, and related reliefs such as those sought at no’s 1 and 5 in the Plenary Summons, should not be struck out or dismissed on any of the grounds raised by the defendant.
The Claim for a Declaration that the Defendant is Not Entitled to a New Tenancy
87. Turning to the defendant’s second jurisdictional point, this is of more substance. Section 3 of the Landlord and Tenant (Amendment) Act 1980 designates the Circuit Court as the court having statutory jurisdiction to determine the right to a new tenancy to which a tenant may be entitled under Part II of the Act. It is not disputed that the defendant’s Notice of Intention to Claim Relief was served under s. 20 of the Act, and that the application for relief in the form of the Landlord and Tenant Civil Bill has been properly served “not less than one month” after the Notice of Intention to Claim Relief. These provisions all fall within Part II of the 1980 Act and it is not disputed that the Circuit Court has exclusive jurisdiction to grant relief under that Act in the form of a new tenancy, or compensation, such as compensation for improvements or for disturbance. Moreover, only the Circuit Court can fix the terms of any new tenancy in the absence of agreement.
88. It was confirmed at hearing that the defendant’s application in the Landlord and Tenant Civil Bill is for a new business tenancy arising under s. 13(1)(a) of the 1980 Act. This requires that the defendant must establish that – “the tenement was, during the whole of the period of five years ending at that time, continuously in the occupation of the person who was a tenant immediately before that time or of his predecessors in title and bona fide used wholly or partly for the purposes of carrying on a business…”.
89. It is no surprise that the defendant relies on a business equity because s.192(2) of the 2004 Act provides that “…on and from the fifth anniversary of the relevant date, Part II of the Act of 1980 shall not apply to a dwelling to which this Act applies.” This means that from 1st September, 2009 i.e. five years on from the commencement of the 2004 Act under S.I. No. 505 of 2004, residential tenancies to which the 2004 Act applies could no longer qualify for a new tenancy under Part II of the 1980 Act, whether on the basis of business use or long possession (20 years occupation). Only if the tenancy falls outside the 2004 Act can there be an entitlement. This does mean that any arguments that the defendant pursued before this court based on a valid and subsisting reference to the RTB of the dispute as to validity of the second Termination Notice are fundamentally inconsistent with the defendant’s claim to be entitled to a new business tenancy.
90. While no particulars are given in the Landlord and Tenant Civil Bill, and no Notice for Particulars has yet been raised, counsel for the defendant indicated that the business user relied upon by the defendant is that summarised in para. 9 of the affidavit which he swore on 31st August, 2018, namely the regular holding of “events for International Georgian Societies and Horticultural Societies at Castletown House & Estate…”.
91. It will be recalled that the second relief sought by the plaintiff in these proceedings is:-
“A declaration that the defendant is not entitled to seek a new tenancy or other relief pursuant to Part II of the Landlord and Tenant Act 1980, as amended by virtue of s. 17 thereof including, but without limitation, because the Letting Agreement has been terminated because of non-payment of rent and/or breach of contract.”
The third, fourth and fifth reliefs seek related declarations and an injunction. These four reliefs are replicated at paragraphs 32 – 35 of the Statement of Claim.
92. Section 17, which falls within Part II of the 1980 Act, so far as it is relevant provides:-
“(1)(a) A tenant shall not be entitled to a new tenancy under this Part if—
(i) the tenancy has been terminated because of non-payment of rent, whether the proceedings were framed as an ejectment for non-payment of rent, an ejectment for overholding or an ejectment on the title based on a forfeiture, or
(ii) the tenancy has been terminated by ejectment, notice to quit or otherwise on account of a breach by the tenant of a covenant of the tenancy, or
(iii) the tenant has terminated the tenancy by notice of surrender or otherwise, or
(iiia) if section 13(1)(a) (as amended by section 3 of the Landlord and Tenant (Amendment) Act 1994) applies to the tenement, the tenant has renounced in writing, whether for or without valuable consideration, his or her entitlement to a new tenancy in the tenement and has received independent legal advice in relation to the renunciation, or
(iiib) if section 13(1)(b) applies to the tenement (and the tenement is one to which the Residential Tenancies Act 2004 applies), the tenant had completed and signed, whether for or without valuable consideration, a renunciation of his or her entitlement to a new tenancy in the tenement and has received independent legal advice in relation to such renunciation, or
(iv) the tenancy has been terminated by notice to quit given by the landlord for good and sufficient reason, or
(v) the tenancy terminated otherwise than by notice to quit and the landlord either refused for good and sufficient reason to renew it or would, if he had been asked to renew it, have had good and sufficient reason for refusing.
(b) In this subsection ‘good and sufficient reason’ means a reason which emanates from or is the result of or is traceable to some action or conduct of the tenant and which, having regard to all the circumstances of the case, is in the opinion of the Court a good and sufficient reason for terminating or refusing to renew (as the case may be) the tenancy.
(2)(a) A tenant shall not be entitled to a new tenancy under this Part where it appears to the Court that—
(i) the landlord intends or has agreed to pull down and rebuild or to reconstruct the buildings or any part of the buildings included in the tenement and has planning permission for the work, or
(ii) the landlord requires vacant possession for the purpose of carrying out a scheme of development of property which includes the tenement and has planning permission for the scheme, or
(iii) the landlord being a planning authority, the tenement or any part thereof is situate in an area in respect of which the development plan indicates objectives for its development or renewal as being an obsolete area, or
(iv) the landlord, being a local authority for the purposes of the Local Government Act, 1941, will require possession, within a period of five years after the termination of the existing tenancy, for any purpose for which the local authority are entitled to acquire property compulsorily, or
(v) for any reason the creation of a new tenancy would not be consistent with good estate management.
(b) In the case of certain dwellings and business premises to which this subsection applies the tenant is entitled to compensation for disturbance under Part IV.”
93. It should be noted that the plaintiff in its pleadings does not limit its claim that the defendant is disentitled under s.17(1)(a) (termination for non-payment of rent). Disentitlement is pleaded based on s.17 “without limitation”. It may transpire, for instance, that s.17(2)(a) (creation of new tenancy not consistent with good estate management) may have relevance in circumstances where the Royal Court of Jersey was persuaded to order a sale because of financial prudence (it took into account the “commercial realities faced by the [trustee]”) and in the best interests of the beneficiaries. At paragraph 54 of its Judgment dated 9th November, 2017 that court stated:
“54. In the view of the Court, the [trustee] was acting responsibly in very difficult circumstances. Its decision that the country house should be sold was both rational and honest and one which any reasonable trustee properly instructed could have arrived at. It was a decision that merited the support of the Court.”
94. Both counsel addressed jurisprudence which suggests that in certain circumstances the High Court may determine whether a tenant could be entitled to a new tenancy under the 1980 Act. Counsel for the defendant argued that this only applied to a case where there was urgency, and then only in respect of a clear-cut failure by a tenant to qualify for a “threshold” statutory requirement such as ‘five years business user’.
95. Counsel for the plaintiff on the other hand argued that under its residual jurisdiction the High Court could determine, at least in a clear case, exclusions under section 17, and contended that this could be viewed as an urgent case.
96. In Kenny Homes Co Ltd v Leonard and Lecorn Limited (unreported High Court, Costello P., and unreported Supreme Court, 18 June, 1998), Costello P. on a preliminary issue held that the exclusive jurisdiction of the Circuit Court did not deprive the High Court of the jurisdiction to grant an injunction against the defendant trespasser who was occupying a filling station/garage on foot of an expired license agreement from Shell, even though the occupier had claimed entitlement to a new tenancy under the 1980 Act. Reference to this preliminary issue appears in the subsequent judgment of Costello P. ([1997] IEHC 230) where he states:
“I concluded that (a) the Circuit Court had exclusive jurisdiction under the 1980 Act to hear and determine claims for a new tenancy, (b) that the present proceedings were for injunctive relief based on a claim that the defendants were trespassers (c) that the 1980 Act did not deprive this court of jurisdiction to hear such a claim, (d) that ordinarily, where a right to a new tenancy under the 1980 Act was contested on the ground that a “tenancy” did not exist or that the premises were not a “tenement” these issues should be determined in the Circuit Court and this Court should stay proceedings in which these issues were raised, that (e) because of the particular urgency in this case the court should not decline jurisdiction, that (f) should the court decide that (i) the agreement of the 1 October, 1994 constituted a “tenancy” and (ii) the site constituted a “tenement” within the meaning of the Act then section 28 of the Act applied and Lecorn would be entitled to retain possession pending the determination in the Circuit Court of the application for a new tenancy, and I would accordingly dismiss these proceedings. I therefore decided to hear oral evidence and determine these two issues. Should I decide them in Lecorn’s favour, the Circuit Court would then be required to determine whether or not a new tenancy should be granted in light of the plaintiff’s intended use of the site and perhaps the issue of compensation.”
97. Costello P., having heard the evidence, determined that Mr Leonard did not hold the site under a lease or contract of tenancy, and accordingly that neither he nor Lecorn had the right to a new tenancy under the 1980 Act. He further held that the premises was not a “tenement” in circumstances where a portion of the land was not covered by buildings and he was unconvinced by the defendant’s assertion that “the parking area is ancillary and subsidiary to the buildings associated with the filling station building”.
98. The Supreme Court (Lynch J.) affirmed Costello P. in respect of the preliminary issue, stating: –
“I agree with these views and in doing so I have regard to Articles 34 Section 3(1) of the Constitution, the decision of the former Supreme Court in the case of Walpoles (Ireland) Ltd v Dixon [1935] 69 I LTR 232 and the decisions of the High Court in R v R [1984] IR 296 and O’R v O’R [1985] IR 367. Accordingly the appeal insofar as it relates to the preliminary issue fails and must be dismissed.”
The Supreme Court also affirmed the High Court in respect of its substantive findings.
99. In Walpoles (a decision affirmed by the Supreme Court) the landlord had sought ejectment in the High Court in circumstances where the tenant had made an application for a new tenancy to the Circuit Court under the Landlord and Tenant Act 1931. In rejecting an application for the High Court proceedings to be adjourned pending the outcome of the circuit court proceedings, O’Byrne J. stated ( at p.233): “I would certainly take that course of action if I thought there was any substantial grounds on which such application might be granted, but in my opinion, having regard to the facts of the case… Such an application could not possibly succeed.”
In the penultimate paragraph of his judgment O’Byrne J. stated: “The difficulty which arises on the threshold of this case, from the point of view of [the tenant]… Is that the premises with which we are concerned do not seem to me to come within the definition of a tenement.”
Both Kenny Homes and Walpole were cases where the court decided that the threshold for entitlement to a new tenancy was not met.
100. It is also worth noting the submissions of counsel in Kenny Homes as to the urgency of the High Court/Supreme Court determining the issue of entitlement in that case. These were first, that his clients “were not insured in respect of the risks inherent in the presence of a filling station on the premises”; and second, “time limits that applied to the premises regarding their status as part of a designated area, the Respondents stood to incur very substantial losses if they were unable to avail within those time limits of the planning permission which they had obtained for the development of the premises.”
101. Kenny Homes was recently considered by Barrett J. in Cuprum Properties Limited (Acting by its Joint Receivers and Managers) v Murray [2017] IEHC 699. There, a publican sought to exercise his rights to seek a new tenancy under the 1980 Act. The plaintiff receivers brought proceedings to restrain the publican from exercising his rights in circumstances where he had in fact executed a deed of renunciation of his right to a new tenancy and was therefore not entitled to a new tenancy by virtue of section 17(1)(a)(iiia). The plaintiffs asserted that delay to a proposed development caused by the publican exercising his rights under the 1980 Act would result in losses amounting to millions of Euro, and that the High Court should therefore accept and exercise jurisdiction.
102. Barrett J. seems to have regarded Kenny Homes as meaning that the High Court could only in urgent cases determine the threshold for entitlement under the 1980 Act. At paragraph 26 he states: –
“26. To paraphrase what Costello P. is a saying in the last-quoted text is “If I decide that Lecorn is a tenant and if I decide that I am confronted with a tenement, then I have no jurisdiction to go any further”. There is, with every respect, no intellectually respectable argument which could persuade the court that Kenny Homes means anything other than that.”
Barrett J. also rejected the idea that simply because a case has been admitted into the Commercial Court that there is some “free-standing urgency” ground on which the comprehensive provisions of the Act of 1980 can in effect be side-stepped in proceedings such as those now presenting “fast – track” through the Commercial Court” (para. 25). He concluded that “having particular regard to the decision of the Supreme Court in Kenny Homes , the court is coerced as a matter of law into concluding that the within proceedings must now be dismissed for want of jurisdiction.” (Para. 28).
103. The other recent decision is that of Emo Oil Limited v Oil Rig Supplies [2017] IEHC 594, where McDermott J. was content to proceed to determine an interlocutory injunction application as to whether the plaintiff should be entitled to vacant possession notwithstanding that the defendant had issued a claim for statutory relief for a new tenancy in the Circuit Court. That was also the case in which the plaintiff relied, inter alia , on a deed of renunciation executed by the tenant. However, unlike Kenny Homes which Costello P. treated as the trial of the action, it was only an interlocutory hearing. No question appears to have arisen as to the High Court’s jurisdiction to grant an interlocutory injunction, which was granted but stayed so long as the defendant paid a monthly equivalent of the rent. The possibility of the High Court not having jurisdiction because of the existence of Circuit Court proceedings it is not considered in the judgment.
Discussion
104. Clearly the Circuit Court, and that court alone, has original jurisdiction to grant a new tenancy, or to determine and grant compensation for disturbance or improvements, where such entitlements are proven to exist under the 1980 Act. However, as the Supreme Court noted by its reliance in Kenny Homes on Article 34.3.1, the High Court is invested with full original jurisdiction. This entitles the High Court in appropriate cases to determine issues concerning a claimed entitlement to a new tenancy.
105. It is difficult to discern as a matter of principle why such matters should be limited to determining whether a premises is a “tenement” or whether it is held under a “contract of tenancy”. The definition of “tenement” is contained in section 5(1) of the 1980 Act, and it is worthwhile reproducing this because it indicates the extent of the conditions that must be satisfied: –
“5. (1) In this Act “tenement” means –
(a) premises complying with the following conditions:
(i) they consist either of land covered wholly or partly by buildings or of a defined portion of a building;
(ii) if they consist of land covered in part only by buildings, the portion of the land not so covered is subsidiary and ancillary to the building;
(iii) they are held by the occupier thereof under a lease or other contract of tenancy express or implied or arising by statute;
(iv) such contract of tenancy is not a letting which is made and expressed to be made for the temporary convenience of the lessor or lessee and (if made after the passing of the Act of 1931) stating the nature of the temporary convenience; and
(v) such contract of tenancy is not a letting made for or dependent on the continuance in any office, employment or appointment of the person taking the letting;
or
(b) premises to which section 14 or 15 applies.”
Section 14 relates to premises which, prior to 1960, were subject to the Rent Restrictions Act 1946 provided they were not letting for temporary convenience, or dependent on the continuance of the tenant in any office or employment.
Section 15 relates to “a dwelling, being a house or a separate and self-contained flat, which immediately before the passing of the Rent Restrictions (Amendment) Act, 1967, was a controlled dwelling” subject to certain rateable valuation requirements of some complexity.
106. These provisions raise many potential issues which Kenny Homes suggests can be determined by the High Court in an appropriate case. It is notable that in that case Costello P. at full trial determined not only the question of whether there was a contract of tenancy, but also whether land not covered by buildings was subsidiary and ancillary to the filling station.
107. While these issues have been described as “threshold” issues, in my view they are better characterised as issues related to conditions that must be satisfied for a tenant to have an entitlement to claim a new tenancy. Why then should the High Court be excluded, even in an urgent case, from determining whether a tenant is disentitled to a new tenancy by virtue of section 17, or at any rate by virtue of one of the circumstances provided for in section 17(1) or (2) where no discretion is vested in the Circuit Court? I cannot discern any difference in principle between issues raised by section 5 and disentitlement issues raised in section 17. This question of principle does appear to have been addressed in Cuprum , and with the greatest of respect to Barrett J. I do not accept that the decision of Costello P. in Kenny Homes is as narrow in effect as he suggests in paragraph 26 of his judgment. Section 17 sets out restrictions on entitlement which could equally be regarded as circumstances or conditions which prevent a tenant having an entitlement. The drafters of the legislation and the Oireachtas cannot have intended that issues arising under section 5 could be determined by the High Court in an urgent case, but issues arising under section 17 could not.
108. What does emerge clearly from the jurisprudence is that the High Court should only determine issues of entitlement under the 1980 Act where there is urgency. This is very important in light of the statutory jurisdiction of the Circuit Court which this court should respect.
Urgency
109. In my view the case for urgency is not made out by the plaintiff, or at any rate does not survive either or both of (1) the purchaser taking over the Sancus debt and security, and (2) this court’s decision to grant summary judgment in respect of the arrears of rent.
110. So far as the court and the parties have been informed, the trustee’s loan interest obligations have now reduced to 0%, although “the loan is subject to retrospective repricing if the sale of Castletown does not complete in a timely manner.” (Trustees letter by email of 24th September, 2018). Although the purchaser “is in a position to exercise control over the asset upon short notice” (A & L Goodbody letter of 2nd October, 2018), there is no evidence to suggest that this is imminent or will even happen in the medium term or within an agreed timeframe. Nor is there any evidence that the plaintiff and purchaser cannot await the determination of the defendant’s claim to a new tenancy in the Circuit Court, or that the plaintiff or trustee are not in a position to preserve and maintain Castletown Cox over the period of time within which it may be anticipated the Circuit Court will determine the Landlord and Tenant Civil Bill – in respect of which the plaintiff herein has yet to seek particulars or deliver a defence. By comparison there was real urgency in Kenny Homes (lack of public liability insurance and the running of “designated area” time limits).
111. However while the issue of entitlement to a new tenancy should proceed in the normal way in the Circuit Court, I am of the view that the plaintiff should not be precluded from litigating section 17 issues in the High Court if, before a trial is reached in the Circuit Court, there is genuine and supervening urgency that justifies the High Court exercising its jurisdiction. This is not to be taken as a licence for the plaintiff to prompt the purchaser into actions that bring matters to a head, and should the High Court be asked to try the section 17 issues “as a matter of urgency” it will be incumbent on this court to scrutinise the relationship and correspondence between the plaintiff and the purchaser in its entirety before acceding to any such request.
Conclusion
112. Accordingly rather than striking out the reliefs sought at numbers 2, 3, 4 and 5 in the Plenary Summons – being the reliefs at numbers 32 – 35 inclusive in the Statement of Claim, and related pleas – I will grant a stay on the plaintiff pursuing those reliefs pending the final determination of the Landlord and Tenant Civil Bill, but I will grant the plaintiff liberty to apply.
113. While I have already determined that the plaintiff is entitled to pursue its claim in relation to the validity or otherwise of the purported termination of the Letting Agreement for non-payment of rent, I am of the view that it would not be an efficient or cost saving exercise for that issue to be determined in isolation by this court. Rather it should be determined by the Circuit Court because it will inevitably arise as an issue that falls to be determined under section 17. In conclusion absent compelling urgency these issues should be determined in a timely fashion at the trial of the Landlord and Tenant Civil Bill proceedings. While I will hear the parties further in relation to this, I propose to apply the stay to this issue also.
Summary
114. There will be summary judgment against the defendant in respect of the arrears of rent up to and including 12th April, 2018 in the sum of €571,893. I will hear counsel further in relation to –
(a) the framing of the order to reflect the obligation of the defendant to withhold and remit to the Collector General 20% by way of Withholding Tax;
(b) the claim to interest pursuant to the Courts Act 1981;
(c) whether there should be any stay on the judgment.
115. The court declines to strike out or dismiss the plaintiff’s claims in these proceedings related to the purported termination of the Letting Agreement dated 15th December, 2010, and related reliefs such as those sought at no.s 1 and 5 in the Plenary Summons, on any of the grounds raised by the defendant. I will hear the parties further in relation to staying the plaintiff’s claims to these reliefs in these proceedings pending the determination in the Circuit Court of issues that may arise as to the validity of the purported termination of the Letting Agreement.
116. The court declines to strike out the reliefs sought at numbers 2, 3, 4 and 5 in the Plenary Summons – being the reliefs at numbers 32 – 35 inclusive in the Statement of Claim, and related pleas, on any of the grounds raised by the defendant.
However, a stay will be granted on the plaintiff pursuing those reliefs in these proceedings pending the final determination of the defendant’s application for a new tenancy in the Landlord and Tenant Civil Bill proceedings, but in respect of this stay the plaintiff will have liberty to apply.
Wilson v Burne
Queen’s Bench Division.
1 December 1888
[1889] 23 I.L.T.R 59
O’Brien, Johnson, Gibson JJ.
O’Brien, J.
In an action for the recovery of land for non-payment of rent, claiming the possession only, the question has been raised whether the defendant can have a defence or a ground for a counter-claim founded on the fact that the landlord was in possession under an habere in a previous action of the same kind for a portion of the time covered by the year’s rent alleged to be due, the redemption having taken place by payment and acceptance out of Court of the rent and costs. The rent for which the former judgment was obtained accrued on the 25th of March, 1887, and the habere was executed on 23rd of August, and the defendant paid, and the landlord accepted, the rent and costs on the 27th of September with the object on the part of the tenant, it was stated in the discussion, in reference to the time of payment, of applying to fix a fair rent. The jury found that the landlord was chargeable with £34 for the interval that he was in possession—from the 23rd of August to the 27th of September—and that amount is stated to have been made up of the value of the grazing of cattle that he put upon the land, and of some small crops—a circumstance which was adverted to as having some bearing on the main question in reference to the mode and principle in which an account of the profits would be taken against a landlord in a redemption suit. The defence in the present action alleged, first, that there was an eviction of the teuant by the landlord during part of the year—meaning the time the landlord was in possession after the habere ; and, secondly, in the strict terms of an ordinary set-off, that the plaintiff was indebted to the defendant in a sum equal to the rent “for money received by the plaintiff for the use of the defendant, being the amount of the rents and profits of the lands secured by the plaintiff from about the 25th of March, 1887, to the 30th of September, 1887, by the grazing, meadowing, and cropping of the lands which the defendant was willing to set-off against the rent alleged to be due.” It was considered so unprecedented and untenable, on principle as well as decision, that to a claim for the possession of land a set-off should be pleaded that it was necessary to contend during the argument that this latter defence ought to be construed as merely expressing the right which a tenant would have in a court of equity, on redeeming to set off any profits the landlord made or might have made without wilful default; and for myself I certainly would be of the opinion that it was in accordance with the policy and requirements of the law as it now stands that we should deal with the defence by amendment, or without amendment, in such a way as in substance to give the defendant the benefit of any right that arises out of the facts. For another reason it became necessary to consider the real purport and effect of the defence, for it was alleged at one time with some uncertainty of language to be a counter-claim, and if that were its nature the question would arise, whether the defence, if it did not displace the ejectment, would nevertheless give the defendant a right to have a judgment entered for him for a money demand. In Whitton v. Hanlon (16 L. R. I. 167), which was an action for the recovery of land, and in which there was a counter-claim for annuities and head rents chargeable upon the land, it was assumed that the effect of the defence would be to defeat the action altogether, on the ground that the year’s rent must be deemed to be satisfied. It is too late now to consider the question whether it was the true construction of the schedule rule relating to set-off and counter-claim that it was really intended to apply to such an action as the recovery of land for non-payment of rent, or whether it was not one of those cases in which the general terms of an Act of Parliament must not be held to be restricted by the existing law and practice by reason of the consequences that would follow from giving them an application as wide as themselves. I have not found any case in England in which a counter-claim has been admitted in an ejectment for non-payment of rent, and set-off which is in *60 cluded in the same rule appears to be entirely inapplicable to such an action. The distinction in the nature of the two defences cannot in any way be got rid of by the application of common language to them, for it would appear to have been considered in England that it was open to the plaintiff to discharge or extinguish the counter-claim by payment into court so as to preserve the original action which certainly could not be done in the case of a set-off which is appropriated to, and extinguished in, the plaintiff’s demand. The words of the statute stand clear: “Whenever a year’s rent shall be in arrear” it shall be lawful for the landlord to proceed by ejectment. That is the condition of the action and nothing can be the negative of that condition but what amounts to satisfaction or payment. In the reply to the defence the plaintiff takes issue on the counter-claim, under which it would perhaps be open to him to contend that the facts when shown did not constitute an eviction in law, but he has not unwisely pleaded specially the habere and the possession taken under it. And as to the set-off, he denies that any money was had or received to the plaintiff’s use, preferring, perhaps, not to take the risk of a dispute on the construction of Rule 22 in the schedule, though the form alone of a plea of set-off, which says that the defendant is willing to set-off his demand against the plaintiff’s claim, can have no meaning when the claim is for the land, and the rent is the condition of the claim, not the claim itself. The denial of “money had and received” puts in issue any right of the defendant at all; and if there were such a right, if there were money to which he was entitled, the question whether it was a ground of defence in ejectment would still be open on the motion for judgment. As to the eviction, it is for the first time alleged, in the records of the law, that a person who enters upon land under lawful authority, such as an habere, thereby causes an eviction so as to suspend or annul the engagements of the tenancy when resisted. The land is his own, the judgment has put an end to all rights of the tenant. Eviction, even if, according to the view taken in Upton v. Townshend (17 C.B. 30), it has lost the character so uniformly attributed to it by Lord Coke and Gilbert, C.B., and must no longer be considered to be founded in wrong, must still amount to a deprivation of the possession out of which the rent issues, contrary to the contract. But, whatever be the definition of it, it has been held, and must have the effect to put an end to the entire contract for rent, which is the effect attributed to it in the present defence by making it discharge the whole gale, and in no instance has it ever been decided to have the effect of causing a vacancy in the possession during the actual time it lasted, so as to be a reduction of the rent pro tanto as distinct from a suspension or abrogation of the contract. That is the condition of things to which the account in equity was adapted, and which it is sought to meet in the present case by converting that remedy through an account into a defence of the set-off. Reasonable as it appears that persons should not pay rent of land for any time it was out of their possession, the deprivation of the possession cannot constitute even a suspension of the rent, because it is necessary to the suspension of the rent that it shall continue when the time comes to fulfil the contract for payment. And so clear is this rule that in two very early cases to which Mr. Justice Gibson has called our attention, Page v. Parr (Styles 432), and Timbrell v. Bullock (ib. 446), it was held that where a landlord entered on his tenant’s land during the gale and the latter resumed possession before the gale was at an end the suspension of the rent could not be relied on. The tenant was not without a remedy. Where he had a title he could bring an action of trespass for the intermediate period. In the case such as that we have to deal with, when his title was gone for the time, he had another remedy provided for him, when it was recovered. But as to eviction, that is an entirely hopeless and groundless position to contend for. There could be no eviction in law. The landlord recovered his land by law. The tenant might never redeem at all, and where would the eviction be in that case? The fact of his resuming possession of his own will could not be turned into a wrong by relation. The mere circumstance that the law subjected him to a liability to an account as upon a legal possession excluded altogether the doctrine of eviction. But by the second defence it is sought under the form of a set-off to make the landlord’s possession pending redemption available as an answer to an ejectment for non-payment of rent covering the same period on the ground that less than a year’s rent is due. The power to do this is considered to be derived from the sections of the Judicature Act which require effect to be given to equitable rights and all claims between the parties to be determined in the same suit. It is extremely doubtful whether an incidental liability to account comes at all within the words “any suit or proceeding instituted for the same or the like purpose” in sub-sections 1 and 2 of section 27, so as to be transferred as a substantive and independent right to a Court of law. It is to be observed, also, that the equitable jurisdiction on the subject was entirely at an end when the Judicature Act was passed, the Act of 1860 having expressly repealed the Statutes of Anne and George I, and substituted the motion for restitution in a Court of law. In this statute there is no express provision for an account except by reference to the relief a Court of Equity would give, though the form of order made under it provides for that object, but under the Statute of Anne the profits are to be set off against the rent that accrues after the ejectment, and the tenant had to pay the balance before he could be restored to the possession, taking no notice at all of the possibility that the profits might exceed the rent, and saying nothing of what was to become of any balance the other way in that event. Nor has the effect of any change in the law been to convert that right to an account into a right “in gross,” as it were, into a substantive cause of action capable of being asserted in defence to an ejectment for rent due for the same period or even to any future rent; for, if it has acquired the character of a set-off or debt it would follow that it may be used at any time, or, if not a set-off, or a distinct cause of action, is it a deduction that can be made from the rent so as to leave less than a year due to maintain the ejectment? First, it is a thing that may never come into existence at all, for the tenant may not redeem. Next, it is a right to be asserted within six months as given by the statute, Again, it is put to a special account, that of the half-year’s rent that accrues after the judgment. Moreover, the account would be taken from a court of equity and given not to a court of law, but to another tribunal, a jury, and that although the statute assigns the account to a court of law on a motion for restitution. And, withal, it was formerly in equity and would be in law at present, an account of profits; but it is not possible to see in what way the result of an account of profits could affect the rent, except as resulting in payment, and if there were no profits there would therefore be no payment, even though the landlord was the whole time in possession, and even although there was wilful default on his part, which would have been the subject of an account in equity. On the other hand, if the right is to be considered in the nature of a set-off against the landlord as having received the produce of the land, while he was in possession, the measure of his liability is changed. He is then liable for what he has received, with whatever result of ultimate profits, or the contrary. Supposing all these difficulties to be surmounted, and we take the broad view of the defendant’s case to be, that this is a kind of demand on which decision has fixed the character of an equitable set-off that has been allowed, as in the case of Beasley v. Darcy (2 Sch. & Lef. 403), to go in satisfaction of a past rent, and therefore ought to be allowed to go in discharge of the rent in a new *61 ejectment, and that the Judicature Act says that as far as possible all claims ought to be adjusted in the same action; let us look the question in the face and see what is the real reply to this argument. The proposition on the other side on which the reply of the plaintiff rests, I take to be, that this is expressly a relative and limited kind of relief given by statute, having a special object and function assigned to it, in a certain course of proceeding, and having no place in the common law, and no existence detached from and independent of that proceeding, differing in the extent and measure of the right and attended by different consequences and not transferred or intended to be transferred by law at all, not the defence to an ejectment, but carried into the substituted proceeding at law of restitution and account. The leading principle of equity was to do complete justice on each side. But, in the account in equity the tenant must pay the balance of the rent before he could be reinstated, and in the form of order for restitution he must undertake to pay what is found to be due. In the ejectment, however, if this defence be allowed he can defeat the action, and then simply take his lease, not concerning himself about the balance of the rent, so that merely one side of the equity, the tenant’s part, could be transferred, leaving the other, the landlord’s side, behind. Judgment could not be given in the ejectment for the balance, and no undertaking could be required from the tenant, and the tenant’s demand of the subject of set-off could not, as far as I can see, be satisfied or extinguished so as to prevent its doing duty at another time and in another ejectment. And if the rule be that equitable rights, which means the rights on both sides, are to have effect and that all claims are to be adjusted in the action it is not possible to apply that rule so as to maintain this defence.
It is true that in Beasley v. Darcy after consent for judgment in ejectment, though upon a bill for an injunction filed before, a collateral demand for damages connected with the land and occurring while the rent was accruing, was allowed to be gone into, to show that a year’s rent was not due at the time the ejectment was brought. That case, which was decided by Lord Clare, affirmed by the House of Lords, was approved of by Lord Redesdale, though he said questions were raised concerning it, and is referred to without dissent by Lord St. Leonards in Malone v. Geraghty (3 D. & W. 339) as an example of the general equitable jurisdiction of the court, even where the requirement of the statute as to lodging the rent and costs within six months was not complied with. But Beasley v. Darcy belongs to a class of cases not uncommon in the books which have a certain tendency to be misapplied, and by a logical process, that it is not easy to arrest at any point, lead to consequences that are yet seen to be wrong in themselves. In one repect it is a stronger case than the present, because the demand—which was for damage caused in cutting timber reserved in a deed—was more strictly collateral, and did not arise from the possession of the land itself, out of which the rent is considered to issue. But, on the other hand, it possesses essential features of distinction from this case because the tenant’s title to the land was unaffected by any judgment at the time, and was not subject to what is called an inchoate forfeiture, and he had an absolute right to recover damages in a cross-action without the aid of the statute. The case establishes that a tenant was entitled upon an account in equity to credit for damages affecting the use of the land, in reduction of the rent on which the ejectment was brought, but it has not the effect of segregating that demand from the rest of the account, and fixing on the defendant a distinct right which he can avail of in an action. Eviction is clearly a legal defence in its nature, and did not require the aid of the Judicature Act in order to be relied on. And yet, in the multitude of cases on this subject, with occasions for the question arising every day, with a large part of the country under a normal process of ejectment and redemption, the law writing its decrees on the land one day and erasing them the next, it cannot but be an argument of great weight that no case can be found of such a defence in ejectment for non-payment of rent as that of eviction under such circumstances. Those cases show that payment and acceptance of the rent operate as a waiver of the forfeiture on the part of the landlord. That was the decision in Sheridan v. Dawson (1 Jones, 256) and that is the principle we have to apply in determining what was the position of landlord and tenant when they settled out of court. Here both parties are silent. The question is, does any right of the tenant stand behind that silence? I am of opinion in the negative. Undoubtedly it would be a strong thing to say that if a landlord lets the land for six months pending redemption, which was a common form of letting, and receives the rent from the interim tenant, he can put that rent in his pocket, and after another six months bring an ejectment for a whole year’s rent. The injustice of such a state of things, when the case arose, would be so evident that it would be certain to force the parties into an arrangement. But the remedy of the tenant was in his own hands. He could apply to the court and not redeem otherwise, unless the landlord came to terms. On his side the landlord may say he would have declined to accept the rent, and would have left the tenant to the remedy by the account if he knew a demand was going to be reserved against him. I would not be of the opinion that the fact of anything having been said would have the same effect as the settlement of an account, or the payment of money without objection or under a mistake of law. But, in the absence of bargain, we have to see what are the rights or liabilities which the law attaches to the situation itself in which the parties stood, and these must be established on some principle known to the law. For the reasons stated, eviction there was not, suspension of the rent there was not, the landlord was not a trespasser, for the land was his own at the time, there was no money had and received as upon waiver of a trespass, for there was no trespass to waive, and money could not be “had and received” by the possession of real estate, and therefore the defendant’s case was reduced to the ground that the claim he would have upon an account was translated by law into a defence to an ejectment, which last ground I have occupied so much time in discussing. In reason, it may be said, what difference can it make that the time was after the judgment and not before, if it was part of the time for which the rent was claimed, or that the demand was the subject of an account if it had acquired from decision the character of a right, or if the act of the landlord was not an eviction, and did not lead to suspension of the rent as it took away the land which was the consideration of the rent, for a certain time—why not deprive him of the rent for that time? and eviction and suspension and forfeiture, it may be added, are fictions of law that stand in the way of actual right. But perhaps an answer also is capable of heing given, even in reason—that the landlord’s right, if founded upon these rules, is restricted by them also—as, for instance, that he cannot recover part of a gale of rent any more than it can be taken from him, that these rules cannot be set aside to his prejudice without being also set aside for his benefit, and that they are not merely constructive at all but arise out of the nature of the subject and the necessity of things, out of the nature of land which requires continuous periods for its use, out of the contract for rent which cannot be made to accrue from day to day and from the uncertain position of the landlord after the judgment open to be reversed by another right entirely artificial and contingent, which may not be exercised at all, with the consequences when exercised, of replacing all the interests as they stood before, in a situation in which the facts that occurred must have the necessary effect of modifying *62 the rights that were disturbed by those that were created in the meantime. But, whatever the reason of the thing may be, it is sufficient to say that the law has not undergone any change that admits of this defence being pleaded. In my opinion, therefore, the judgment ought to be entered for the plaintiff for the possession of the lands.
Johnson, J.
Assuming the first defence (suspension of rent by eviction) to be well pleaded in bar to this action, it is answered by the replication, which is admitted on the pleading, and was also proved in fact on the trial; because the replication shows that before the 29th September (the day when the half-yearly gale of rent to which this defence is applied became due) the defendant was restored to, and thenceforth continued in, possession of the demised lands. It is settled law for over 200 years that a lessee or tenant relying on expulsion by the lessor or landlord as suspending the rent must plead and prove that he was not only disseised and put out, but also that he was kept out of possession until after the rent became due, otherwise the defence is bad; because if the lessee or tenant re-enters before the rent day he is in possession of his former estate, and the rent is revived, and he is liable for it: 1 Wms. Saunders (5th Ed.), p. 204; and to the authorities there cited may be added Cibel and Hill’s Case, 1 Leon, No. cxlix., 110: Timbrell v. Bullock, Styles, 446; 2 Furl. L. & T. (1st ed.), p. 867. On this ground this defence fails.
The replication also answers this first defence on the broader ground that possession acquired by a lessor or landlord under habere in ejectment for non-payment of rent is not (in case the lessee or tenant redeems) such an expulsion or eviction of the lessee or tenant as to suspend the rent within the meaning or application of the principle laid down by Lord Coke in his Commentary on Littleton, sect. 222:—“So it is if the lessor enter upon the lessee for life or years into part, and thereof desseise or put out (explained in Upton v. Townend, 17 C. B. 30, at p. 64, the lessee, the rent is suspended in the whole, and shall not be apportioned for any part” (Co. Litt., 148 b.). The Landlord and Tenant (Ireland) Act, 1860 (23 & 24 Vict. c. 154), governed the relation of the parties to this action when they succeeded to the contract of tenancy entered into by the lessor and lessee by the lease of 1862, and gave to the plaintiff the statutable right and remedy to proceed by ejectment for non-payment of rent by the defendant; and to the defendant the statutable right and remedy, by payment or lodgment in Court of the rent and costs to stop the ejectment at any time before habere; or, after execution executed by the habere, to redeem the lands within the statutable period on the terms indicated by the statute, otherwise the interest of the defendant in the lands would be absolutely determined. Before the ejectment and redemption code (for which the Landlord and Tenant Act, 1860, was substituted) equity relieved on terms against forfeiture in ejectment for rent, on the ground that as the landlord was only entitled to the rent, the default in payment of it, according to the doctrine of the Court of Chancery, admitted of compensation: Malone v. Geraghty, 5 Ir, Eq. 549, 565, with the result, as appears by the recital in 11 Anne, c. 2. s. 2 (Ir.):—“The lessee or his assignee not only holds out the lessor or landlord by an injunction from recovering the possession, but likewise, pending the suit, doth run much more in arrear, without giving any security for the rents due, when the re-entry was made, or which shall or do afterwards incur for remedy whereof” the lessor or landlord was by this statute authorised to eject if more than half a year’s rent was due, and if the lessee or tenant suffered judgment and execution without redeeming on the terms provided by the statute, the lands were discharged of the lease. Under the Landlord and Tenant Act, 1860, sections 70, 71, the application for redemption is now made in a summary manner to the Division in which the ejectment is brought, and the lessee or tenant is by writ of restitution restored to the possession of the premises and given such relief “as a Court of Equity might have given”: this, in substance, is that the lessee or tenant on his part shall account for the rent and costs in the ejectment, and for all rent which subsequently became due up to the day of the report of the Master to whom the Court refers the account, and that the lessor or landlord on his part shall account for the profits, without wilful default, during his possession; that a balance shall b struck on foot of these two accounts, and the party against whom the balance is found shall pay that balance to the other party. The form of the prayer of the old redemption bill, after execution of ejectment, will be found in Burr. and Gress. Eq. Pl., p. 154.
By redemption in Court, or by redemption out of Court (and as Mr. Justice Gibson during the argument termed it by redemption in pais ), by payment, which is equivalent to redemption through the process of the Court (Lessee Kenmare v. Supple, V. & S. 1; Sheridan v. Dawson, 1 Jones’ Rep. 256; Lombard v. Kennedy, 21 L. R. Ir. 201), the interest of the lessee or tenant which was divested by the execution of the habere is revested in the lessee or tenant, and continued as of his former estate, the inchoate forfeiture (as it is termed in some of the cases) being wiped out; by the redemption he is restored to the possession, as if he had not been dispossessed, on the terms not only of payment of the rent and costs in the ejectment, but also that he is liable for and bound to pay all rent accruing after the rent in the ejectment, and is also given an account against the lessor or landlord for the rents and profits, The landlord’s possession under the judgment in the ejectment and the habere is lawful, and is given by statute on the tenant’s default. If the tenant redeems, the rent is not suspended, and the only liability of the lessor or landlord to the lessee or tenant on redemption is to account for the rents and profits during his possession. On this ground also I am of opinion that the first defence fails.
This first offence was not objected to on the ground that it is pleaded in respect of the first half of the entire year’s rent for which the ejectment is brought, without averring that the defendant was kept out of possession on and after the rent day when the entire year’s rent was due; and I therefore express no opinion on that point, which was not argued.
The remaining defence is a set-off of money received by the plaintiff for the use of the defendant, being the amount of the rents and profits during the plaintiff’s possession in the previous year under the habere already referred to. Mr. Justice O’Brien has pointed out the difficulty of applying such a set-off in the present action; but dealing with it as pleaded, and as a defence in this action, if the defendant had redeemed in 1887, according to the statutory provisions (23 & 24 Vict. c. 154, ss. 70 and 71), the account would have been taken down to the date of the Master’s report of all rent due up to that date on the one side, and all the rents and profits on the other side, and a balance struck: Butler v. Burke, 1 Dr. & W. 380; Trant v. Irwin, 8 Ir. Jur. (N. S.) 309; Brinkley v. Donoghue, 11 Ir. Jur. (N. S.) 96.
When the defendant redeemed out of court or in pais he had a similar right to require a settlement of this demand against the rent; and if it was refused or disputed by the plaintiff, the defendant had his right and his remedy in the statutable provisions for redemption. The defendant went to the plaintiff’s solicitor on the 26th September to redeem, knowing his rights and knowing the facts, knowing that the plaintiff had been in possession of the lands under the habere, and how he had dealt with them; for the defendant lived one quarter of a mile away from the lands, and saw them almost daily; but the defendant desired to be restored to the possession at once before the 29th September (which was the gale-day) in order, having redeemed, to be in a position to take advantage of the fair rent *63 notice which he served. He brought with him part of the money to pay the rent and costs in cash; for the rest he offered a cheque, which the plaintiff’s solicitor was not bound to accept, and at first declined to accept, but eventually took, at the request of the defendant, in order to enable the defendant to re-enter into possession at once. The account was then stated between them in figures, and the balance ascertained in figures, bringing into account a small sum overpaid on the previous occasion. If the defendant had then demanded a settlement and made his claim to an account of the rents and profits it might have been mutually arranged and settled, or disputed, and the defendant left to his statutory remedy; but the defendant stated that by advice he abstained from then putting forward any claim to an account of the rents and profits during the landlord’s possession; and thus, with full knowledge of his rights and of the facts, deliberately and intentionally abstaining from requiring any settlement on foot of the plaintiff’s possession, or making any claim on the plaintiff, the defendant and the plaintiff’s solicitor closed the account on foot of the rent, and the defendant settled the balance at foot of the account by payment. After that it is impossible that the parties could be restored to the original position in which they stood before that transaction took place; and it appears to me to amount to a voluntary payment, with full knowledge of the facts, and a closing of the account, within the principle of the cases of Denby v. Moore, 1 B. & Ald. 123; Skyring v. Greenwood, 4 B. & C. 281.
As to the larger question, whether set-off is applicable in ejectment for non-payment of rent since the Judicature Act, I should follow, if the question is open for consideration in this Division, the principle which I understand to be established by Whitton v. Hanlon, 16 L, R. Ir. 137, in the Exchequer Division—that any set-off which equity would have allowed in the accounting may be set up by way of defence, in order to avoid circuity of proceeding and affect a final determination of the real question in controversy, viz., whether one year’s rent or upwards is due to the plaintiff after all proper allowances.
Gibson, J.
The question for decision in this case is one of procedure; but like many questions of procedure, where one party or the other must be in the wrong, the decision either way wears a certain air of hardship. On the one hand, the defendant, if defeated, may complain that he has been deprived of a sum to which he would have been entitled had the account been taken before the Master, though no doubt the acceleration of his fair-rent case may have recouped him; while, on the other hand, the plaintiff, if unsuccessful, finds himself exposed to a defence which must be tried by a jury, and he loses the protection as to time and mode of account given by the ordinary statutory procedure. Since the substitution of a notice for the old habere, under the recent Act, and the conversion of persons served into caretakers, it may be anticipated that redemptions out of court, always numerous, will be much increased; and the decision come to in this case may be of far-reaching importance.
The facts are simple. The plaintiff, as landlord, having recovered judgment in an action of ejectment for non-payment of a year’s rent, due and ending 25th March, 1887, executed the same by writ of possession on August 23rd. The premises were redeemed on the 26th September, 1887, before any further rent accrued, the landlord accepting rent and costs out of court to enable the tenant to get the benefit of the Land Law Act, 1887. No contract was pleaded, proved, or left to the jury, either as to the plaintiff’s accounts for profits during his possession, or in reference to the tenant’s accruing rent. The present ejectment is founded on the assumption that the entire year’s rent from 25th March, 1887, to 25th March, 1888, is due. It contains no claim for the rent as a debt, and the defendant is not described as tenant.
The defences are two in number: the first, relying upon an eviction by the plaintiff, continued during the accrual due of one half of the year’s rent; the second is a set-off for money had and received for defendant’s use. There was a special reply to the first defence, stating that the eviction complained of was the execution of the writ of possession. This raised an issue of law, and the facts not being in dispute no rejoinder was filed. The only issues to be tried were on the set-off.
Three questions were argued before us on behalf of the defendant:—
1. That the execution of the writ of possession was an eviction by the landlord, which suspended the rent during its continuance.
2. That there was at least an enforcible demand against the landlord for rents and profits during his occupation.
3. That this demand was available as a set-off or counterclaim in an action of ejectment.
This last question may be at once disposed of. The Exchequer Division in Whitton v. Hanlon, 16 L. R. Ir. 137, has decided that a counterclaim may be pleaded in such action (a view for which Beasley v. Darcy, 2 Sch. & Lef. 403, n. b, is an authority); and the plaintiff not having moved to strike it out in this court, we must deal with the set-off (which I treat as a counterclaim) as legally pleadable, leaving the final settlement of the controversy to the Court of Appeal.
In order to solve the other questions raised it is necessary to see how the law stood at the passing of Deasy’s Act. Under the Irish ejectment code the rent ascertained to be due with full costs had to be paid or lodged on filing a bill in equity for relief within six calendar months from execution. In case such bill was filed within that time the landlord was to be accountable only for so much and no more as he should really and bona fide, without wilful neglect, make of the premises from the time of entering into actual possession; and if what was so made was less than the rent reserved, the lessee before being restored to possession, was required to pay the lessor what the money so made fell short of the reserved rent for the time such lessor held the lands. This condition was imposed for the lessor’s security against accruing arrears as appears by the recital in the second section of the statute of Anne. If the tenant was upon such bill relieved in equity he was to have, hold, and enjoy the demised lands according to the lease thereof made. The tenancy was determined by the judgment apparently as from the date of demise laid in the ejectment, though the landlord was expressly authorized to sue for rent up to the execution, which was the cardinal feature in the ejectment as the commencement of the redemption period.
The first point to be considered is, did the relief given by the court, without a new lease, restore and revive the evicted lease, ab initio, so as to preserve the lessee’s continuous liability, or was the lease reinstated only as from the date of relief given, leaving a hiatus of legal right and liability from the execution to that date?
The former view is clearly correct, and is settled law. After judgment the tenancy is in a state of suspended animation. Redemption calls it back to life—not to a new existence, but to the old life. “The redemption,” says Sir E. Sugden, in Malone v. Geraghty, 5 Ir. Eq. Rep. at p. 557, “confers no new right—it settles nothing, it transfers nothing; it merely restores the estate exactly as it stood before the eviction.” I am not aware of any authority for the other view, which would involve an unparalleled anomaly.
Counsel for the defendant, far from questioning, relied upon the retrospective efficacy of the revived lease, contending that redemption vacates or obliterates the judgment and execution: that rent was suspended during possession by the landlord, who must be regarded as a disseisor; or that the tort being waived, the landlord would be liable in set-off for money had and *64 received. It will be noted in this view that eviction and set-off are not necessarily alternative. If eviction, as a wrongful act, suspends the rent it might possibly also support an action for damages. The landlord might lose his rent, and also pay damages, for enforcing a legal judgment. It would also seem strange that the law, in restoring the lease, should preserve continuous liability against the lessee under the covenants, and at the same time enable him to evade liability for accruing rent by pleading eviction.
No doubt language is found in some cases giving some colour to this contention on behalf of defendant. The judgment is said, for instance, to be “vacated, the forfeiture waived.” These expressions, not quite so accurate as Sir E. Sugden’s language, above quoted, mean no more than to state emphatically the completeness of the restoration of the redeemed lease. The statutes have not a word about invalidating the judgment. Equity, under statutory powers in favour of the lessee, notwithstanding the judgment, revives the lease; but it does not, as against the landlord, make the eviction unlawful, nor does the statutory redemption qualify the landlord’s legal right under the revived lease.
That redemption should enable a tenant in the wrong to sue his landlord in the right in an action of trespass or covenant for quiet enjoyment, because that landlord executed a legal judgment, is an impossible and irrational contention. If it could have had any such operation it would have been necessary to insert in all redemption decrees special clauses for the landlord’s protection prohibiting such attempts; and occupying sub-tenants, not parties to the suit, could always have brought such actions. In Sheridan v. Dawson, 1 Jones’ Reports, 256, the action was for acts subsequent to redemption.
Looking at the landlord’s possession, not as a tortious but as a rightful possession, considered apart from statute law, no authority was cited to show that such possession could be treated as an eviction, causing a suspension of the rent by a tenant who applied for and obtained restoration of his old tenancy. Sub-tenants dispossessed by title paramount, owing to the default of the lessee, are in a different position. They may, not unreasonably, have their rent payable to the lessee suspended while they are actually evicted.
In case of statutory redemption under decree the effect of the ejectment statutes, in my opinion, is that the redeeming lessee against the lessor has only an equitable claim for an account, in the same way as a redeeming mortgagor against a mortgagee in possession—a kind of relief which, prescribed by the statute, seems quite inconsistent with the notion of the judgment being extinguished, the rent suspended, or the landlord a trespasser. The account was taken by the court and its officer, not by a jury; it was in the redemption proceeding, and not an independent action; it must therefore have been brought forward within a limited time; it was an equitable as distinct from a legal claim; it was wholly different in its nature and scope from a common law set-off; and, in my opinion, no such account could have been enforced if the decree restoring the tenant did not direct it, as such decree (in the absence at least of special reservation) concluded the tenant and closed the redemption.
So far I have considered only the question of a redemption decreed by the court, in which case the legal questions argued before us could have rarely, if ever, arisen. A decree directing restoration without an account must have been very rare—though one can imagine such a decree where immediate restoration was desired and agreed upon.
In redemptions out of court the defences of eviction and set-off, if legally available, would have been so convenient that it might be anticipated they would have been of not infrequent occurrence. In point of fact, however, no precedent of any such pleas appears to exist, and we have, as before, to consider redemptions of this class, effected by acceptance of rent and costs, with the aid of principle only.
Lord Earlsfort, in the year 1786, in Kenmare v. Supple, Ver. & Ser. 1, expreseed the opinion that “by payment and acceptance the judgment seems vacated by consent.” In Jones v. Cuthbert, Ibid. 505, the payment of rent and costs redeeming the tenancy seems to have been out of court and to have been treated as effectual. In Lessee of Coyne v. Smith, Batty, 71 (Easter, 1827), the Exchequer decided that payment of rent and costs within the six months was sufficient to revest the tenant’s interest in the lease without filing any bill. Sheridan v. Dawson, 1 Jones’ Reports, 256 (1835), decides that acceptance of rent and costs was a waiver of the forfeiture, and revived the lease—a strong decision, as in that case the payment was by a sub-tenant, without any apparent privity of the lessee, who would have been a necessary party to a redemption suit. That case was apparently accepted as settling the question.
In 1843, in Malone v. Geraghty, 5 Ir. Eq. Rep. 549, at p. 551; 3 Dr. & War. 239, it appears incidentally that Malone, the equitable mortgagee, redeemed the premises by payment of rent and costs, and the validity of this redemption in restoring the tenancy was assumed throughout the suit. The facts are interesting, and bear a certain resemblance to the present case. In Trinity Term, 1838, there being a year’s rent (£56 9s. 4d.) due on the 25th March, 1838, Geraghty brought an ejectment for non-payment of rent, obtained judgment, and executed his habere. Shortly after (the 29th June, 1839) Malone, at the instance of the tenant, paid Geraghty the sum of £85 1s. 6d., for rent and costs, for which Geraghty passed a receipt, showing that the payment was made in redemption of the premises, and included the March rent, 1839. The rent falling again into arrear, another ejectment was brought, tried before a jury, who ascertained the rent due to be £51 9s. 8d., and the habere was executed on the 22nd May, 1840.
Examination of the papers in this case, if they were available, might throw an interesting light on the controversy now raised. It would seem as if the rent supporting the second ejectment was that for the year from 25th March, 1839, to 25th March, 1840, that the landlord was in possession until the end of June, 1839, and that no such defence as here suggested was put forward, though apparently the case was not undefended.
The result of these authorities appears to be that acceptance of rent and costs in redemption has the same efficacy in reviving and restoring an evicted tenancy as a decree in a redemption suit. They do not establish that a consent redemption effected by such acceptance has per se a wider or different operation, either as invalidating the judgment and depriving the landlord of its protection, or as giving the tenant a set-off he was not otherwise entitled to, or as removing, by implied waiver, the conditions as to time and procedure, subject to which alone an account could be claimed against the landlord.
It does not appear in any of these cases of redemption in pais that in addition to, and outside, the payment of rent and costs there was any account or settlement. There is no trace of any such contention being ever relied upon as has been set up in this case. Indeed in Malone v. Geraghty, 5 Ir. Eq. Rep. 549, above referred to, the obvious inference from the facts stated is that the landlord did not account for the period of possession. I do not think that a redemption by acceptance of rent and costs can per se at least, be relied upon as a waiver of the statutory limitation of the account of profits; but no such question of waiver arises here. A redemption so effected (just like a redemption decree) must, in the absence of special circumstances, be deemed to close the account, and precludes the tenant from claiming an account of profits in any independent proceeding.
In my opinion, the law now in force as to redemption *65 in court and redemption out of court is substantially the same as under the old statutes. The judgment determines the legal tenancy as from the date of writ: Russell v. Moore, 8 L. R. Ir. 318, if not, as Fitzgerald, B, thought, from the last gale-day antecedent to ejectment: Hall v. Flanagan, Ir. R. 11 C. L. 470. The six months for redemption run from execution. It has been suggested in a useful text-book that by reason of the repeal of the statute of Anne the restitution given by the 23 & 24 Vict., c. 154, does not set up the evicted tenancy, but creates a new tenancy on the old terms. The language of sect. 71 of that Act is sufficient to preserve the old equity jurisdiction and relief, and the decisions have uniformly gone on that view. In Caulfield v. Walsh, Ir. R. 2 C. L. 492, the original tenancy is said to be restored. In Hall v. Flanagan, Ir. R. 11 C. L. 470, and Listowel v. Kelly, 17 Ir. L. T. 285, the same view was assumed, and Lombard v. Kennedy, 21 L. R. Ir. 201, is a direct decision on the point.
The statute does not, in reviving the original tenancy, extinguish the judgment or avoid the execution. The writ of restitution purports only to restore possession. In one respect the order directing restitution appears to differ from the old practice, as though it directs an account of accruing rent and of profits, and the striking of a balance, it appears not to suspend the issue of the writ until the account is taken. The writ is rarely, I believe, issued in practice.
In some cases of redemption in court—the present being quicker than the old equity procedure—no account is asked or required, and restitution is ordered without more (see an instance in Caulfield v. Walsh, Ir. R. 2 C. L. 492). In such a case—the order merely directing restitution—could the tenant defend an action for rent, when due, on the ground of eviction or set-off? The order for restitution is, in my view, final, and in the absence of unfair dealing or express stipulation the redeeming tenant cannot enforce an account, if he pretermits requiring it on the occasion of redemption. A redemption in pais would seem to have the same effect. A tenant wishing to redeem, if he intends to claim credit against rent for profits received by the landlord, must agree with the latter as to the amount, and settle the account accordingly. If they cannot agree, the account and redemption must be carried out in court. If, without saying anything as to an account or credit, he gets the landlord to accept rent and costs, and thereby redeems the eviction, by so doing he ought to be deemed to have waived any account.
Even if this were not so, his remedy would not be a common law set-off or law action, to be tried before a jury, but would be a suit for an account, the costs of which, as a redemption proceeding, should ordinarily be borne by the tenant; and such suit, it would seem, should, in ordinary circumstances, be brought within the redemption period.
The well-known case of Beasley v. Darcy, 2 Sch. & Lef. 403, n. b, was strongly relied upon by the defendant as supporting the defence of set-off. It is not, I think, in point. There the demand set off was admittedly enforcible: in the opinion of the court it should have been applied in discharge of the rent on which the ejectment was founded, and the judgment was therefore inequitable. In the present case the judgment of 1887 is undisputed, and the question is, whether there is any legal set-off available, and whether the claim pleaded is established.
Out of respect to the argument of counsel, I have stated at length my reasons for disagreeing with the defendant’s contention in principle. Taking the defences, however, as legally sufficient, they are not proved. The defendant was restored to possession, at his own instance, on the 26th September, before the rent became due. It is a necessary averment in the defence that the defendant was kept out of possession until the rent became due. The two cases in Styles’ Reports: Page v. Parr, Styles, 432; Timbrell v. Bullock, Styles, 446; William Saunders, pp. 208, 209; the note to Upton v. Townend, 17 C. B. 30, are distinct authorities upon the point. The defendant’s liability, even if in a state of inchoate contingent suspension, revived on his resuming possession, and the plea therefore fails. Nor can I see that the set-off for money had and received is established. An occupation rent was the utmost that could have been enforced, if asked for at the proper time; and this would have been fixed by the court, subject to settled principles: Brinkley v. Donoghue, 11 Ir. Jur. (N. S.) 96. Had such a claim been put forward, there being no fact to be tried by a jury, the expense of a trial could have been saved, and the legal controversy determined at moderate expense. The pleadings represent an experiment, and the defendant should be bound by them. The experiment is not supported by authority or principle, and if successful would either prevent redemption out of court altogether, or would expose considerate landlords (who might accept rent and costs out of court) to indefinite risk. The plaintiff is entitled to judgment.
Flynn v Sweeney
Circuit Court.
8 November 1933
[1933] 67 I.L.T.R 228
Judge Davitt
A landlord was granted a decree in ejectment for overholding against a weekly tenant. The actual reason for the proceedings was that the tenant had failed to pay rent for some years. The District Justice stayed the execution of the decree generally provided that the tenant paid the arrears by instalments with the current rent. The landlord appealed against so much of the decree as declared that the defendant was entitled to any stay of execution. The Circuit Court allowed the appeal and varied the District Justice’s order by allowing only a limited stay on execution.
The defendant was weekly tenant to the plaintiff of premises in County Dublin under a written contract dated 28th April, 1919, at a weekly rent of 8/−. The weekly rent of 8/− was allowed to go into arrears for some years. The landlord issued proceedings in the Kilmainham District Court in ejectment for overholding. It was conceded for the tenant that the Increase of Rent and Mortgage Interest (Restrictions) Acts did not protect the tenant or apply to the premises. The District Justice granted the decree sought but, notwithstanding the contention contra of counsel for the landlord, proceeded to ascertain the amount of arrears and ordered that execution of the decree be stayed generally provided that the arrears of rent were paid by instalments each week with the current rent. The plaintiff appealed against so much of the decree as declared that the defendant was entitled to the stay of execution.
Counsel appeared for the appellant and submitted that there was no power in the District Court to grant such a stay of execution. He agreed that there was power or discretion to grant a limited stay by way of respite from execution, but no such stay as would amount to a grant of a new interest or tenancy, which was what the District Justice’s order amounted to. He cited Kelly v. White [1920] W. N. 220.
Counsel for the respondent agreed that there was no authority that he could trace for the order made by the District Justice so far as it related to a general stay on execution of this ejectment decree. He prayed the Court, however, for a limited stay.
Judge Davitt allowed the plaintiff’s appeal with costs. He varied the order of the District Court by staying the operation of the decree for one month from this date.
Kelly v Murnaghan
High Court.
24 July 1946
[1949] 83 I.L.T.R 61
Davitt J.
Davitt, J.:
By an agreement in writing, dated the 5th May, 1945, the plaintiff let to the defendant, two flats in the house, No. 6 Saint James’s Terrace, Malahide, for a term of three years at the yearly rent of £96, payable monthly by instalments. By clause three of the agreement, it was provided, that if any instalment should be in arrears for fourteen days after the gale day, the tenancy should be absolutely determined, and the landlord might re-enter, and resume possession. The clause did not contain the usual provision that the landlord might re-enter whether or not the rent had been formally demanded. The defendant having made default in payment of his rent, the plaintiff served him with a notice requiring him to give up possession on the 1st day of February, 1946. The defendant did not comply with this notice, and, on the 5th March, 1946, the plaintiff served him with a Civil Bill in Ejectment. The defendant entered no appearance or defence, and the plaintiff thereupon moved for judgment under Order XVI, rule 9, of the Circuit Court Rules. The learned Circuit Court Judge refused the motion with costs, and dismissed the ejectment. From this Order the plaintiff appealed.
The defendant, not having appeared or defended, was still in the privileged position, created by rule 6, of Order XVI, that judgment could not be entered against him by default. Accordingly, the plaintiff could have no successful recourse to the procedure provided by Order XV. It has long been settled practice in the Circuit Court, and in my opinion settled correctly, that the proper course for the plaintiff to adopt in such circumstances is to move under the provisions of Order XVI, rules 1, 2, 3, 4, and 5, as modified by rule 6, and not under rule 9. (See Clare County Board of Health v. Crowe; same v. Boyle [1940] I. R. 180; and The Irish Law Times and Solicitors’ Journal, vols. 75, and 77, at pages 325, and 28, respectively) Rules 6, and 9, might, perhaps, with advantage, have been included in Order XV, rather than in Order XVI, but I think their combined effect is clear enough. Rule 9 applies only to actions which have not been otherwise provided for. Actions of ejectment in which the defendant makes default in delivering a defence or entering an appearance have been otherwise provided for in rule 6, and accordingly rule 9 has no application. Rule 6 goes on to provide that in actions of ejectment where the defendant makes default in entering an appearance or delivering a *62 defence, the rules as to summary judgment shall apply mutatis mutandis. Reading rules 1, and 2, in the light of rule 6, and changing what has to be changed, the effect is as follows:—In any ejectment where the defendant has failed to enter an appearance, or, where, having entered an appearance he has failed within the period prescribed by the rules to file a defence, the plaintiff may move as prescribed for judgment with costs on not less than four clear days’ notice. He shall file and serve with such notice an affidavit made by himself or by some other person who can swear positively as to the facts, verifying the cause of action and stating that in deponent’s belief there is not a bona fide defence to the ejectment. The provisions of rules 3 (i), 4, and 5, apply without modification. Where the defendant fails to enter an appearance the ten day limit prescribed by rule 2 can have no application. Where the defendant does enter an appearance, but fails to file a defence in time, that is, within ten days of appearance as prescribed by Order VII, rule 3, it also follows that the ten days limit prescribed by rule 2, of Order XVI, can have no application since, until the ten days have elapsed, the defendant cannot be in default. In the result, the position is as follows. In any ejectment within the provisions of rule 1, (iv), of Order XVI, where an appearance has been entered, the plaintiff may apply for summary judgment within ten days of appearance. In any ejectment where no appearance is entered, or an appearance having been entered, no defence is filed, the plaintiff may apply for judgment without regard to the time limit prescribed by rule 2, of Order XVI.
Apart from any question of the plaintiff having failed to adopt the correct procedure, he is faced with other serious difficulties. The claim indorsed upon the Civil Bill clearly invokes the jurisdiction conferred upon the Civil Bill Court by section 72 of Deasy’s Act and transferred to the Circuit Court by section 51 of the Courts of Justice Act, 1924, since there is no averment as to the Poor Law Valuation of the premises. Counsel for the plaintiff, moreover, in his argument upon another aspect of the case (the point with which I am at the moment concerned not having been adverted to in argument), vigorously contended that this ejectment was an ejectment for overholding, brought under the provisions of section 72 of Deasy’s Act. It was decided in McCarthy v. Beamish, 3 I. L. T. & S. J. 350, that an ejectment of this kind, based on a forfeiture for breach of condition in the lease or contract of tenancy, could not be successfully brought under the provisions of section 72. It is, I think, worth while endeavouring to make clear the basis of that decision.
The Civil Bill Courts (Ireland) Act, 1851 (14 & 15 Vict. Cap. 57 in sections 71, 72, 73, 79, 80, and 82, conferred upon the Civil Bill Court jurisdiction to hear and determine ejectments in respect of deserted tenements, against overholding tenants, for non-payment of rent, in certain cases on the title, on acknowledgements, and against permissive occupants. Section 96 provided that in no other case should the title to any lands, tenements or hereditaments be drawn into question in any proceeding by Civil Bill under the Act. The terms of sections 71, 72, 73, 80, and 82, clearly did not confer jurisdiction to entertain an ejectment based upon a forfeiture; but section 79, in words very similar to section 2, of 6, and 7, Will. 4, Cap. 75, did not so clearly exclude such an ejectment. This section conferred jurisdiction to hear and determine all disputes and differences respecting the possession of any lands, tenements, or hereditaments held under any grant, lease, or other instrument for any term not exceeding the limits specified. The words of the section confined the jurisdiction to a determination of the issue as to who was entitled to possession under the instrument in question. In an ejectment under the section, each party had to claim possession of the same title. In the case of an ejectment based upon a forfeiture, this could not be so; since the tenant could claim only by virtue of the instrument creating his tenancy while the landlord would claim by title paramount. See Ahern v. Heffernan, 1 Leg. Rep. 151, decided upon the construction of section 2, of 6 and 7 Will. 4, Cap. 75; Furlong’s Landlord and Tenant, 2nd Edition, vol. 2, p. 1141; Carleton’s County Courts, 1st Edition, pp. 148, and 149.)
This appears to have been the position when Deasys’ Act became law. That Act conferred no jurisdiction upon the Civil Bill Court to entertain any ejectment other than:—for non-payment of rent, (sec. 52), against overholding tenants, (sec. 72), in respect of deserted premises, (sec. 78), on acknowledgements, (sec. 80), and in respect of cottier tenants and permissive occupants, (secs. 84, 85, and 86). Section 101 provided that the title to any lands or premises should not be drawn into question in any proceedings by way of Civil Bill under the Act. As an ejectment based on a forfeiture was considered to involve a question of title, it was held by Judge Keogh that such an ejectment did not lie under the provisions of sec. 72. The basis of the decision was, not that such an ejectment was excluded by the terms of *63 the section, but that, as it involved a question of title, it was excluded by section 101 from the jurisdiction in ejectment conferred by the Act. General jurisdiction to try ejectments on the title within certain limits as to valuation was not conferred upon the Civil Bill Court until the passing of 37 and 38 Vict. Cap. 66.
When the real basis of the decision in McCarthy v. Beamish, 3 I. L. T. & S. J. 350, is appreciated, it becomes clear that there is no conflict between it and Lord Talbot de Malahide v. Odlum and Best, I. R. 5, C. L. 302; as Morris, J., points out in his judgment. The purport of his remarks in that case is simply that the terms of sec. 237 of the Common Law Procedure Act, 1853, did not exclude from the class of cases to be tried in the Consolidated Nisi Prius Court, an ejectment based upon a forfeiture for breach of condition; and that such an ejectment could be considered as being one against an overholding tenant within the meaning of that section.
The note in Cherry’s Land Law and Land Purchase Acts (2nd Edition, p. 116), to sec. 72 of Deasy’s Act is possibly misleading. It seems to indicate that an ejectment based upon a forfeiture can be brought under the provisions of that section; though it gives the reference to Lord Talbot de Malahide v. Odlum and Best, I. R. 5, C. L. 302, wherein, in turn, McCarthy v. Beamish, 3 I. L. T. & S. J. 350, is referred to. It should be noted also that paragraph 4, of Chapter iii, of Book VI, of Furlong’s treatise on Landlord and Tenant, Vol. 2, at p. 1037, which might appear by implication to suggest that such an ejectment could be brought under Deasy’s Act, was apparently written before the decision in McCarthy v. Beamish ( supra ) (decided in 1869, the year in which Furlong’s treatise was published), was reported. There is no reference to that case, and it is not included in the table of cases at the beginning of Vol. 1. However that may be, it seems to me that this passage, referred to in the argument by Mr. Burne, does not really contain the implication upon which he sought to rely.
It is hardly necessary to point out that the jurisdiction of the Circuit Court to entertain ejectments for overholding is not confined to that created by section 72 of Deasy’s Act, and transferred by section 51 of the Courts of Justice Act, 1924. Section 48 (iii), of that Act confers upon the Court, jurisdiction in all classes of ejectment where the Poor Law Valuation of the premises does not exceed £60. This is a case, however, where the jurisdiction created by section 72 of Deasy’s Act has been expressly invoked. The Civil Bill contains no avernment as to valuation or as to the making of any formal demand of the rent in arrears, and counsel for the plaintiff, for the purpose of obtaining the benefit of section 53, which dispenses with the necessity of making any demand, strongly argued that this case was properly brought under the provisions of section 72. I am of opinion, for the reasons stated, that that section does not confer jurisdiction to entertain this case, and that the learned Circuit Judge was correct in dismissing it.
It is perhaps, worthy of note, that this decision is not, in any way, in conflict with my judgment in Harris v. O’Toole, and Archer v. Bowles [1940] Ir. Jr. Rep. 51, where the opinions I have expressed in this cases are adumbrated. In those cases it was not necessary to invoke section 72 as the valuation of the premises in each case was under £60.
The point upon which I have decided this case was not, however, adverted in the argument. As I have mentioned, clause No. 3 of the tenancy agreement did not dispense with the necessity imposed by the Common Law for formally demanding the arrears of rent before proceeding to exercise his right of re-entry. The Civil Bill contained no averment that any such demand had been made. Plaintiff’s counsel sought to overcome this difficulty by contending that this was an ejectment for overholding brought under section 72 of Deasy’s Act, and that accordingly by virtue of section 53 it was unnecessary to prove the making of any demand. It was in support of that contention that he quoted the passage from Furlong’s Landlord and Tenant to which I have already referred.
As I have decided that this ejectment cannot be brought under section 72 of Deasy’s Act, I must hold that section 53 has no application. The requirement of the Common Law that the landlord must make a formal demand of the arrears of rent before he proceeds to exercise the right of re-entry therefore remains. If, instead of relying on Deasy’s Act, plaintiff had invoked the jurisdiction conferred by section 48 (iii), of the Courts of Justice Act, 1924, on the Circuit Court, he still could not succeed, because, according to the claim indorsed on the Civil Bill, no such demand was made.
In my opinion the learned Circuit Court Judge’s decision was correct and this appeal will accordingly be dismissed with costs.
Sir Arthur Brooke,
Bart v John Patrick O’Mahony
Supreme Court.
15 May 1939
[1939] 73 I.L.T.R 229
Sullivan C.J. Murnaghan Meredith Geoghegan Johnston JJ.
O’Byrne, J.:
This is an action brought to recover a sum of £294 claimed as six years’ rent, from the 29th September, 1931, to the 29th September, 1937, out of certain lands at Cork, held under lease for lives, and a term of years, at a yearly rent of £49. The lives have all determined, and during *229 the material period the premises were held for the residue of the term of years. The lease is admitted, and it is also admitted that the defendant holds under it, that the rent is £49, and that no rent has been paid in respect of the period specified, and the only question raised is the defence based on the provisions of the Land Act, 1923.
When the Land Act, 1923, was passed the landlord, as bound to do, furnished particulars of tenanted land within the meaning of the Act. Amongst these particulars he included the name of J. P. O’Mahony in respect of a certain holding with which I am not concerned, but in a note under the particulars he stated. “Mr. O’Mahony also holds Dromdiah Demesne, etc., at rents aggregating £56. 12s. 0d. a year” It is admitted that the holding with which I am concerned forms part of the holding mentioned in that note, and the first contention made, and expressly made, is that that note constitutes particulars under the Act of 1923 and, accordingly, that the holding is within the Act. In the affidavit of the defendant’s solicitor it is stated. “The defendant will contend that the said holding is a holding to which Section 24 (sub-section 1) of the Land Act, 1923, applied, and that particulars of the said holding were in fact returned by the landlord on the 14th September, 1923, in pursuance of Section 22 of the said Act. He will contend that in accordance with the provisions of Section 19 of the said Act no rent was payable by him to the plaintiff after the date of the passing of the Land Act, 1923.” That contention completely fails. Under the Act of 1923 certain particulars have to be furnished and these have not been furnished in respect of this holding. I must then proceed upon the basis that particulars were not furnished under the 1923 Act, and that position appears to have been recognised, because the question arose some time afterwards, and proceedings were instituted in the Land Commission to enforce the furnishing of particulars.
So the matter stood for many years and the question now arises as to what was the position of the defendant O’Mahony in his affidavit states:—“The landlord’s interest in these lands was vested in the Land Commission on particulars being furnished, as from 9th August, 1923, and from that date the lands were subject to the provisions of the Land Act, 1923, and on that date the lease was extinguished and lands passed out of plaintiff’s ownership, and I am at present tenant owner in fee-simple.” The affidavit proceeds. “The delay in vesting was due to the wilful misrepresentation of the landlord’s agents that this lease included demesne lands, well knowing this to be an incorrect statement, and it would be inequitable that I should be penalised for this misrepresentation and to allow the landlord to profit by it.”
There can be no doubt that the landlord deliberately refrained from furnishing particulars, and it is equally clear that he did so on the basis, rightly or wrongly, that the lands consisted of demesne land. That could have been questioned in the Land Commission, but it never was, and the case remained in that condition down to the year 1937, and then the landlord consented to return particulars, and did so in November, 1937, and these particulars were furnished, as I must assume, because the landlord no longer contended that the lands were demesne lands. It is a reasonable inference that from 1923 to 1937 the landlord contended that the farms consisted of demesne lands, and were in consequence excluded from the provisions of the Act of 1923.
These being the facts, what is the position of the landlord as regards rent? If the law had remained as it was under the 1923 Act he, clearly, could not recover: the only person who could would be the Land Commission. The law, however, was altered by the Act of 1927, and Section 12 was designed to meet a contingency which, it was apparently foreseen, might arise in cases where a long interval was allowed to elapse before the necessary particulars were furnished. Section 12 of the Act of 1927 provides that: “Where the particulars prescribed by Section 22 of the Land Act, 1923, in respect of a holding to which that Act applies have not been furnished to the Land Commission prior to the passing of this Act and such particulars are furnished after the passing of this Act then the provisions of Section 20 of the Land Act, 1923, shall apply to the holding from the gale day next preceding the date on which such particulars are furnished to the Land Commission, from which gale day the liability of the tenant for payment in lieu of rent and of the Land Commission for payment of the sum equivalent to the sum to be collected as payment in lieu of rent pursuant to Section 20 of the Land Act, 1923, shall commence. Provided that the rent payable by the tenant from the gale day next preceding the passing of the Land Act, 1923, shall be reduced by 25 per cent and that nothing in this section shall alter the mutual rights and liabilities of landlord *230 and tenant under Section 19 of the said Act.”
The last proviso of that section is applicable in this case. The view I take is that the holding here is one which was properly within the 1923 Act, and in respect of which particulars under that Act should have been furnished to the Land Commission, but which particulars were not in fact furnished until the year 1937.
The question then is: Is the landlord entitled to rent down to the furnishing of the particulars? I am of opinion that he is so entitled, subject to the proviso at the end of Section 12 of the 1927 Act. The amount claimed is £294. I reduce that by 25 per cent. and give a decree for £220 10s 0d.
From this decision the defendant appealed to the Supreme Court.
Ashley Powell for the appellant, J. P. O’Mahony: The status of the land is to be determined as from the date of the passing of the Land Act, 1923: Hatchell v. Russell, 58 Ir. L. T. R. 163. Untenanted demesne land alone is excluded, with a holding occupied in connection therewith. Land Act, 1923, Sect. 24 (1)(a). The land is undoubtedly within the scope of the Act O’Byrne, J., in his judgment, followed his decision in Pembroke v. Lambert, [1936] I. R. 508. If necessary, the Court is asked to overrule this decision, which is founded on the notion of the continued existence of the relation of landlord and tenant. This notion is without foundation. The Act of 1927, it is true, continues to speak of “landlord” and “tenant,” but nothing can be inferred from the mere careless use of those words. “Landlord” in that Act simply means the person who was the landlord before the passing of the 1923 Act There is nothing in the Act to recreate the relationship. It is submitted, however, that Sect. 12 of the 1927 Act has no application, inasmuch as particulars were, in fact, furnished, see the note on the Schedule of Particulars of Lands returned by the landlord in 1923. It is immaterial that this was not the intention of the landlord, so long as the details required by the Act have been furnished.
He referred also to Lynam v. Butler [1925] 2 I. R. 82. 231; 59 Ir. L. T. R. 58
Hewitt Poole for the respondent, Sir Arthur Brooke The Land Act, 1927, left the relationship of landlord and tenant unaltered. Under the Act of 1923 that relationship subsisted until the vesting of the land by the Land Commission. Lynam v. Butler (supra) does not apply, since its effect was entirely abrogated by Sect. 12 of the Land Act, 1927. Our case is made on the basis that there was no furnishing of particulars.
The judgment of the Court was delivered by the Chief Justice.
Sullivan, C.J., in the course of his judgment, said. The defences raised in this case are based on the Land Act, 1923. The defendant contended that this holding out of which rent is claimed came within Sect. 24 (1) of the Land Act, 1923, that particulars were returned by the plaintiff under Sect. 22 on 14th September. 1923. The defendant relied on Sect 19 of the Act, which provides that in these circumstances no rent is payable
The first question decided by O’Byrne, J., was whether particulars were furnished as alleged. The learned Judge came to the conclusion that they were not. We have been pressed by Mr. Ashley Powell that Mr. Justice O’Byrne was meorrect in that matter. We have before us the note relied on as being a furnishing of particulars under the Land Act, 1923. It is as follows.— “Mr. O’Mahony also holds Dromdiah Demesne, etc, at rents aggregating £56 12s 0d a year.”
We are of opinion that that contention is entirely unsustained, and it is clear not alone that the landlord did not intend it to be, but that it did not in fact amount to, a furnishing of particulars, and that Mr. Justice O’Byrne was quite correct.
The second question is what is the effect of that upon the landlord’s right to recover rent? Undoubtedly, if the 1923 Act had not been amended, the landlord could not recover. But the question is what is the effect of the subsequent legislation?
(His Lordship referred to Sect 20 of the Land Act, 1923)
Sect 12 of the Land Act, 1927, was passed obviously to deal with particular cases in which particulars should have been delivered but were not in fact delivered
That section was construed by Mr Justice O’Byrne to have the effect that the provisions of Sect 20 would apply to this case, substituting for “the gale day next preceding the passing of this Act” the words “the gale day next preceding the date on which such particulars are furnished to the Land Commission,” and he decided that the landlord was entitled to recover the rents sued for down to that gale day
We are of opinion that that is correct The judgment appealed from must stand
We have been pressed with certain pas *231 sages of the judgment of Kennedy, C.J., in Lynam v. Butler (supra), as to the effect of the 1923 Act. That would, no doubt, have been effective if the legislature had thought fit to leave the Act unaltered by subsequent legislation. We must, however, deal with the matter on the basis that that Act was altered by the Act of 1927. These passages are, therefore, of no importance.
Sargent v Morrissey
County Court.
26 June 1888
[1888] 22 I.L.T.R 78
June 26, 1888
Landlord and tenant—Lease—Covenant by tenant to pay all taxes—Local Act, water rate—Money paid at defendant’s request.
The Judge.
This case, which stood over from yesterday, has given me a good deal of trouble, owing entirely to the wording of section 28 of the Water Act, which is very confusing; but it was decided in Corporation of Waterford v. Spencer (8 L. R. I. 171), that the corporation are empowered to levy the public water rate from the occupiers of rateable property in the first instance, who may then deduct half when paying their rent; but I am relieved from difficulty by the fact that plaintiff does not insist on his right to be recouped by defendant the total amount he has been obliged to pay the corporation for the public rate. As regards the domestic water rate, the corporation are clearly entitled by section 27 to assess a rate, not exceeding one shilling in the pound, to be levied upon and from the occupier, according to the valuation of the premises. It is not a personal rate; but one assessed on the property according to its annual rating value. Then by a subsequent section of the Act—the 32nd—the owner may be, from time to time, and at the option of the corporation, rated instead of the occupier in certain cases. When, therefore, the taxing authority, in the exercise of that optional power, have rated the owner the primary liability to pay is shifted to him from the occupier; but that cannot alter the incidence of the tax or control the previous sections, 27 and 28. I suppose the reason the corporation sought for and obtained the power given them by the 32nd section is, that in the three cases there mentioned, the owner would probably be a better mark for the rate, as he would have a permanent interest in the premises; while that of the occupier would be only temporary and liable to terminate at any moment with the tenancy. A man might go into occupation on Monday morning and leave on Saturday. The plaintiff here, having been obliged to pay the corporation, can clearly recover against defendant; as it impossible to distinguish this case from that of Greene v. Thornton, relied on by plaintiff’s counsel, I shall, therefore, give a decree for the amount claimed, and I should have had no difficulty in deciding the case were it not for that incomprehensible 28th section.
Penal rent
Massy v Neill
Quarter Sessions.
1 February 1877
[1877] 11 I.L.T.R 19
The Chairman.
In this case an ejectment for non-payment of rent was brought for the last Michaelmas Sessions. The rent sought to be recovered was a year and a half-year’s rent, £75, to 29th September, 1876, payable under an indenture of lease of the 4th May, 1842, to hold for the life therein named, which is still subsisting, and 31 years concurrent. The lease was made to Michael Neill and John Neill, and the ejectment is brought against the representative of the survivor. In the reddendum the rent of £50 is called a “penalty rent.” And it is provided that in case the lessees, their heirs, &c., should thereafter, during the term, observe the several covenants of the lease, which, including the covenant for payment of the rent, are ten in number, the lessor, his heirs, &c., would accept the yearly rent of £25 instead of the said rent of £50. In several parts of the lease the lesser rent is called the real rent. The real or reduced rent was not paid on the 29th of September last, but was tendered and rejected after that day and at the usual time for payment of the September rent. The breach of covenant now complained of is the non-payment of the real or reduced rent, ad diem, on the 29th September last. No other breach was proved before me. This state of facts raises two very important questions:—1st. Is this rent of £50 a penal rent, and, therefore, not within the ejectment statutes? 2nd. If not a penal rent, so as to exclude it from the operation of the ejectment statutes, is it a penal rent of that character against which I am called upon to give relief under the equitable jurisdiction which I undoubtedly have in ejectment cases?
In Yielding v. Cavendish, reported in Furlong’s Landlord and Tenant, 1st Edition, Appendix 1279, it was held that a penal rent was not within the ejectment statutes. In Stephens v. Doyle, 2 Ir. Jur., N. S. 152, Yielding v. Cavendish was recognised as law, and a similar decision was arrived at. Baron Greene, in his judgment, page 157, referring to Yielding v. Cavendish, says, “There was a clause of re-entry if the larger rent was not paid. It was, in fact, the original rent varying in amount. There might be a serious inconvenience in holding such rents within the ejectment statutes. Equity would interfere in such cases. In my opinion, having regard to the scope and policy of the ejectment statutes, I ought not to hold the ejectment maintainable.” In those cases, it is true, the smaller or real rent came first in the lease, and the larger rent was reserved in the event only of a breach of the covenants. In a later case of Ashton v. White, 11 L. T. Rep. N. S. 400, where the larger rent, as here, was first reserved, and the smaller rent followed, it was held that the larger rent could not be considered a penal rent so as to exclude the operation of the ejectment statutes. In that case, however, the larger rent was not called “a penal rent,” the parties did not impress upon it the stamp, which they have so emphatically impressed upon it all through this deed, and, in my opinion it would be extremely difficult to take this case out of the operation of the judgment of Baron Greene, in which, disregarding all petty distinctions derived from the placing of the rents in the deeds, he says, “When the breach of covenant arises, the larger rent became the only rent, and the only rent is a penal rent.”
The next consideration is—supposing the case within the ejectment statutes at law, will equity give relief on payment of the smaller rent? In 2nd White & Tudor’s Leading Cases, 1094, referring to Peak v. The Duke of Somerset, and Sloane v. Walter, it is laid down, that wherever it can be collected that the object of the penalty is to secure the performance of a covenant, relief will be given in equity. At page 1097 of the same authority, it is stated “That when there is a debt actually due, and in respect of that debt a security is given, be it by way of mortgage, or be it by way of stipulation, that in case of its not being paid at the time appointed, a larger sum shall become payable and be paid; in either of these cases equity regards the security that has been given as a mere pledge for the debt, and will not allow either a forfeiture of the property pledged, or any augmentation of the debt as a penal provision. It regards the stipulation for the larger sum of money as a penalty against which a court of equity will relieve.” Here the larger rent of £50 is, in my opinion, a mere penalty to secure the payment of the smaller rent, which was tendered after the day,1 no doubt, on which the rent was payable. Should it, however, be contended that in breach of covenant between landlord and tenant equity will not relieve, because it cannot measure the damage, another equitable principle comes into operation in this case, viz., acquiesence and surprise on the part of the landlord in taking advantage of the penal covenant. In this case the landlord for over twenty years received the reduced rent from the tenant after the gale day without objection, and now avails himself of the fact that, without any previous caution on his part, the gale day has been allowed to pass. In the last edition of Mr. DeMoleyn’s valuable book on Landlord and Tenant, at pages 302 and 303, we find the following doctrine laid down:—“Due notice of requiring a penalty must be given before a distress for a penal rent can be made. An extensive branch of equitable jurisdiction is that which gives relief in cases of forfeiture for penalties, and this jurisdiction will be exercised between landlord and tenant. If, indeed, the landlord has been in any way accessory to the breach which he afterwards seeks to take advantage of, or if his acquiescence has been clear, or such as to mislead the tenant to his prejudice, his conduct will be deemed fraudulent, and relief will be given to the tenant in a Court of Equity, although the landlord’s title to recover may be complete at law.” In Story’s Equity Jurisprudence, section 384, a similar doctrine is laid down. And in Burke v. Price, 15 Ir. Ch. Rep., p. 119, in which an assignment causing a forfeiture was made without any objection on the part of the landlord who was aware of it, Smith, M.R., after referring to the section which I have mentioned, says:—“The ground on which I decide this case is that the respondent, the landlord, cannot be permitted, by a snare or contrivance he has thrown the tenant off her guard, and induced her to do an act amounting to a breach of covenant, then to turn round and say, ‘You have fallen into the trap I have laid for you, and your lease is void.’” Even in the leading case which may be relied upon at the other side, the case of Hill v. Barclay, 18 Ves. 56, in which Lord Eldon says, “That a Court of Equity will not give relief in cases of forfeiture, because it cannot estimate the damages,” he adds, “I do not mean to apply those observations to cases of accident or surprise.” I may fairly close my observations on this case, in the words of the Master of the Rolls, in Bourke v. Price, “It is lamentable that cases like the *20 present should occur, but I believe that in administering common justice in this case, I do not violate any principle of law or equity.” I dismiss the ejectment, the smaller rent being lodged in Court
O’Neill and Others v. Murphy. Same v. Harris.
[1948] IR 72
Kingsmill Moore J.
By a lease dated the 4th day of September, 1840, the then Marquis of Lansdowne leased to Horatio Nelson Seymour, three acres, one rood and twenty-eight perches of land in the North liberties of Limerick, on which Seymour had lately built a dwelling-house and out-offices. The term was for 999 years from 25th March, 1840 and the yearly rent £21. By another lease, dated the 30th day of December, the Marquis leased to Robert Maunsell Gabbett an adjoining plot of 4 acres, 2 roods, 33 perches, subject to a rent of £34 11s. 10d. also for a term of 999 years but from the date of the lease. The lessees’ interests under these two leases subsequently came to the same hands, the two plots being run together and used as one. On the lands demised by the first lease (which may be called the “Seymour” lease) stands the house known as “Shelbourne,” and it is approached by an avenue leading over the lands demised by the second lease (which may be called the “Gabbett” lease). On the “Gabbett”leasehold stands a rather attractive gate-lodge in neoclassic style but otherwise it is devoid of buildings. By a third lease, dated the 3rd day of May, 1853, the Marquis demised to Arthur Russell 7 acres, 3 roods and 32 perches of land, adjoining the Seymour leasehold, on which Russell was then erecting a dwelling-house and out-offices, for a term of 999 years from the 25th day of March, 1853, subject to the rent of £52 10s. 0d.
The leases are almost identical in form with the same covenants, reservations and provisions, subject to some small modifications in the covenants of the “Gabbett” lease due to the fact that no house was built or in process of being built upon the lands demised by this lease.
The house, “Shelbourne,” built upon the “Seymour” leasehold, and, “Kilmoyle,” built upon the “Russell” leasehold, were both large and handsome buildings in late Georgian style with Regency influences, and they were provided with ample outbuildings. The ordnance map of 1840 and the present day ordnance map provide clear evidence that, at the date of the leases and for the greater part of the nineteenth century, this neighbourhood, a country district on the north bank of the Shannon and facing the city of Limerick, was being developed by the erection of really fine houses, standing in their own grounds of three acres or more and inhabited by the most prosperous of the citizens.
But with the coming of the twentieth century a change was taking place. On the south-west factories encroached. North-west and north a swarm of small semi-detatched and terrace houses sprang up. Many of the big houses have ceased to be private residences and have become institutions or hotels or devoted to some communal purpose.”Shelbourne” and “Kilmoyle,” remained as private houses, secluded in their ample grounds, dignified, aloof, a little out of keeping with their surroundings, good for a residential life of another century but one which would involve ever lengthening bills for repairs.
The present diocesan college for the diocese of Limerick, used primarily for training students for the priesthood, but also as a secondary school, stands in a situation which is becoming progressively less suitable and the accommodation is inadequate. The Diocesan Trustees, who are the plaintiffs in both actions, had been looking around for a site on which to build a new college, a very extensive building whose erection is estimated to cost between £100,000 and £200,000. The evidence convinces me that the land demised by the three leases would provide almost an ideal site; and as a site for the projected new college the Trustees acquired the lessees’ interest in the three leases by purchase in the year 1946, at a combined expenditure of £18,000. They were aware of the covenants in the leases but relied on the provisions of the Landlord and Tenant Act, 1931, to relieve them from the restrictive covenants in those leases.
The covenant or rather the congregation of covenants in the “Seymour” lease, which is identical with that in the”Russell” lease and varies only in unessential details from that in the “Gabbett” lease, is as follows[His Lordship read the covenants set out ante.]
There is a clause of distress in the event of non-payment of”the said respective yearly rents” and finally a proviso in the following terms[His Lordship read the proviso, set out ante.]
On the 3rd day of September, 1946, Messrs. Philip J. O’Sullivan & Son, solicitors for the plaintiffs, wrote two letters to Messrs. Dundon & Treacy who were the solicitors for both the defendant, namely, Miss H. M. Harris, in whom the lessor’s interest in the “Russell” lease is vested and for the defendant, Douglas St. John Murphy, in whom the lessor’s, interest in the “Seymour” and “Gabbett,” leases is vested. The letters are not in identical terms but both gave the information that the Most Rev. Patrick O’Neill, D.D., Lord Bishop of Limerick, had purchased the relevant premises and was anxious to build a diocesan college partly on the lands of”Kilmoyle” and partly on the lands of “Shelbourne” and enquired if the lessor had any objections to the erection of the proposed college on this property. No plans or particulars of the proposed buildings were furnished and indeed none were in existence, as the details were under consideration and the general scheme had only taken a hazy shape in the architect’s brain. Both defendants gave an unqualified refusal, the refusal in the case of Miss Harris being communicated verbally through her solicitors and in the case of Mr. Murphy in a letter from his solicitors, dated 9th September, in which he said: “it being apparent that your client’s proposal is to alter the entire character of the leasehold premises he is not prepared to waive the restrictive covenants in the leases of this property.” After some further correspondence had taken place between the solicitors for the parties which was written “without prejudice” and is not before me, (Miss Harris now being represented by a different solicitor), the summons in each action was issued on 6th December, 1946. The statement of claim in the Murphy action was delivered on the 19th day of December, 1946, and in the Harris action on 3rd January, 1947. In each case it was stated that the proposed work might include alterations, or demolition, of all or part of the existing buildings. The relief claimed was in each case a declaration that the plaintiffs were entitled, without any consent by the landlord, to erect the proposed college on payment of the £10 additional rent; a declaration that the proposed college would constitute an”improvement” within the meaning of that term as used in the Landlord and Tenant Act, 1931; a declaration that the defendant had unreasonably withheld consent; and further auxiliary and incidental declarations.
On the 5th day of February, 1947, the solicitors for the plaintiffs wrote further letters to the respective solicitors for the defendants in which he offered to supply a set of plans and architect’s report on the proposed buildings, and gave the information that it was proposed that the existing buildings should be taken down and replaced by buildings greater in extent and value. No building was to be erected on the “Gabbett” plot. On the 10th March, the plans were forwarded and the architect’s report and a further plan was sent a few days later. The proposed building did not encroach on the existing houses of “Kilmoyle” or “Shelbourne”but from the lay out of the grounds it could be deduced that those houses were to be demolished. At the hearing of the case Mr. Lavery stated that it was now intended to give those buildings some extension of life but he could not guarantee for how long, and from the evidence I gathered that, at most, execution was deferred for a space of ten years.
The defendants in their defences urged that the proposed works would destroy the identity of their respective premises by obliterating or interfering with the boundaries, challenged most of the assertions in the statements of claim, denied that the plaintiffs were entitled to go on with their project on payment of an additional rent, denied that the proposed new building would be an improvement and denied that consent had been unreasonably withheld. In opening the case Mr. Lavery offered to put up plaques or other marks’ to preserve evidence of the existing boundaries.
The facts of the cases were hardly in dispute, and though evidence was given for both sides it could hardly be regarded as contradictory on any essential point and for the most part went unchallenged. The matter resolved itself to a full and careful legal argument.
For the plaintiffs it was first boldly contended that on the true construction of the leases the additional £10 rent was not a penalty but was in the nature of liquidated damages: that, if this were so, the further result followed that the plaintiffs could elect to pay the additional rent and by so electing were free to break any of the covenants in the lease. For this proposition Mr. Lavery cited Woodward v.Gyles (1); Dunlop Pneumatic Tyre Co., Ltd. v. New Garage and Motor Co., Ltd. (2), and Bradshaw v. Lemon (3). His argument involved the proposition that, on the true construction of the leases, it was the intention of the Marquis of Lansdowne that the respective lessees should be empowered, on payment of the extra £10 rent, to use the demised premises for soap-boiling, lime-burning or as a tavern or bagnioand this in a discreet and highly respectable district. Such a proposition startles me and unless I am so manacled by the authorities as to have no liberty of individual judgment I am not prepared to accept it. Mr. Liston in reply admitted there was no absolutely coercive authority. This was in the nature of an understatement. It seems to me that the authorities, on balance, point to an opposite conclusion. They are numerous and I think I have consulted them all but it is only necessary to refer to a few.
In the Dunlop Case (2), Lord Dunedin lays down a number of propositions as being deducible from decisions which rank as authoritative. No. 3 is as follows:”The question whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach.” Lord Parker of Waddington, at page 97, says:”. . . whether the sum agreed to be paid on the breach is really a penalty must depend on the circumstances of each particular case.”
To assist the task of construction Lord Dunedin recognises certain tests as helpful and sets out at 4 (c) of his propositions that “There is a presumption (but no more) that it is a penalty when ‘a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage.'” Lord Parker, at page 98, also accepts this rule of guidance, but with the qualification that it should only apply where the damage to be anticipated from the breach of a stipulation varies in kind with each stipulation.
In the leases with which we are dealing the £10 additional rent is made payable indiscriminately for the raising of the height of a wall, for making any addition in height or projection to a building, or for carrying on a noisome, objectionable, or even immoral pursuit (for “bagnio” in Victorian times had almost lost its primary meaning and was used as a polite equivalent for an older and more robust word). Applying the test as recognised by Lord Parker and looking to the inherent circumstances of the case I would be prepared to hold that the £10 was a penalty and not liquidated damages. Even if I am wrong in this it does not follow that, in a case where there is a proviso for re-entry on breach of covenant, a lessee is necessarily entitled to commit the breach on payment of the additional rent. The fact that a sum is liquidated damages and not a penalty may be an indication in that direction. So may be the fact that payment of a recurrent sum is provided as opposed to a single lump sum. But neither indication is conclusive and the question has to be decided upon the terms of the lease taken as a whole in conjunction with the inherent circumstances as existing at the date of the lease: Weston v.Managers of the Metropolitan Asylum District (1). I think the judgment of Lord Sugden in French v. Macale (2), also supports this view although in that particular case he held the sum to be in the nature of a penalty. I can see no objection to the parties to a lease agreeing that the landlord may re-enter on breach of a covenant or may alternatively require payment of an additional rent which is to be regarded as a fair pre-estimate of damages and not as a penalty. But the option in such a case could be confined to the landlord. Whether the £10 rent is a penalty or liquidated damages, I hold that the landlord’s right to re-enter for breach of covenant is not abolished.
Next, it was argued that in so far as the proposed alteration of user and erection of buildings involved a breach of covenant, the provisions of ss. 57 and 58 of the Landlord and Tenant Act, 1931, gave relief to the plaintiffs. All that was sought to be done, it was said, was to make an alteration of user and to erect improvements. The effect of those sections was that the covenant must be read as if the words “the landlord’s consent not to be unreasonably withheld” were inserted. The landlord’s consent had been unreasonably withheld and the plaintiffs were free to go on with their plans. This argument applied only to the “Seymour”and “Russell” leases for it was not contended that the”Gabbett” lease constituted a tenement.
Mr. Lavery relied upon several cases decided upon the similar but by no means identical provisions of the English Act of 1927, 17 & 18 Geo. 5, c. 36. It is specially to be noted that the English Act contains no definition of “improvement”such as is found in s. 2 of the Irish Act, and though the general objects of both the English and Irish Acts are the same and portions of the wording are almost identical the differences are sufficient to make English authorities an unsafe guide unless very closely examined.
National Electric Theatres v. Hudgell (1), the first authority cited by Mr. Lavery, was decided under s. 3 of the English Act, a section which corresponds roughly with Part II of the Irish Act and not with s. 58 which is the governing section in this case. Premises had been demised on 99 year leases for the purposes of a hall duly licensed for entertainments or meetings, and had bean used as a cinematograph theatre down to 1938 when the county council refused to renew the licence for any form of public entertainment unless certain alterations were made. Morton J. in his judgment says that the building as it stood might not unfairly be described as a derelict building. The lessee proposed to pull down the existing building and erect instead a row of modern shops with flats above them, and the question to be decided was whether such work constituted an “improvement” within the meaning of that term as used in Part I of the English Act and especially as used in s. 3 thereof. The learned judge considered that the work was such an “improvement.” In so far as he decides that the work would be an improvement of the holding in any ordinary use of the word improvement, his decision seems to me to be a legitimate extension of a principle implicit in the judgments in Doherty v. Allman (2), an Irish case which went to the House of Lords: but in so far as it rests on the wording of the English Act (especially the phrase “including the erection of any building”) I think that the differences between the Acts prevent it from being of any assistance to me.
F. W. Woolworth & Co. v. Lambert (3) and Lambert v. F. W. Woolworth and Co. (4), were decided under s. 19, sub-s. 2 of the English Act. The lessee of a shop who was also lessee of adjoining premises proposed to throw the two sets of premises together and use them as one. This involved taking down the back wall of the shop, removing the staircase to the adjoining premises and some other alterations. The lessee undertook to restore the shop to its original condition before the determination of the existing lease.
In the first case the trial judge, Clauson J., and in the Court of Appeal, Greene L.J., took the view that the proposed alterations did not constitute improvements within the meaning of the section, but the opposite view was taken by Lord Wright M.R. and Romer L.J. In the second case the trial judge Simonds J. held himself bound by the opinion of the majority of the Court of Appeal in the first case, and on appeal McKinnon and Slesser L.JJ. agreed with the former opinions of Lord Wright M.R. and Romer L.J., while Greer L.J. agreed with the former opinion of Greene L.J. Thus of seven judges who held themselves free to consider the question, four considered that the proposed works were an improvement and three did not so consider not a very impressive preponderance of opinion. Moreover, it is by no means clear that the opinions would have been the same if the proposed alterations had included the entire destruction of the premises demised and the substitution of other premises, and the opinions are to some extent based on provisions in the English section which are not to be found in our section.
I have dealt with the English cases with some fullness in deference to the reliance placed on them by counsel for the plaintiffs, but in my opinion they are of no assistance; for the answer to the questions in this case must depend on the correct interpretation of the definition of “improvement” contained in s. 2 of our Act. That definition is as follows:”the word ‘improvement’ when used in relation to a tenement means any addition or alteration to the building comprised in such tenement and includes any structure erected on such tenement which is ancillary or subsidiary to the said buildings and also includes the installation in the tenement of conduits for the supply of water, gas, or electricity, but does not include work consisting only of repairing, painting, and decorating, or any of them.”
The interpretation clause first uses the word “means,”a word which is prima facie at once explanatory and restrictive, exhaustive and exclusive; and if the clause ended with the words “comprised in such tenement” the question would have to be decided, without further help, as to whether the word “addition” could mean only something physically annexed to the existing buildings on the tenement, or whether it included a separate building and could be read as equivalent to”an addition to the number of the buildings.” The first meaning seems the more natural and when faced with the necessity of construing the somewhat similar phrase in the Settled Land Act, 1890, s. 13 (ii)(“Improvements . . . shall include . . . Making any additions to or alterations in buildings reasonably necessary or proper to enable the same to be let;”)Cozens-Hardy L.J. found occasion to say:”Sect. 13 (ii) certainly does not mean making any additional building on an estate, but it is an addition to, or alteration in, existing buildings”: In re Blagrave’s Settled Estates (1), Under the same sub-section it was also decided that the erection of a new building in place of an old building was not an addition to, or alteration in, that old building: In re Leveson-Gower’s Settled Estates (1).
But the doubt, if doubt there be, seems to be resolved by the next sentence in the definition which provides that improvement”includes any structure erected on such tenement which is ancillary or subsidiary to the said buildings.” When a definition, introduced by the word “means”, is followed by a clause or clauses of inclusion, it seems to me that there is an implication, first, that the extended subject matter of the including clauses would not have come naturally under the main definition, and secondly, that the extension is meant to be an exclusive extension: Dilworth v. Commissioner of Stamps (2). If this be so it would seem to follow, first, that an additional building erected on the tenement was not considered by the Legislature as coming within the words”any addition or alteration to the building comprised in such tenement”; and secondly that, by providing that a structure erected on the tenement should be an improvement if ancillary or subsidiary to the existing buildings, the Legislature showed that no structure was to be considered an improvement unless it was ancillary and subsidiary to the existing buildings.
Mr. Liston conceded that this interpretation would be irresistible if instead of the word “structure” the word”building” had been used. But he contended that the word”structure” was wider than the word “buildings” and would include such things as the steel framework supporting a windmill to generate electricity, or pump water, or a ram to supply water. This seems to me to be correct. But he went on to argue that when the Act used the word”structure” it meant by that word “structures other than buildings;” and that it was only for the purpose of bringing in such structures that it was necessary to enact the including clause. This seems to me a forced construction. I prefer to interpret the word “structure” as including buildings and as equivalent to “buildings and other erections which may not be properly termed buildings;” and I read the including clause as a clear indication from the Legislature that no separate structure, be it building or otherwise, should be accounted an improvement unless it was ancillary or subsidiary to the existing buildings. That which gives a tenement its nature is the existence of buildings on the land and the land must be ancillary or subsidiary to the buildings. (See definition of “tenement”) and it seems to me that an improvement to come within the Act must be an improvement to existing buildings and not an improvement to the land by the erection of another building.
If I am right in my interpretation of “improvement,” that interpretation is sufficient to decide the cases in favour of the defendants: but as I may be wrong in my interpretation and this case may go further I will express my view on the question of reasonableness.
By the courtesy of the plaintiffs I have been provided with certified copies of the judgments of Mr. Justice Davitt and of the Supreme Court in the cases of Kenny v. The Dublin Corporation and Rice v. The Dublin Corporation (1), and from those judgments it appears that the question whether consent is reasonably or unreasonably withheld must be decided upon the facts as presented at the hearing of the case. On these facts, if the proposed works could come under the heading of improvements, I have a clear view that the refusal of the defendants to consent to them is unreasonable. The defendants are entitled to consult their own interests and need not pay any attention to the need or desirability of the project from the standpoint of the plaintiffs. But what are the interests of the defendants? It is not suggested that either of them owns any other property in the neighbourhood which could be adversely affected by the proposed buildings or the proposed change of user. The terms of the leases have still some 900 years to run. So long as their rents are amply secured to them the defendants are in no way prejudiced. The moment Mr. Lavery undertook, at the hearing, that the existing buildings would not be destroyed till the new college was erected and that care would be taken to preserve evidence of the present boundary lines between the premises demised by the respective leases, it appeared that the security for the rents payable to the defendants would not be impaired and would in all probability be greatly enhanced. It has been suggested that the plaintiffs are still at liberty so to alter their scheme as to place all the new buildings on “Kilmoyle” and none on “Shelbourne” or vice versa, and His Lordship the Bishop of Limerick was at pains to explain that he did not wish to be tied too tightly to the layout and plans produced in Court. I did not, however, understand him as wishing to reserve a right to make alterations so drastic as to confine all buildings to “Kilmoyle”or to “Shelbourne.” If the defendants so desired, I would require from Mr. Lavery and would note in the order an undertaking that the existing buildings on the “Russell”leasehold and the “Seymour” leasehold respectively, should not be taken down until buildings had been erected by the plaintiffs on the relevant leasehold, costing not less than £30,000. This, it seems to me, would amply secure the defendants.
It is not so clear to me that the defendants were unreasonable in refusing their consent when first asked for it, or indeed at any time up to the hearing. I think that a landlord who is asked to consent to a project is entitled to have fairly specific information as to what is proposed to be done; plaintiff’s letter of 3rd September, 1946, was extremely vague, and if the defendants had given an answer refusing consent till more details were furnished them I should have considered such a refusal to be reasonable. Admittedly the refusals were categorical. Even so, and having regard to the statements in the statement of claim and in the letter of 5th February, 1947, to the effect that the project might involve the demolition of the existing buildings, I think it would have been reasonable for the defendants to be given an assurance that the existing buildings would not be destroyed till new buildings, entirely adequate to secure the rents, had been put up. It seems to me that if the existing buildings had, in fact, been destroyed before new buildings were erected, then the premises would have ceased to be”tenements” as defined by the Act and plaintiffs, would have, inadvertently, cut their own throats.
Those matters are only relevant on a question of costs and, if my view as to the meaning of “improvements”should turn out to be erroneous and the case should fall to be decided on a question of reasonableness, I would not decide the manner in which costs are to be awarded without hearing counsel for all parties.
Mesne Rates
The London and North-Western Railway Company v Hill
High Court of Justice.
Queen’s Bench Division.
16 May 1883
[1883] 17 I.L.T.R 70
May C.J., Johnson J.
May, C.J.
In the statement of claim in this case, it is set forth that the plaintiffs were owners of a certain house and premises in this city; that the late John Hill had occupied these premises as tenant of the plaintiffs until the time of his death, some time prior to the 30th of October, 1879; that the defendant was the widow of the said John Hill; and that on the 1st of February, 1880, the defendant broke and entered the *70 said house and premises and ejected the plaintiffs from the possession thereof, kept the plaintiffs so ejected for a long time, during which time the defendant took and received all the issues and profits of the same, by which the plaintiffs were deprived of such issues and profits, and prevented from demising the same, and were obliged to incur great expense in recovering the possession thereof by action. The defendant, by way of defence to the first, second, and third paragraphs, traverses the allegations in the statement of claim; and fourthly, by way of special defence, states in effect that the said late John Hill had occupied the premises as tenant from year to year to the plaintiffs until the time of his death; that during such tenancy he had sublet a portion of the premises to a sub-tenant; that defendant was administratrix of the said John Hill, and that the said premises came to her as such administratrix after his death, the said sub-tenant being in possession of parcel thereof; that the tenancy of the late John Hill determined upon the 1st of February, 1880, by notice to quit of the plaintiffs; that the defendant on the said 1st February, 1880, quitted the same premises, and gave notice to the plaintiffs of her having thus quitted the same, and did not afterwards enter upon the premises; that the said sub-tenant of the said John Hill refused to give up possession of the said premises, and continued in such possession, which, it is stated, is the grievance complained of in this action; that the plaintiffs afterwards recovered possession of the premises by ejectment. The defendant proceeds to state, with sufficient matter of detail, that when she quitted the premises she offered possession of all the premises except the part in possession of the said sub-tenant, which the plaintiffs refused to accept; that the defendant was unable to give possession of the part held by the sub-tenant, as his sub-term had not then expired; that while the premises remained in possession of the sub-tenant, the defendant did not, nor could she, derive any profits from the premises; submits that, save as administratrix of the late John Hill, she is not liable for the said trespasses; and lastly, states that she has fully administered the assets of the said John Hill, and has now no assets in her hands. To this fourth defence, presenting the various statements to which I have adverted, the plaintiffs have demurred on general grounds. The statement of claim in the present case seems in the latter branch of it to amount to the common form familiarly used in actions of trespass for mesne profits. The defendant by her fourth paragraph by way of defence set forth the real facts, as she alleges, that took place between the plaintiff and the defendant, alleging that these involve the contents of the statement of claim. The plaintiffs, by a general demurrer, for the purpose of this branch of the argument, must be assumed to admit the facts so alleged by the fourth defence; and the question arises whether the matters set forth in the fourth defence afford an answer in point of law to the statement suggested in that defence, as the grounds of the action. In this view of the case, the facts upon which the point of law arises seem sufficiently simple. The late John Hill was tenant from year to year of the premises to the plaintiff; he sublet a portion of the premises to a sub-tenant, and died in October, 1879. The defendant took out administration to him, and went into possession of the said premises, subject to the sub-tenancy. The plaintiffs served a notice to quit, which expired on the 1st February, 1880. The plaintiffs applied for possession to the defendant. The defendant was unable to give possession of the sub-tenancy, which the sub-tenant refused to give up. The defendant offered to give to the plaintiffs the portion of the premises of which she was in possession, which the plaintiffs declined to receive. The defendant apparently then abandoned the premises. The plaintiffs subsequently recovered in ejectment against the defendant and the sub-tenant, and the present action is brought to recover damages against the defendant, including the costs of the ejectment. The question is, can the present action in this view of the case be maintained against the defendant? If John Hill were still in being, and had he by reason of the possession of the sub-tenancy created by himself been unable to restore possession of the premises to the defendant on the 1st February, 1880, there can be no doubt that he would be liable to an action at the suit of the plaintiffs. The latest case on the subject is that of Henderson v. Squire, L. R. 4 Q. B., 173. The plaintiffs might have recovered against John Hill, as damages, the value of the premises while kept out of possession, and the cost of evicting the sub-tenant. If a tenant creates a sub-tenancy, which occasions loss and damage to his landlord, it seems perfectly just that he should be responsible for such consequences. In the present case the defendant is the administratrix only. The question is, can the administratrix be liable in the same manner as the intestate would have been responsible with respect to the liability of an executor or administrator for rents which have accrued since the death of the deceased tenant. It seems established that if such representative enters upon the demised premises, after the death of the tenant, he may be treated as assignee in fact, and may be sued de bonis propriis; but the law does not deal unjustly with a representative who acts in a fiduciary relation, and will render him personally liable only to the extent of the value of the premises upon which he has entered. The law is so clearly laid down in the case of Rubery v. Stevens, 4 B. & Ad, 245, that, of course, if sued in his representative capacity, and so far as regards assets in his hands, he might be liable to make good any liability incurred by the testator or intestate, whom he may represent. Under the circumstances of the case now under consideration, the defendant, we assume, properly took possession of the premises as administratrix, and thus became, in fact, an assignee of the premises and liable to the limited extent which the law has above defined. The present action is not for use and occupation of the defendant, but is brought against her as a trespasser and wrongdoer. The gravamen of the case against the defendant is simply that, being an administratrix of the former tenant, she was unable to procure the surrender to the plaintiffs of the portion demised to the sub-tenant by the deceased intestate. I think that the special defence set forth in the 4th paragraph discloses a sufficient answer. The defendant, being a mere administratrix, ought not, I think, to be held personally responsible by reason that the sub-tenant refused to deliver up possession to the plaintiffs; the defendant had not placed the sub-tenant in possession, did not encourage him to remain in such possession, received apparently no rent from him, and had no privity whatever with him. This special defence seems to me to discharge the defendant from this gravamen. A shorter view may also be regarded. The statement of claim is an action of trespass for mesne profits brought by the plaintiffs after judgment of an ejectment from the premises; but, it seems established that the defendant abandoned the possession of the premises at the same moment as the right of the plaintiffs to acquire that possession, and at no subsequent period had any connexion with the premises; nor with the sub-tenant; and I apprehend that an action for mesne profits lies only against those who had been actually or virtually in possession of the premises at a time when plaintiff was rightfully entitled to seek possession. No such possession by the defendant is shown in this case. If the present case had been brought against the defendant as administratrix of the deceased, John Hill, in order to recover damages against his assets by reason of the refusal of the sub-tenant to surrender his possession after the surrender of the principal tenancy, the aspect of the proceedings would have been very different; but, the present case is brought in order to charge the defendant for personal alleged trespasses against *71 the plaintiffs, and I think the fourth defence excuses the defendant from such allegations. The averments of plene administravit and absence of assets do not seem material, as the defendant is not sued as administratrix, but in her own personal capacity. On the whole, I think, the demurrer must be overruled.
Johnson, J.
I agree that this demurrer must be overruled. This action is an ordinary action of trespass for mesne rates, and the principles which govern the maintenance of such an action are, in my opinion, correctly deduced from the authorities stated in Furlong’s Landlord and Tenant, p. 1203, par. 4, 1st ed.; p. 1095, par. 4, 2nd ed. The defence which is now demurred to averring what in this argument are admitted facts, and which, after the judgment of the Lord Chief Justice, I need not repeat, establish, in accordance with the principles to which 1 have referred, that the present action of trespass is not sustainable. This decision in no way conflicts with the case of Henderson v. Squire, L. R. 4 Q. B. 170, which has been so much pressed in the arguments. It is to be observed that in that case the first count was trespass for mesne rates, the second breach of contract for not giving up possession. To the first count the defendant pleaded not guilty, but to the second count payment into court of 40s. The plaintiff required damages ultra this 40s., and at the trial a verdict was directed for the defendant, with leave to plaintiff to move to enter the verdict on the second, or contract count, be it observed, for the increased damage proved at the trial; and accordingly, after argument, the verdict was entered for the increased damage on the contract count, pursuant to the leave reserved. The way in which this action is framed is matter of substance not of form; and if the defendant was sued for breach of contract her responsibility would be entirely different from that in respect of a trespass by herself. For these reasons, I am of opinion that the present action is not maintainable.
Order.—Plaintiffs’ demurrer to the fourth paragraph of defendant’s statement of defence overruled with costs, and let plaintiffs be at liberty to amend their statement of claim, as they may be advised.1
Lynham v Butler
High Court.
5 December 1932
[1933] 67 I.L.T.R 121
Hanna J.
Hanna, J.
During the past eight and a half years the protracted litigation in this case of Lynham against Butler has contributed both to the legal and to the national history of this country. I appeared as counsel for one of the former parties in the first phase of this litigation, and if this action before me should happen to be the last phase, it is a privilege to give it decent burial. This expensive and dilatory litigation, of which the defendant, the Reverend Dr. Butler, is now to be the victim, commenced in 1924. In this particular action before me it is sought to make him liable for mesne profits as a trespasser from August 22nd, 1924, the date of the death of his lessor, until the 3rd April, 1928, a few weeks after the decision of the Supreme Court delivering the judgment, as a result of which he had to give up possession. The occupancy of the land by the defendant in respect of which mesne profits or damages for trespass are now claimed in this action is peculiar and unusual in actions of this description. Mrs. McInerney, tenant for life of certain lands, demised, upon 30th July, 1920, for the term of her life, to the Reverend Dr. Butler. On Mrs. McInerney’s death, on 23rd August, 1924, the plaintiff, Lynham, being entitled in remainder in feesimple, brought an action in the High Court to recover possession of the land from the Reverend Dr. Butler. During Mrs McInerney’s lifetime, that is February 7th, 1924, Dr. Butler had obtained an order from the Judicial Commissioner declaring the holding to be one to which the Land Act of 1923 applied. The High Court, on March 2nd, 1925, held that the Act deprived Lynham of any right to recover possession. An appeal to the Supreme Court was dismissed on July 15th, 1925. The Judicial Committee gave leave to appeal, but the appeal was withdrawn following the passing of the Land Act of 1926. Lynham then served a notice of objection to the “Provisional List,” and the lands, if not excluded in consequence of a valid objection, would become vested in the Land Commission on the appointed day. This list contained particulars of the holding in question. The objection was disallowed by the Land Commission on the 21st October, 1925. Lynham then served notice requiring the objection to be reheard by the Judicial Commissioner, Mr. Justice Wylie; relying upon a new objection, namely, that the tenancy created by the lease of 30th July, 1920, was a letting for temporary convenience, and the alleged discovery of additional material evidence in the form of certain letters. The Judicial Commissioner made an order declaring that the tenancy was a letting for temporary convenience and discharging his own provious order of February, 1924. He also discharged the order made by the Land Commission on October 21st, 1925, and allowed Mr. Lynham’s objection to the Provisional List. From this decision the Reverend Dr. Butler appealed to the Supreme Court, and the Supreme Court, in February, 1928, by a majority, upheld the decision of Mr. Justice Wylie.
Now, their decision was given upon February 8th, 1928, and in consequence of, and as a result of their decision, the Reverend defendant gave up possession of these lands upon 3rd April, 1928. This action for mesne rates was then instituted, the summons being issued on March 7th, 1929. The defence was filed on October 12th, 1929, raising questions of law. A pleading motion before the High Court for liberty to deliver a rejoinder was heard and decided by the High Court upon December 16th, 1929. An appeal therefrom was heard by the Supreme Court from the 5th to the 12th February, 1930, and their judgment was delivered on July 30, 1932. It was a judgment covering all the questions of law in the case and leaving to be declared in this action only an assessment of mesne profits.
It is clear that from February 7th, 1924, until at least June 29th, 1926, the Reverend Dr. Butler was in possession under the order of Mr. Justice Wylie of February 3rd, 1924, and the judgment of the High Court, which was affirmed on appeal on the 2nd March, 1925, and the order of the Land Commission of October 21st, 1925, the latter disallowing Lynham’s objection to the Provisional List. The Rev. gentleman must have deemed his possession as almost protected by triple brass, and it is clearly not an ordinary case of a tenant overholding as against his landlord or lessor. But on June 29th, 1926, the matter was again before Mr. Justice Wylie, on fresh evidence, and the learned Judge, as I have indicated, discharged his former order of February 7th, 1924, as well as the *122 order of the Land Commission of October 21st, 1925. From this order of Mr. Justice Wylie the Rev. Dr. Butler appealed and remained in possession until the appeal was finally disposed of by the Supreme Court and judgment finally given on February 8th, 1928. A distinction was sought to be drawn between the occupation until June 29th, 1926, which was in a sense under the protection of the Court orders and judgments and the subsequent occupation pending the result of the defendant’s own appeal; but the Supreme Court, on the appeal from the order of the High Court on the pleading motion in this action, heard all questions of law and have determined that none of the orders or judgments could be relied upon by the Rev. Dr. Butler as a defence in this action, and that the mesne profits must be assessed against him for the whole period from 1924.
Though it is not an ordinary case, we are entitled to apply the ordinary rule as to the assessment of mesne profits. The possession of the Rev. Dr. Butler being held wrongfully, as from the 22nd August, 1924, he is liable to indemnify the plaintiff, in my opinion, for “having lost or been deprived of the uses and profits of the messuages and lands and for the loss of the beneficial use and occupation of the same” Now that is the form of the old pleading, accepted and laid down in Bullen and Leake in the 1868 Edition at page 422.
Cole on Ejectment, at page 643, states that the plaintiff in an action of this kind is entitled to recover the value of the possession of the lands calculated as in an action for use and occupation. “In the ordinary case of a tenant overholding from the landlord the jury shall take the rent of the demise as the measure of the loss but they are not bound to do so” It has been argued here on behalf of the plaintiff, Lynham, that the rent of £450 per annum, being the rent under Mrs. McInerney’s lease payable by the defendant for the life of Mrs. McInerney must be taken as a minimum. I decline to do so. The rent was fixed at a time when the conditions may have been quite different and it may have been accepted for different reasons. The rent of the lease of the defendant’s brother was something less than £450, and the new lease in 1920 included additional shooting rights and, I think, the house. The plaintiff wrongfully, in my opinion, based his case unequivocally on this rent and did not, though I suggested it more than once to him, attempt to give any evidence as to actual profit by letting or otherwise to be made out of the lands either since 1928 or before. The plaintiff merely stated on cross-examination that he believed he could have made a living out of it. Mr. Lavery in his reply relied alternatively on the sum of £337 paid for a period by the defendant to the Land Commission, but I am not bound to accept that figure either The rent and the payment to the Land Commission may be attributable to different and perhaps to some personal considerations from the point of view of the defendant and may not at all measure accurately the mesne profit that could be raised out of the land if the plaintiff had had occupation of it The position of the defendant, or the relation between the defendant and the plaintiff, was never at any time that of landlord and tenant and, in my opinion, the cases cited as between landlord and tenant are not conclusive upon me or upon the point of law involved in the case. I think, therefore, as the defendant has been, in my opinion, bona fide using and making the most he can of these lands during the period, I may take as some guide the statement of the law laid down in Furlong (Vol. 2, page 1094) as follows “The owner of land who had been wrongfully deprived of its possession may after his re-entry recover, in an action of trespass, all the intermediate profits derived out of the premises from the time of the ouster, as the law by relation refers such re-entry back to the original right.” The evidence in the case is somewhat unsatisfactory upon both sides. The only definite evidence I have before me is the statement of account put in and proved on behalf of the defendant. I think that a criticism of it will help to disclose what the plaintiff would have made out of the lands if he had had the use and occupation of it himself, which is the widest measure I can give him in this case. Lynham says he uses them now in the same way as the defendant and he has used them since he obtained possession—that is during the last four years. As the lands are mountain grazing, it seemed to me a proper method of user, namely, letting the fenced portion and taking cattle, sheep, and horses on agistment terms as regards the remainder. It seems to me on the rough figures to come to about 500 acres of mountain. Now there are a few criticisms I would make on the defendant’s accounts. I do not think that he is entitled in 1924 or 1925 to charge against the plaintiff any rent that he may have paid. The plaintiff never received this, and the plaintiff if he had been in possession *123 would not have paid these sums and would have been under no obligation to discharge them. Secondly, as regards the fencing and repairs, a lump sum irrespective of details is charged every year, and I shall deal with it generally at the end. The evidence with reference to the debit items concerning hay and the absence of credits is not established completely to my satisfaction so as to enable me clearly to charge the plaintiff with it. Further, the documents from which the items of rents were made up are very rough and perhaps not complete. Accordingly, my view is as follows, making the best estimate I can as a juror. In respect of the period from August 22nd, 1924, until December 31st, 1924, I estimate the net profit at a sum of £25. For the year 1925 I allow the sum of £185. That seems to me to have been a very good year. In 1926 the lettings fell off and I allow for that year a sum of £50. In 1927 the lettings were again bad, and I allow for that year a sum of £50. For the period of 1928 up till the delivery of possession on the 3rd April I allow a sum of £40. Now that makes in all a sum of £350, as mesne profits, viewed on a net basis. During that period the defendant had horses of his own upon the lands. The particulars are not given and I presume no record was kept by the steward. Further, I do not think the amount spent on the fencing was anything like the amount claimed, for the plaintiff had to spend over £100 on fencing and repairs—fencing for 4 miles of the grazing lands on the mountain. Accordingly, I think I am doing no injustice to either party in putting the expenditure of fencing as against the grazing of the defendant’s own horses. It is all very vague but that is the best I can do. It is possible that Mr. Lavery is right to some extent in stating that the defendant, while bona fide in his use of the lands, kept this mountain more as a hobby than as a practical farmer, and he urged upon me that the figures would not be reliable as being the income that a practical farmer would make from it. The plaintiff is not a practical farmer either, but I do think that he would have given perhaps closer attention to it though it seems on the evidence that he follows the same method now and has the same steward as the defendant had. Still his personal attention might have brought a little more out of the land during the three and a half years, and I will allow an additional 10 per cent., making in all the sum of £385, which sum I assess as mesne profits during the period in question. I give judgment accordingly, with costs, and dismiss the counter-claim.
The order made by the Court was that £100 should be paid by defendant to plaintiff within one fortnight, in consideration of which a stay was put on the order until the middle of January. The defendant also undertook to join in a transfer of the funds paid to the Land Commission while he was in occupation of the lands in part payment of costs due to date, the plaintiff at the same time formally abandoning any claims he might have had to these monies but without prejudice to his rights to attach same. The order also allowed the costs of the plaintiff reserved under the order of 16th December, 1929 (see 67 I. L. T. R., page 75
Harrisrange Ltd. v. Duncan
[2002] IEHC 14
JUDGMENT of Mr. Justice William M. McKechnie delivered the 25th day of January, 2002
1. By Indenture of Lease made the 17th day of May, 1977, between MEPC Ireland Limited of the one part and AURIC Limited of the other part, All That and Those the Hereditaments and Premises therein described as Number 32A Dawson Street in the City of Dublin were demised unto the said AURIC Limited for the term of 21 years from the 1st day of October, 1976, subject to the annual rent of £2,000 and to the other terms and conditions as therein contained. As a result of an Indenture of Conveyance dated the 24th day of March, 1984, Harrisrange Limited became entitled to all of the estate and interest of MEPC Ireland Limited in the aforesaid premises. Likewise, as a result of an Indenture of Assignment dated the 31st day of March, 1986, the Defendant succeeded to the Lessee’s interest under the aforesaid Lease. In addition, in consideration of receiving the Lessor’s consent to this Assignment, Mr. Duncan, by Deed of Covenant also dated the 31st day of March, 1986, covenanted with the Plaintiff Company to observe, abide by and perform all the covenants and conditions on the Lessee’s part, including the payment of rent, as contained in the said Lease. As appears therefrom and in the circumstances which occurred the term so created, expired by fluctuation of time, on the 30th day of September, 1997.
2. Being advised of his entitlement to assert a statutory right, Mr. Duncan on the 1st October, 1996, served on his Lessor a Notice of Intention to Claim Relief under section 20 of the Landlord and Tenant (Amendment) Act, 1980. This Notice claimed a new tenancy and the sum of £10,000 for Improvements. In the alternative a sum of £3 m was claimed for Disturbance. At the expiry date of the term so created, no Notice of Application had been made, and accordingly the Court did not have seisin of this matter. Whether as a result of this or otherwise, the Plaintiff company not only attempted to, but in fact re-entered the property by changing the locks on the external doors. The response by Mr. Duncan was similar with further re-entries and attempted re-entries being repeated on more than one occasion. Ultimately by the 14th October 1997, both parties had instituted High Court proceedings effectively seeking restraining orders one against the other. The resulting motions, seeking this interlocutory relief, were, on the 2nd February, 1998, adjourned generally with liberty to re-enter. This because, at that time, with the Defendant retaining occupation of the property, it was agreed that the dispute between the parties would be resolved through the medium of the Circuit Court proceedings which by then had been served. On the 12th December an Ejectment Civil Bill for Over Holding was issued with Mr. Duncan in his Defence and Counterclaim, seeking a new tenancy as well as compensation for Disturbance and/or Improvements.
3. On 19th October, 1998 a Notice of Application, under section 21 of the 1980 Act, was served by the Defendant in these proceedings who obviously was the Applicant in that Notice. As with his Counterclaim, Mr. Duncan sought a new tenancy and compensation for Disturbance and/or Improvements. Both the Civil Bill and the Application were heard in the Circuit Court at the same time. On the 5th November, 1998 His Honour Judge O’Hagan granted Harrisrange Limited possession of the said property and dismissed the Defendant’s Counterclaim. From that Order an appeal was taken with the Defendant obtaining leave from the High Court to amend his original Defence and Counterclaim. That amendment has no relevance to this case. Having heard oral evidence and having considered the submissions as made, Mr. Justice Butler on 4th December, 2000, dismissed the Defendant’s appeal and affirmed the Circuit Court Order. He stayed the execution of his Order for the period from the 1st January to the end of February, 2001, and did so on condition that for this length of time mesne rates would be paid in a sum calculated, at what is now agreed to be, £8,000 per annum. In compliance with this Order, possession of the demised premises was then surrendered by Mr. Duncan to his now former Lessor.
4. In the present proceedings, which were instituted by way of Summary Summons, the Plaintiff company seeks from the Defendant, mesne rates for the period from the 1st day of October, 1997 up to and including the 31st day of December, 2000; this at a rate of £12,500 per annum. In total, the amount claimed in the Special Indorsement of Claim is £40,625 with interest, pursuant to section 22 of the Courts Act, 1981, also being sought. On the Plaintiff’s motion for liberty to enter final judgment the matter was transferred from the Master’s List to this Court. Affidavits in support of the reliefs claimed have been filed and served, as have the replying documentation in which the Defendant seeks from this Court leave to defend unconditionally or alternatively on the terms as suggested by him. No Notices to cross-examine were served and no oral evidence given. The Motion was therefore dealt with solely on Affidavit.
5. Having being commenced by way of Summary Summons, the course of these proceedings is governed by Order 37 of the Rules of the Superior Courts. Following the entry of an Appearance, a defendant may, in response to the aforesaid motion for judgment, show cause against such motion by way of affidavit. Upon the hearing of this application:-
“….. the Court may give judgment for the relief to which the plaintiff may appear to be entitled or may dismiss the action or may adjourn the case for plenary hearing as if the proceedings had been originated by plenary summons, with such directions as to pleadings or discovery or settlement of issues or otherwise as may be appropriate and generally may make such order for determination of the questions in issue in the action as may seem just”. (Rule 7). Emphasis added.
1. Under Rule 10 leave to defend may be given unconditionally or subject to such terms as to give security, or time and mode of trial, or otherwise as the Court may think fit.
6. Accordingly, as can be seen, the next procedural step following the entry of an Appearance is the bringing of a motion by a Plaintiff wherein he seeks liberty to enter final judgment. That motion may be contested by the Defendant via affidavit evidence which of course may include, were appropriate, any exhibits attached thereto. On the hearing of such a motion the Court may give liberty to enter final judgment for the amount claimed or any part thereof, may give the Defendant leave, conditionally or unconditionally, to defend or may favour one of a number of other options which are available to it. When deciding what is the most appropriate course to take, the Court, in order to determine the questions in issue between the parties, is obliged under Rule 7 to do that which best meets the justice of the situation. That result is the result which must be achieved.
7. In this jurisdiction and elsewhere there have been several cases dealing with the court’s function on the hearing of a motion for liberty to enter final judgment under Order 37 or it’s equivalent. In The First National Commercial Bank Plc v. Anglin [1996] 1 IR 75 Mr. Justice Murphy was of the opinion that the correct approach which should be adopted was that as laid down in Banque du Paris v. de Naray 1984 1 Lloyds Reports 21, a case subsequently affirmed in the National Westminister Bank Plc v. Daniel 1993 1 W.L.R. 1453. In The Governor and the Company of The Bank of Ireland v. Educational Building Society [1999] 1 IR 220 such a test was applied, certainly by Murphy J. and
2. Barron J., with perhaps some modification of language in the Judgment of Keane J. as he then was. Whilst in truth the Judgments in that case were much more concerned with the law on Bills of Exchange rather than with Motions for Judgment, nevertheless the decision is relevant, because in dismissing the Plaintiff’s appeal and in upholding the High Court’s Order remitting the matter to plenary hearing, the Supreme Court did so on the basis, that from the written submissions of the parties, the argument of counsel and the analysis of such submissions and arguments, it was clear that the defendant had raised an issue of law in respect of which it was entitled to be heard. In so deciding the following frequently quoted passage from the judgment of Barry L.J. in Crawford -v- Gillmor 1891 30 L.R. Ir. 238 was again repeated. It reads:-
“I am of opinion that … the mere length of time which has been occupied by the argument of this case – and I do not think one moment of our time was occupied unnecessarily – shows that it does not come within the rule which allows final judgment to be marked on motion”.
8. In A.C.C. Plc v. Elio Malocco HC U.R. 7/2/2000 Miss Justice Laffoy, in applying First National Commercial Bank Plc , went on to say that the whole situation should be looked at, which in turn necessarily involved “an assessment of the cogency of the evidence adduced by the Plaintiff in relation to the given situation which is to be the basis of the defence”. See p. 14 of the text. In the most recent case in this area namely Aer Rianta CPT v. Ryanair, Limited S.C. U/R. 13/11/2001, there were two judgments delivered in the Supreme Court. In her opinion, under the hearing of “The Law and Conclusions” , Mrs. Justice McGuinness applied the test as suggested by Murphy J. in The First National Commercial Bank Plc case. In his analysis of the law, Mr. Justice Hardiman surveyed what might be described as the historical cases as well as the most modern authorities on this topic. His conclusion was, I think that leave to defend should be granted unless it was “very clear” that the defendant had no defence, not even one which could be described as arguable.
9. From these cases it seems to me that the following is a summary of the present position:-
(i) The power to grant summary judgment should be exercised with discernible caution,
(ii) In deciding upon this issue the Court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done,
(iii) In so doing the Court should assess not only the Defendant’s response, but also in the context of that response, the cogency of the evidence adduced on behalf of the Plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting Affidavit evidence,
(iv) Where truly, there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use,
(v) Where however, there are issues of fact which in themselves are material to success or failure, then their resolution is unsuitable for this procedure,
(vi) Where there are issues of law, this summary process may be appropriate but only so, if it is clear that fuller argument and greater thought, is evidently not required for a better determination of such issues,
(vii) The test to be applied, as now formulated is whether the Defendant has satisfied the Court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, ‘is what the Defendant says credible?’, which latter phrase I would take as having as against the former an equivalence of both meaning and result,
(viii) This test is not the same as and should be not elevated into a threshold of a Defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence, (ix) Leave to defend should be granted unless it is very clear that there is no defence,
(x) Leave to defend should not be refused only because the Court has reason to doubt the bona fides of the Defendant or has reason to doubt whether he has a genuine cause of action,
(xi) Leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally,
(xii) The overriding determinative factor, bearing in mind the constitutional basis of a person’s right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter Judgment or leave to defend, as the case may be.
10. In this case the following issues arise for consideration:-
What effect on the Plaintiff’s claim, has Section 28 of the Landlord and Tenant (Amendment) Act 1980, and in particular:-
Whether under that section, a tenant who avails of the right therein contained to remain on in occupation pending the Courts’ determination of his application for a new tenancy, is entitled to do so, paying only to the landlord the rent as reserved in the pre-existing lease,
Whether such a tenant, on being ultimately unsuccessfully, is liable on vacating the property to answer a landlord’s claim for mesne rates in respect of this said period,
Whether, if he is not so amenable, the basis of his protection on the one hand and the landlord’s restriction on the other, is to be found within the terms of the section itself, or
(d) Whether if in this regard the section itself is inconclusive, the landlord can on some other basis, establish the necessary foundation for his pursuit of a claim grounded as mesne profits,
If such a claim is maintainable what figure should be measured by this court as representing mesne rates or profits for the period in question?
Whether the Defendant in these proceedings is entitled to assert a claim for compensation for improvements and if so whether the resulting sum can be set off against the landlord’s award, if any, and finally,
Whether, again in these proceedings, the said Defendant is entitled to claim damages for wrongful re-entry, trespass, breach of covenant for quite enjoyment, assault and battery – all of which it is alleged arise out of the events which took place in early October, 1997.
11. Before dealing with the substantive points in this case, it should be noted that both the Plaintiff and the Defendant have agreed, that in the hearing of this Motion, the principles set forth at par 9 above should not be applied to the first issue for consideration namely the interpretation of section 28, this because both parties are anxious for a decision from this Court on the construction of that section. However, in respect of each and every other issue between them the aforesaid test should apply.
12. ISSUE NO. 1 :-
3. Under Part II of the Landlord and Tenant (Amendment) Act 1980,a tenant in respect of what is defined by section 5 as a “tenement”, is entitled, in certain circumstances to a new tenancy in that tenement. By virtue of section 13(1)(a), if a tenement was, during the whole of the period of three years ending at that time, continuously in the occupation of the person who was the tenant immediately before that time or of his predecessors in title and bona fide used wholly or partly for the purposes of carrying on a business, then Part II of the Act applied to such a “tenement” . The period of three years was changed to five years by section 3 of the 1994 Act but only in respect of where the term in question commenced after the coming into the operation of that last mentioned Act.
13. Where such an entitlement exists, the new tenancy, which shall begin on the determination of the previous tenancy, shall be on such terms as may be agreed between the parties or in default as shall be fixed by the Circuit Court. (sections 16 and 18(2) of the Act). When the Court fixes the terms, the duration of the new tenancy shall be thirty five years or such lessor period as the tenant may nominate, save that, by an amendment introduced by Section 5 of the 1994 Act, the term of a new business tenancy has been reduced to twenty years and cannot now be less than five, otherwise then with the Landlord’s consent. If a tenancy is continued or renewed or a new tenancy granted, then the continued, renewed or new tenancy shall and shall be deemed to be a continuation of the tenancy previously existing and shall for all purposes be deemed to a graft upon that tenancy (section 27). The doctrine of “graft” , operates so as to prevent a person in a fiduciary position from acquiring beneficially for himself the renewal or continuation of the Lease, as the case may be, to the depravation of the beneficiary. See Keech v. Sandford Sel. Cas Ch. 61.
14. The procedure applicable where an existing tenant seeks a new tenancy is that as set forth in the 1980 Act, essentially being contained in sections 20 and 21 thereof. Following on from the service of a Notice of Intention to Claim Relief, a Notice of Application is then made to the Court. If the landlord should have issued his own proceedings, say for example to recover possession, then that ejectment Civil Bill is heard at the same time as the application by the tenant for a new tenancy. As indeed happened in this case. There must inevitably be, it seems to me, a time lapse before the required documentation is in order and before such disputed matters can get a hearing in the Court of first instance. Of course either party, if aggrieved by the result, would be entitled to appeal from such a decision, which of necessity would involve further time. But what is the position between the expiry of an existing tenancy and the final determination by the Courts, of a landlord’s claim for possession as against the tenant’s claim for a new tenancy plus perhaps other ancillary relief? It is what return or compensation the landlord is entitle to obtain from the tenant for this period that is at the heart of this Issue No. 1 in this case.
15. Section 28 of The Landlord and Tenant (Amendment) Act, 1980 reads:-
“28 – Where an application is pending under this Part for a new tenancy or to fix the terms of new tenancy and the pre-existing tenancy was terminated otherwise than by ejectment or surrender the tenant may, if he so desires, continue in occupation of the tenement from the termination of the tenancy until the application is determined by the Court or, in the event of an appeal, by the final appellate court, and the tenant shall while so continuing be subject to the terms (including the payment of rent) of such tenancy, but without prejudice to such recoupments and readjustments as may be necessary in the event of a new tenancy being granted to commence from such termination.”
4. As appears from its wording, this section applies only as and from the date of the tenant’s application to the Court and not from any earlier date even where a Notice of Intention to Claim Relief has been served. See Baumann -v – Elgin Contractors [1973] IR 169 at p.176. The section therefore operates where an application for a new tenancy or to fix the terms thereof is pending and where the pre-existing tenancy was not terminated by ejectment or surrender. In such circumstances the tenant may, if he so decides, continue in occupation until the application is finally determined. But whilst so continuing, he is subject to the terms of the expired lease, including the obligation to pay the rent reserved thereunder.
16. Up to this point in the section there is no dispute, certainly as of now, between the parties. This means that from the 30th of September, 1997 up to the 31st of December, 2000, the Plaintiff Company notwithstanding Baumann, agrees that the Defendant was a person to whom section 28 applied and therefore that he was entitled to continue in occupation of the demised premises under this section. For his part the Defendant accepts that for such a period his occupation was on the same terms and conditions as contained in the expired lease, including an obligation to pay the rent as specified therein. The point of departure, however, is that the landlord now feels that for this period of occupation it should be compensated in a sum not measured as against the rent under the pre-existing lease, but rather under the heading of mesne profits or rates, in a sum which reflects the open market rental value of it’s said property.
17. The essence of this point in the case centres on the interpretation to be placed of the last portion of section 28, which portion reads as follows:-
“… but without prejudice to such recoupments and readjustments as may be necessary in the event of a new tenancy being granted to commence from such termination.”
5. The landlord claims that by applying a purpositive cannon of construction, this Court could and indeed should declare an equality of position as between tenants, whether successful in obtaining a new tenancy or not. Otherwise it is said, an anomalous result occurs. Success on this point solely depends on this section of the Act, as the Plaintiff Company is not in a position to advance any other legal basis for the relief which it seeks. The Defendant on the other hand, has a diametrically opposed view with the section in his opinion being quite clear. A tenant, continuing in occupation for the relevant period does so on exactly the same terms and conditions as in the expired lease. So once he discharges the existing rent, his obligation to the landlord, in that regard, is fully satisfied. This follows it is claimed from the clear wording of this, the last portion of section 28.
18. The right conferred by section 28 is not new and is not confined to a business relationship. The section in question has a predecessor in section 38 of the Landlord and Tenant Act 1931, which latter section, in its substantive form, was virtually identically worded. It has in our law therefore, an antiquity of at least 70 years. A similar provision, though not exactly the same, was contained, in the context of reversionary leases, in section 23 of The Landlord and Tenant (Reversionary Leases) Act, 1958 which section has largely been reproduced in section 40 of the 1980 Act. Sub section (1) of section 40 deals with a person who is entitled to obtain a reversionary lease but whose interest in the land has expired prior to agreement having been reached or the process having been concluded. Such a person can continue to hold the land until he is declared either not to be entitled to or else has executed in his favour a reversionary lease. During this period the land is held on the terms so far as applicable –
“on which he previously held them, subject to any recoupments or adjustments that may be made under the reversionary lease if granted to him”.
6. Sub – section (2) however is worded differently. That sub – section applies where an application for a reversionary lease is made but where the existing interest expires before it is determined. In such circumstances a lessee is given a right to remain in possession until the application is finally disposed of. If he chooses to exercise that right he does on the terms, so far as applicable, on which he previously held the land but “ subject to such recoupments or adjustments as the Court thinks proper”. So, as can be seen, under sub – section (1) the recoupments or adjustments as envisaged, at least prima facie , appear to arise only where a reversionary lease is granted whereas under sub – section (2) no such context is specified for the operation of the recoupment’s or adjustment provision.
19. In addition to such a right being given to business tenants and to those in a reversionary lease situation, a similar entitlement is available to those who seek to statutorily acquire a fee simple interest under The Landlord & Tenant (Ground Rents) (No 2) Act 1978, as amended. Section 12 of the 1984 Act reads as follows:-
“ 12 (1) A person to whom Part II of Act (No 2) of 1978 applies by virtue of Section 73 of the Act of 1980 and whose interest in the land has expired shall continue to be entitled to hold the land until either he is declared not to be entitled to acquire the fee simple or a grant to him of the fee simple is duly made and during such period he shall hold the land on the terms (so far as applicable) on which he previously held it, subject to all proper recoupments or adjustments.
(2) When an application is made in relation to the acquisition of the fee simple and the interest of the applicant in the land expires before the application is heard and determined, the applicant shall be entitled to remain in possession of the land until the application is finally heard and determined on the terms (so far as applicable) on which he previously held it, subject to all proper recoupments or adjustments ”.
7. Apart from the wording difference when dealing with recoupments and readjustments there is also some difference in the body of each of these sections themselves. Section 28 refers to continuing “ in occupation ” and “ while so continuing ”; section 40(1) enables a person “ to hold land ” and “ during such period he shall hold …”, whereas ss (2) entitles a person “ to remain in possession” . Section 12 (1) of the 1984 Act replicates ss (1) of section 40 with section 12(2) equally reflecting ss (2) of section 40.
20. For the purposes of the issues under consideration in this case nothing in my view turns on the different phraseology used in the aforesaid Sections of the 1980 and 1984 Acts. The reason is that such wording does not call for interpretation, strictly speaking, in the context of a Landlord and Tenant relationship. In my opinion the right conferred by these sections does not create or establish any new statutory tenancy. It most certainly does not create any new contractual tenancy as where for example a tenant remains in possession after the expiry of his term and rent is paid and accepted, then without more the parties by operation of law are presumed to have agreed to a yearly tenancy on the same terms and conditions as are applicable. See Phoenix Picture Palace Ltd .v. Capital And Allied Theatres Ltd (1951) Ir Jur Rep 55. The right is simply one to continue in occupation and no more. Such continuation is of course on the terms as decreed by the various sections but though such terms and conditions may differ, this does not change the nature of the right so conferred. Such a right is I think personal, that is personal to the pre-existing tenant and, quite unlike a contractual tenancy, does not create any estate or interest capable of being transferred or transmitted either inter vivos or on death. It is also quite unlike any traditional statutory tenancies which existed previously such as those under section 32 of the Rent Restrictions Act 1960 as amended by both section 10 of the 1967 amendment act and section 11 of the Landlord & Tenant (Amendment) Act 1971. Such a tenancy so created, which is now of course governed by the Housing (Private Rented Dwellings) Act 1982 as amended, is expressly capable of conferring rights on identifiable persons in certain specified circumstances. That is not the situation under discussion, which incidentally is also quite unlike the old renewable 15 year “judicial tenancies”, which arose under the Land Law (IR) Act of 1881 as amended, see Wylie Land Law at para. 149. As I have said in my view, the right in this and similar situations is a bare one, and by itself does not confer on the tenant any estate or interest in the land. Consequently, though in other areas of landlord and tenant law the above phraseology could and indeed would convey quite different meanings, nevertheless I don’t believe that there is any significant difference between them in the context of these sections.
21. The overriding duty of a Court when asked to construe any piece of legislation is to try and ascertain what the true will and intention of the legislature is. The first step in this process is to consider, in the context in which they appear, the words themselves and, in the absence of any contra indicator to give to such words their ordinary and natural meaning. If in so doing, the Court can in this way, clearly identify what was intended by the Oireachtas then it will not be necessary to invoke any of the very numerous subsidiary rules of construction which have been established over the years. In Cork County Council v. Whillock [1993] I IR 231 at 237 Mr. Justice O’Flaherty stated:-
“… it is clear to me that the first rule of construction requires that a literal construction must be applied. If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences .”
In the Inspector of Taxes v. Kiernan [1981] IR 117, Mr. Justice Henchy at pages 121 to 122 explored the meaning as contextually based when he said:-
“A word or expression in a given statute must be given meaning and scope according to its immediate context, in line with the scheme and purpose of the particular statutory pattern as a whole, and to an extent that will truly effectuate the particular legislation or a particular definition therein …
Leaving aside any Judicial decision on the point, I would approach the matter by the application of three basic rules of statutory interpretation. First, if the statutory provision is one directed to the public at large, rather than to a particular class who may be expected to use the word or expression in question in either a narrowed or an extended connotation, or as a term of art, then, in the absence of internal evidence suggesting the contrary, the word or expression should be given its ordinary or colloquial meaning …
The statutory provisions we are concerned with here are plainly addressed to the public generally, rather than to a selected section thereof who might be expected to use the words in a specialised sense. Accordingly the word “cattle” should be given the meaning which an ordinary member of the public would intend it to have when using it ordinarily.
Secondly, if a word or expression is used in a statute creating a penal or taxation liability …
Thirdly, when the word which requires to be given its natural and ordinary meaning is a simple word which has widespread and unambiguous currency the judge construing it should draw primarily on his own experience of its use …”
McCarthy J., in Texaco (Ireland) Ltd. v. Murphy [1991] 2 IR 449, reaffirmed the role of giving the words under construction their ordinary and natural meaning and of doing so in the context in which they appear. He said:-
“… the first rule of statutory construction remains that the words be given their ordinary literal meaning …”.
In Howard v. Commissioners of Public Works [1994] 1 IR 101 at p.151, Mr Justice Blayney likewise took a similar view by decreeing that:-
“The cardinal rule for the construction of acts of parliament is that they should be construed according to the intention expressed in the acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the lawgiver .”
8. And finally see also Lawlor v. Flood [1999] 3 IR 107 at 136 where Mrs. Justice Denham said:-
“The words of the Statute are clear and unambiguous. Thus the ordinary sense of the words should be applied …
As plain words make clear the meaning and intent of the section it is unnecessary to apply any further Canon of Construction. ”
22. Where however an application of this literal approach leads to an “absurdity” then recourse may be had to an alternative approach, such as the one previously articulated as the golden or mischief rule but more modernly being referred to as the schematic or teleological approach. This permits the Court to attribute to the words a secondary or modified meaning which they are capable of bearing. See for example Frescati Estate Limited -v- Walker [1975] IR 177; Nestor -v- Murphy [1979] IR 326 and DPP (Ivers) -v- Murphy [1999] 1 IR 98.
23. In applying these principles to section 28 of the 1980 Act, it seems to me that the relevant wording is clear, indeed unquestionably so, as to when and in what circumstances recoupments or readjustments may be made under that section. These can occur, the section says, “in the event of a new tenancy being granted … ” There is I feel no doubt, ambiguity or uncertainty about this phrase. The plain meaning and understanding of the words can only convey the view that under this section a tenant must have been successful in his assertion for a new tenancy before there can be any question of recoupments or readjustments. In my opinion it would be very difficult to read the section otherwise. If I was to construe these words, in the manner suggested by the Plaintiff’s Company, I would either have to delete a significant part of the section or else insert words to the effect that a similar power exists even if the application was unsuccessful. I firmly believe, that under the rules of interpretation as above set forth, there would be no justification for me in so doing.
24. Nor do I believe that the interpretation which I propose to give section 28 and which necessarily follows from what I have already said, leads to an absurd result. If it does then the absurdity may be either way. There are at least three possible results which may follow the operation of section 28. The first is that the rent, at expiry, is equivalent to the market rent and so remains for the duration of the period of occupation. If so the landlord could have no complaint in these circumstances. The second is what has occurred in this case with the tenant, of course, having no complaint in such circumstances. But there is a third where in a falling market a tenant could indeed feel quite aggrieved at having to pay a pre-existing rent which could be much higher than the market rent. True the latter has not tended to happen in the recent past but this illustration shows that it is the market, at least in part, which dictates the result. I can see nothing anomalous about that. Furthermore from a landlord’s point of view there is no reason, certainly for the past 30 years, even with inflation, as to why, with the use of rent review clauses, the rent of a pre-existing tenancy should not be in keeping with or at least very close to the market rent at any given time. There are different forces at play in this relationship from time to time with variable consequences. Simply because in this case the result is adverse to the landlord, this does not in my view, even if otherwise one had power to so do, afford any compelling reason to depart from the otherwise clear meaning of the section.
25. There are a number of other reasons why I believe the above approach to section 28 is justified. When a tenant is successful in his application for new tenancy, the accruing benefit to a landlord is the guarantee of a return, fixed by the Court if necessary, over a specified period as well as having his asset preserved through the insuring and repairing obligations normally imposed on such a tenant. For an unsuccessful applicant however, there is nothing. Compensation for Improvements is but a method by which a tenant may recoup his expenditure on the demised property, which expenditure has enhanced its value for the landlord but in respect of which the tenant no longer enjoys occupation. Compensation for Disturbance arises where a tenant has satisfied all of the statutory preconditions for the obtaining of a new tenancy, but is denied such a tenancy because of the landlord’s plans for the property. So under neither hearing is there any additional benefit accruing to the former tenant. Indeed under section 18 (4) of the 1980 Act, a tenant is expressly denied any right to compensation in respect of the termination of his previous tenancy. Being so unsuccessful therefore the tenant finds himself in this situation, whereas the landlord’s position may be significantly enhanced because, by recovering possession of an asset without an occupying tenant, it may indeed be very valuable to him. In such circumstances the Legislature may well have made a deliberate decision in this regard.
26. If the aim of the Oireachtas was otherwise, it could in 1980 have re-enacted section 38 of the 1931 Act in a different form, perhaps as in section 12 of the 1984 Act, and in this way, at least have left open the possibility of a landlord being in a position to seek what the Plaintiff Company now seeks against its former tenant. Compare, for example, the wording of section 40 (2) with section 28. Moreover, when inserting section 12 in 1984, the Oireachtas could have taken the opportunity of treating applicants for a new tenancy, who continue in occupation, in the same way as it treated those who likewise continue in occupation, but instead who sought the acquisition of the fee simple . It did neither, and to date has not done so. To effectively rewrite the section, would I feel, be to unfairly attribute to the draughtsman an oversight which I think may very well have been intentional. Of course if a tenant attempted to use section 28 solely as a device or pretence then that would constitute an abuse of the process and could be dealt with accordingly.
27. On behalf of the landlord it is suggested that this Court should apply a purpositive approach to the interpretation of section 28, an approach which it is said was adopted by the Supreme Court in Twill Ltd. v. John F. Kearney , U/R 28/6/2001. In that case what was in issue was the correct interpretation of the phrase “ at any time” as contained in Section 13 (i) (a) of the 1980 Act. No fewer that seven possible meanings were canvassed in respect of these words which according to Mr. Justice Murphy :-
“most, if not all, of the foregoing candidates held significant attractions but also serious shortcomings in their bid to fill the position as the operative or relevant date by reference to which the performance of the tenant’s conditions precedent to the grant of a new tenancy must be determined.”
9. Such a situation is immediately distinguishable from the present case where in my view there are no such competing interpretations and where that opted for does not produce a “serious anomaly”. The Twill judgment is however of interest in that in the opinion of Mr. Justice Fennelly the phrase in question should to be considered in the context of the 1980 Act and should be given a meaning “which is most consistent with the aims of the legislation … (and)… the legislative history including the Act of 1931” and the report of the Conroy Commission. Such an approach is I feel supportive of the conclusion above reached.
28. In any event even if I was to apply a schematic approach, I would arrive at a conclusion which would not be of any benefit to the Plaintiff in these proceedings. In my view, irrespective as to what approach is taken, the most advantageous position which could result to the landlord, would be a conclusion that section 28 was moot on the point in that it did not contain a prohibition against the seeking of the higher return. However, on the other hand I could not under any circumstances see the section being used as a legal basis for such recovery. That being the situation the question then arises, even on this interpretation, as to what other basis the Plaintiff company can rely upon as grounding this claim. In my view there is none.
29. Where an owner has been deprived of his property, he is as a result, entitled to recover possession and in addition in an action for trespass, all the profits derived out of the lands by the person wrongfully withholding them.This from the time when the owners title accrued. Mesne rates are recoverable from the day on which the Plaintiff’s title to re-enter accrues. In ejectments for overholding this is the day on which the tenancy was terminated by efflux of time or by notice to quit, or otherwise. In forfeiture it runs from the day on which possession under the forfeiture is demanded, as up to that date the tenant is in possession with consent ( Meares v. Redmond 1879 4 L.R. Ir 533). Even in the case of overholding, if the tenant remains on with the consent of the landlord, he is not liable for mesne rates, as there cannot be a trespass with consent. See pages 446-447 of Harrison, Ejectments in Ireland, and p. 69 of the Black Deale where, in the commentary on section 77 of Deasy’s Act, it is reiterated that such a claim for mesne profits arise only on trespass that is where the Defendant wrongfully withholds possession of the plaintiff’s lands . Quite evidently for the period in question Mr. Duncan was not a trespasser and therefore I cannot see how recovery of the sum sought can be based on a claim for mesne profits. Nor do I think has section 5 of Deasy’s Act any relevance or that the Plaintiff company can mount an action for “use and occupation”. Under section 46 of the 1860 Act, a landlord is entitled to recover “ a reasonable satisfaction”, for a tenant’s use and occupation of a demised premises but only where such tenant is occupying with the agreement of the landlord and in circumstances where no rent has been specified or determined. Obviously quite unlike section 28. In addition there is no suggestion that an action could be founded, much less successfully so, on the basis of any alleged breach by the defendant of his covenant to deliver up quite enjoyment of the property on the expiration of the term created by the said Lease. Furthermore, it cannot I feel be claimed that Mr. Duncan was a tenant at will or at sufferance or that some sort of estoppel exist which could operate against him in defending these proceedings. The fundamental position is that at no time up to the 4th day of December 2000 could it be said that the Defendant was a trespasser and accordingly none of the aforesaid circumstances can be relied upon by the Plaintiff in order to afford to it a cause of action wherein it could successfully seek the relief now demanded. Consequently, in my opinion, by virtue of section 28 of the 1980 Act, and in the absence of any other cause of action available to the Plaintiff in which it may recover mesne rates, the tenant is obliged to the landlord only to the extent of the rent which was then current at the expiry of his tenancy. This obligation has been acknowledged. Since in my view no greater sum is due this part of the landlord’s claim cannot succeed.
10. In such circumstances quite evidently there is no necessity to consider the measure of any such profits.
30. ISSUE NO. 3 :-
11. In the Notice of Intention to Claim Relief served pursuant to section 20 of the aforesaid Act of 1980, the defendant, in addition to seeking a new tenancy, also claimed in the alternative, a sum of £3 million compensation for Disturbance and £10,000 compensation for Improvements. In the original Defence and Counterclaim, at paragraph 7(c) thereof, an order for compensation for Disturbance and Improvements was also sought. This relief was repeated in the amended Defence and Counterclaim. Equally so such a claim for both Disturbance and Improvements was contained in the Notice of Application dated the 19th day of October, 1998, which was made under section 21 of the Act. All of this documentation was before the Circuit Court, when that Court at the same hearing dealt with the Plaintiff’s Ejectment Civil Bill for Overholding and the Defendant’s Application for a new tenancy. The resulting order is dated the 5th day of November, 1998 and therein it is expressly recorded that
“the court doth order:- (1) that the Defendant’s Counterclaim herein be and the same is hereby dismissed with no Order as to costs.”
31. An appeal was taken from this Order. It was heard by and resulted in Mr. Justice Butler on the 4th of December, 2000 making an order on this Circuit appeal. Again it is expressly recorded in this Order that the “appeal be dismissed and the order of the Circuit Court be affirmed”. Consequently there is no doubt but that in the documentation which was brought into existence for the purposes of dealing with this Landlord and Tenant dispute, the Defendant at all stages asserted an entitlement to compensation for Improvements. Equally so there is no doubt but that the order of both courts expressly dismissed that claim. In these circumstances I cannot see how Mr. Duncan can now, once again, attempt to reinstate and effectively argue afresh this ground of relief. On his behalf it is said that since no evidence was called in either courts dealing with this claim, it is now open to him to relitigate this matter. I cannot agree with this submission. If what is said is correct, then that course of action in not calling evidence, must have followed from a decision deliberately taken by or on behalf of Mr. Duncan. It was at all times open to him, on the pleadings, to adduce such evidence and make such submissions on the question of improvements as he saw fit. If he choose not to do so then the consequences are his and he must abide by them. Therefore I am quite satisfied that by reason of the Orders of the Circuit Court and the High Court, taken in conjunction with the pleadings, it is not now open to the Defendant to reopen this issue of compensation and accordingly I would refuse leave to defend on this point.
32. ISSUE No 4
12. It is also claimed by Mr. Duncan, that if the within matter should be remitted to plenary hearing it would be his intention to counterclaim against the plaintiff for wrongful re-entry, for trespass, for breach of the covenant for quite enjoyment which was contained in the 1977 Lease, and for assault and battery. All of these matters arise out of the actions and activities of the plaintiff, its servants or agents in the beginning of October, 1997, when on at least one and probably on more than one occasion, it changed the locks on the external doors of the demised premises and gained entry to it via this method. That in turn prompted a similar response from Mr. Duncan which was followed by the parties instituting cross-proceedings in the High Court on the 13th and 14th of October, 1997 respectively. Arising out of these matters the defendant claims that he has suffered loss and damage. Whilst it is surprising to note that in the October 1997 High Court proceedings there was no mention of any relief being sought on any of these grounds, an omission continued in the original and amended defence and counterclaim, nevertheless save for the allegation of assault and battery, I am satisfied, on the test set forth at par 9 above, that the defendant’s cause of action is such, that it meet the threshold as therein specified. Consequently if permission was needed, which is questionable given the intention to progress this matter through a counterclaim but if it was, then I would grant such leave and do so unconditionally.
33. The situation of the alleged assault and battery is in a different category in that if there is any foundation for such a claim, it occurred from circumstances which happened not later than the end of week number two in October, 1997. It is clear that Mr. Duncan had at the time full knowledge of all of these circumstances including the identity of the persons allegedly involved. It would therefore seem to me that his claim, if any, which might have existed is statute barred, there being no grounds upon which I could see any court granting an order enlarging the time under the Statute of Limitations (Amendment) Act of 1991. I would therefore, if such a matter is properly before me, refuse to permit the Defendant to proceed with these allegations of assault and battery in this case.
34. However if in the manner permitted, this counterclaim is to travel it must in my view do so independently of the Plaintiff’s claim. I would not be disposed to making any Order of set off in this case. Clearly neither section 21 of the 1860 Act or sections 61 or 87 of the 1980 Act have any application. The closest provision is perhaps section 48 of Deasy’s act which reads “All claims and demands by any landlord against his tenant in respect of rent shall be subject to deduction or set off in respect of all just debts due by the landlord to the tenant.” Even if it could be said that the Plaintiff’s claim is one for rent, the section it would appear can only be invoked where the cross claim is for a liquidated sum only. See the judgment of Maguire P in Mac Causland and Kimmitt -v- Carroll and Dooley (1938) 72 ILTR 158. Consequently there will be no order of set off in this case.
35. Finally could I say that the unseemly events demonstrated by the landlords conduct at the beginning of October 1997 are to be seriously disapproved of. No re-entry is to take place unless it, and the method used, are lawful and in accordance with law. The procedures available are quite adequate to vindicate any persons rights and access to the Courts for that purpose is unlimited. Those who refuse to avail of such rights and such access can only intend to steal a march on the rule of law. This should not be allowed to happen.
[2002] IEHC 117 (25 January 2002)
THE HIGH COURT
No. 2001 269S.
BETWEEN
HARRISRANGE LIMITED
PLAINTIFF
AND
MICHAEL DUNCAN
DEFENDANT
JUDGMENT of Mr. Justice William M. McKechnie delivered the 25th day of January, 2002
By Indenture of Lease made the 17th day of May, 1977, between MEPC Ireland Limited of the one part and AURIC Limited of the other part, All That and Those the Hereditaments and Premises therein described as Number 32A Dawson Street in the City of Dublin were demised unto the said AURIC Limited for the term of 21 years from the 1st day of October, 1976, subject to the annual rent of £2,000 and to the other terms and conditions as therein contained. As a result of an Indenture of Conveyance dated the 24th day of March, 1984, Harrisrange Limited became entitled to all of the estate and interest of MEPC Ireland Limited in the aforesaid premises. Likewise, as a result of an Indenture of Assignment dated the 31st day of March, 1986, the Defendant succeeded to the Lessee’s interest under the aforesaid Lease. In addition, in consideration of receiving the Lessor’s consent to this Assignment, Mr. Duncan, by Deed of Covenant also dated the 31st day of March, 1986, covenanted with the Plaintiff Company to observe, abide by and perform all the covenants and conditions on the Lessee’s part, including the payment of rent, as contained in the said Lease. As appears therefrom and in the circumstances which occurred the term so created, expired by fluctuation of time, on the 30th day of September, 1997.
Being advised of his entitlement to assert a statutory right, Mr. Duncan on the 1st October, 1996, served on his Lessor a Notice of Intention to Claim Relief under section 20 of the Landlord and Tenant (Amendment) Act, 1980. This Notice claimed a new tenancy and the sum of £10,000 for Improvements. In the alternative a sum of £3 m was claimed for Disturbance. At the expiry date of the term so created, no Notice of Application had been made, and accordingly the Court did not have seisin of this matter. Whether as a result of this or otherwise, the Plaintiff company not only attempted to, but in fact re-entered the property by changing the locks on the external doors. The response by Mr. Duncan was similar with further re-entries and attempted re-entries being repeated on more than one occasion. Ultimately by the 14th October 1997, both parties had instituted High Court proceedings effectively seeking restraining orders one against the other. The resulting motions, seeking this interlocutory relief, were, on the 2nd February, 1998, adjourned generally with liberty to re-enter. This because, at that time, with the Defendant retaining occupation of the property, it was agreed that the dispute between the parties would be resolved through the medium of the Circuit Court proceedings which by then had been served. On the 12th December an Ejectment Civil Bill for Over Holding was issued with Mr. Duncan in his Defence and Counterclaim, seeking a new tenancy as well as compensation for Disturbance and/or Improvements.
On 19th October, 1998 a Notice of Application, under section 21 of the 1980 Act, was served by the Defendant in these proceedings who obviously was the Applicant in that Notice. As with his Counterclaim, Mr. Duncan sought a new tenancy and compensation for Disturbance and/or Improvements. Both the Civil Bill and the Application were heard in the Circuit Court at the same time. On the 5th November, 1998 His Honour Judge O’Hagan granted Harrisrange Limited possession of the said property and dismissed the Defendant’s Counterclaim. From that Order an appeal was taken with the Defendant obtaining leave from the High Court to amend his original Defence and Counterclaim. That amendment has no relevance to this case. Having heard oral evidence and having considered the submissions as made, Mr. Justice Butler on 4th December, 2000, dismissed the Defendant’s appeal and affirmed the Circuit Court Order. He stayed the execution of his Order for the period from the 1st January to the end of February, 2001, and did so on condition that for this length of time mesne rates would be paid in a sum calculated, at what is now agreed to be, £8,000 per annum. In compliance with this Order, possession of the demised premises was then surrendered by Mr. Duncan to his now former Lessor.
In the present proceedings, which were instituted by way of Summary Summons, the Plaintiff company seeks from the Defendant, mesne rates for the period from the 1st day of October, 1997 up to and including the 31st day of December, 2000; this at a rate of £12,500 per annum. In total, the amount claimed in the Special Indorsement of Claim is £40,625 with interest, pursuant to section 22 of the Courts Act, 1981, also being sought. On the Plaintiff’s motion for liberty to enter final judgment the matter was transferred from the Master’s List to this Court. Affidavits in support of the reliefs claimed have been filed and served, as have the replying documentation in which the Defendant seeks from this Court leave to defend unconditionally or alternatively on the terms as suggested by him. No Notices to cross-examine were served and no oral evidence given. The Motion was therefore dealt with solely on Affidavit.
Having being commenced by way of Summary Summons, the course of these proceedings is governed by Order 37 of the Rules of the Superior Courts. Following the entry of an Appearance, a defendant may, in response to the aforesaid motion for judgment, show cause against such motion by way of affidavit. Upon the hearing of this application:-
“….. the Court may give judgment for the relief to which the plaintiff may appear to be entitled or may dismiss the action or may adjourn the case for plenary hearing as if the proceedings had been originated by plenary summons, with such directions as to pleadings or discovery or settlement of issues or otherwise as may be appropriate and generally may make such order for determination of the questions in issue in the action as may seem just”. (Rule 7). Emphasis added.
Under Rule 10 leave to defend may be given unconditionally or subject to such terms as to give security, or time and mode of trial, or otherwise as the Court may think fit.
Accordingly, as can be seen, the next procedural step following the entry of an Appearance is the bringing of a motion by a Plaintiff wherein he seeks liberty to enter final judgment. That motion may be contested by the Defendant via affidavit evidence which of course may include, were appropriate, any exhibits attached thereto. On the hearing of such a motion the Court may give liberty to enter final judgment for the amount claimed or any part thereof, may give the Defendant leave, conditionally or unconditionally, to defend or may favour one of a number of other options which are available to it. When deciding what is the most appropriate course to take, the Court, in order to determine the questions in issue between the parties, is obliged under Rule 7 to do that which best meets the justice of the situation. That result is the result which must be achieved.
In this jurisdiction and elsewhere there have been several cases dealing with the court’s function on the hearing of a motion for liberty to enter final judgment under Order 37 or it’s equivalent. In The First National Commercial Bank Plc v. Anglin 1996 1 IR 75 Mr. Justice Murphy was of the opinion that the correct approach which should be adopted was that as laid down in Banque du Paris v. de Naray 1984 1 Lloyds Reports 21, a case subsequently affirmed in the National Westminister Bank Plc v. Daniel 1993 1 W.L.R. 1453. In The Governor and the Company of The Bank of Ireland v. Educational Building Society 1999 1 IR 220 such a test was applied, certainly by Murphy J. and
Barron J., with perhaps some modification of language in the Judgment of Keane J. as he then was. Whilst in truth the Judgments in that case were much more concerned with the law on Bills of Exchange rather than with Motions for Judgment, nevertheless the decision is relevant, because in dismissing the Plaintiff’s appeal and in upholding the High Court’s Order remitting the matter to plenary hearing, the Supreme Court did so on the basis, that from the written submissions of the parties, the argument of counsel and the analysis of such submissions and arguments, it was clear that the defendant had raised an issue of law in respect of which it was entitled to be heard. In so deciding the following frequently quoted passage from the judgment of Barry L.J. in Crawford -v- Gillmor 1891 30 L.R. Ir. 238 was again repeated. It reads:-
“I am of opinion that … the mere length of time which has been occupied by the argument of this case – and I do not think one moment of our time was occupied unnecessarily – shows that it does not come within the rule which allows final judgment to be marked on motion”.
In A.C.C. Plc v. Elio Malocco HC U.R. 7/2/2000 Miss Justice Laffoy, in applying First National Commercial Bank Plc, went on to say that the whole situation should be looked at, which in turn necessarily involved “an assessment of the cogency of the evidence adduced by the Plaintiff in relation to the given situation which is to be the basis of the defence”. See p. 14 of the text. In the most recent case in this area namely Aer Rianta CPT v. Ryanair, Limited S.C. U/R. 13/11/2001, there were two judgments delivered in the Supreme Court. In her opinion, under the hearing of “The Law and Conclusions”, Mrs. Justice McGuinness applied the test as suggested by Murphy J. in The First National Commercial Bank Plc case. In his analysis of the law, Mr. Justice Hardiman surveyed what might be described as the historical cases as well as the most modern authorities on this topic. His conclusion was, I think that leave to defend should be granted unless it was “very clear” that the defendant had no defence, not even one which could be described as arguable.
From these cases it seems to me that the following is a summary of the present position:-
(i) The power to grant summary judgment should be exercised with discernible caution,
(ii) In deciding upon this issue the Court should look at the entirety of the situation and consider the particular facts of each individual case, there being several ways in which this may best be done,
(iii) In so doing the Court should assess not only the Defendant’s response, but also in the context of that response, the cogency of the evidence adduced on behalf of the Plaintiff, being mindful at all times of the unavoidable limitations which are inherent on any conflicting Affidavit evidence,
(iv) Where truly, there are no issues or issues of simplicity only or issues easily determinable, then this procedure is suitable for use,
(v) Where however, there are issues of fact which in themselves are material to success or failure, then their resolution is unsuitable for this procedure,
(vi) Where there are issues of law, this summary process may be appropriate but only so, if it is clear that fuller argument and greater thought, is evidently not required for a better determination of such issues,
(vii) The test to be applied, as now formulated is whether the Defendant has satisfied the Court that he has a fair or reasonable probability of having a real or bona fide defence; or as it is sometimes put, ‘is what the Defendant says credible?’, which latter phrase I would take as having as against the former an equivalence of both meaning and result,
(viii) This test is not the same as and should be not elevated into a threshold of a Defendant having to prove that his defence will probably succeed or that success is not improbable, it being sufficient if there is an arguable defence,
(ix) Leave to defend should be granted unless it is very clear that there is no defence,
(x) Leave to defend should not be refused only because the Court has reason to doubt the bona fides of the Defendant or has reason to doubt whether he has a genuine cause of action,
(xi) Leave should not be granted where the only relevant averment in the totality of the evidence, is a mere assertion of a given situation which is to form the basis of a defence and finally,
(xii) The overriding determinative factor, bearing in mind the constitutional basis of a person’s right of access to justice either to assert or respond to litigation, is the achievement of a just result whether that be liberty to enter Judgment or leave to defend, as the case may be.
In this case the following issues arise for consideration:-
(i) What effect on the Plaintiff’s claim, has Section 28 of the Landlord and Tenant (Amendment) Act 1980, and in particular:-
(a) Whether under that section, a tenant who avails of the right therein contained to remain on in occupation pending the Courts’ determination of his application for a new tenancy, is entitled to do so, paying only to the landlord the rent as reserved in the pre-existing lease,
(b) Whether such a tenant, on being ultimately unsuccessfully, is liable on vacating the property to answer a landlord’s claim for mesne rates in respect of this said period,
(c) Whether, if he is not so amenable, the basis of his protection on the one hand and the landlord’s restriction on the other, is to be found within the terms of the section itself, or
(d) Whether if in this regard the section itself is inconclusive, the landlord can on some other basis, establish the necessary foundation for his pursuit of a claim grounded as mesne profits,
(ii) If such a claim is maintainable what figure should be measured by this court as representing mesne rates or profits for the period in question?
(iii) Whether the Defendant in these proceedings is entitled to assert a claim for compensation for improvements and if so whether the resulting sum can be set off against the landlord’s award, if any, and finally,
(iv) Whether, again in these proceedings, the said Defendant is entitled to claim damages for wrongful re-entry, trespass, breach of covenant for quite enjoyment, assault and battery – all of which it is alleged arise out of the events which took place in early October, 1997.
Before dealing with the substantive points in this case, it should be noted that both the Plaintiff and the Defendant have agreed, that in the hearing of this Motion, the principles set forth at par 9 above should not be applied to the first issue for consideration namely the interpretation of section 28, this because both parties are anxious for a decision from this Court on the construction of that section. However, in respect of each and every other issue between them the aforesaid test should apply.
ISSUE NO. 1:-
Under Part II of the Landlord and Tenant (Amendment) Act 1980,a tenant in respect of what is defined by section 5 as a “tenement”, is entitled, in certain circumstances to a new tenancy in that tenement. By virtue of section 13(1)(a), if a tenement was, during the whole of the period of three years ending at that time, continuously in the occupation of the person who was the tenant immediately before that time or of his predecessors in title and bona fide used wholly or partly for the purposes of carrying on a business, then Part II of the Act applied to such a “tenement”. The period of three years was changed to five years by section 3 of the 1994 Act but only in respect of where the term in question commenced after the coming into the operation of that last mentioned Act.
Where such an entitlement exists, the new tenancy, which shall begin on the determination of the previous tenancy, shall be on such terms as may be agreed between the parties or in default as shall be fixed by the Circuit Court. (sections 16 and 18(2) of the Act). When the Court fixes the terms, the duration of the new tenancy shall be thirty five years or such lessor period as the tenant may nominate, save that, by an amendment introduced by Section 5 of the 1994 Act, the term of a new business tenancy has been reduced to twenty years and cannot now be less than five, otherwise then with the Landlord’s consent. If a tenancy is continued or renewed or a new tenancy granted, then the continued, renewed or new tenancy shall and shall be deemed to be a continuation of the tenancy previously existing and shall for all purposes be deemed to a graft upon that tenancy (section 27). The doctrine of “graft”, operates so as to prevent a person in a fiduciary position from acquiring beneficially for himself the renewal or continuation of the Lease, as the case may be, to the depravation of the beneficiary. See Keech v. Sandford Sel. Cas Ch. 61.
The procedure applicable where an existing tenant seeks a new tenancy is that as set forth in the 1980 Act, essentially being contained in sections 20 and 21 thereof. Following on from the service of a Notice of Intention to Claim Relief, a Notice of Application is then made to the Court. If the landlord should have issued his own proceedings, say for example to recover possession, then that ejectment Civil Bill is heard at the same time as the application by the tenant for a new tenancy. As indeed happened in this case. There must inevitably be, it seems to me, a time lapse before the required documentation is in order and before such disputed matters can get a hearing in the Court of first instance. Of course either party, if aggrieved by the result, would be entitled to appeal from such a decision, which of necessity would involve further time. But what is the position between the expiry of an existing tenancy and the final determination by the Courts, of a landlord’s claim for possession as against the tenant’s claim for a new tenancy plus perhaps other ancillary relief? It is what return or compensation the landlord is entitle to obtain from the tenant for this period that is at the heart of this Issue No. 1 in this case.
Section 28 of The Landlord and Tenant (Amendment) Act, 1980 reads:-
“28 – Where an application is pending under this Part for a new tenancy or to fix the terms of new tenancy and the pre-existing tenancy was terminated otherwise than by ejectment or surrender the tenant may, if he so desires, continue in occupation of the tenement from the termination of the tenancy until the application is determined by the Court or, in the event of an appeal, by the final appellate court, and the tenant shall while so continuing be subject to the terms (including the payment of rent) of such tenancy, but without prejudice to such recoupments and readjustments as may be necessary in the event of a new tenancy being granted to commence from such termination.”
As appears from its wording, this section applies only as and from the date of the tenant’s application to the Court and not from any earlier date even where a Notice of Intention to Claim Relief has been served. See Baumann -v – Elgin Contractors 1973 IR 169 at p.176. The section therefore operates where an application for a new tenancy or to fix the terms thereof is pending and where the pre-existing tenancy was not terminated by ejectment or surrender. In such circumstances the tenant may, if he so decides, continue in occupation until the application is finally determined. But whilst so continuing, he is subject to the terms of the expired lease, including the obligation to pay the rent reserved thereunder.
Up to this point in the section there is no dispute, certainly as of now, between the
parties. This means that from the 30th of September, 1997 up to the 31st of December, 2000, the Plaintiff Company notwithstanding Baumann, agrees that the Defendant was a person to whom section 28 applied and therefore that he was entitled to continue in occupation of the demised premises under this section. For his part the Defendant accepts that for such a period his occupation was on the same terms and conditions as contained in the expired lease, including an obligation to pay the rent as specified therein. The point of departure, however, is that the landlord now feels that for this period of occupation it should be compensated in a sum not measured as against the rent under the pre-existing lease, but rather under the heading of mesne profits or rates, in a sum which reflects the open market rental value of it’s said property.
The essence of this point in the case centres on the interpretation to be placed of the last portion of section 28, which portion reads as follows:-
“… but without prejudice to such recoupments and readjustments as may be necessary in the event of a new tenancy being granted to commence from such termination.”
The landlord claims that by applying a purpositive cannon of construction, this Court could and indeed should declare an equality of position as between tenants, whether successful in obtaining a new tenancy or not. Otherwise it is said, an anomalous result occurs. Success on this point solely depends on this section of the Act, as the Plaintiff Company is not in a position to advance any other legal basis for the relief which it seeks. The Defendant on the other hand, has a diametrically opposed view with the section in his opinion being quite clear. A tenant, continuing in occupation for the relevant period does so on exactly the same terms and conditions as in the expired lease. So once he discharges the existing rent, his obligation to the landlord, in that regard, is fully satisfied. This follows it is claimed from the clear wording of this, the last portion of section 28.
The right conferred by section 28 is not new and is not confined to a business relationship. The section in question has a predecessor in section 38 of the Landlord and Tenant Act 1931, which latter section, in its substantive form, was virtually identically worded. It has in our law therefore, an antiquity of at least 70 years. A similar provision, though not exactly the same, was contained, in the context of reversionary leases, in section 23 of The Landlord and Tenant (Reversionary Leases) Act, 1958 which section has largely been reproduced in section 40 of the 1980 Act. Sub section (1) of section 40 deals with a person who is entitled to obtain a reversionary lease but whose interest in the land has expired prior to agreement having been reached or the process having been concluded. Such a person can continue to hold the land until he is declared either not to be entitled to or else has executed in his favour a reversionary lease. During this period the land is held on the terms so far as applicable –
“on which he previously held them, subject to any recoupments or adjustments that may be made under the reversionary lease if granted to him”.
Sub – section (2) however is worded differently. That sub – section applies where an application for a reversionary lease is made but where the existing interest expires before it is determined. In such circumstances a lessee is given a right to remain in possession until the application is finally disposed of. If he chooses to exercise that right he does on the terms, so far as applicable, on which he previously held the land but “subject to such recoupments or adjustments as the Court thinks proper”. So, as can be seen, under sub – section (1) the recoupments or adjustments as envisaged, at least prima facie, appear to arise only where a reversionary lease is granted whereas under sub – section (2) no such context is specified for the operation of the recoupment’s or adjustment provision.
In addition to such a right being given to business tenants and to those in a reversionary lease situation, a similar entitlement is available to those who seek to statutorily acquire a fee simple interest under The Landlord & Tenant (Ground Rents) (No 2) Act 1978, as amended. Section 12 of the 1984 Act reads as follows:-
” 12 (1) A person to whom Part II of Act (No 2) of 1978 applies by virtue of Section 73 of the Act of 1980 and whose interest in the land has expired shall continue to be entitled to hold the land until either he is declared not to be entitled to acquire the fee simple or a grant to him of the fee simple is duly made and during such period he shall hold the land on the terms (so far as applicable) on which he previously held it, subject to all proper recoupments or adjustments.
(2) When an application is made in relation to the acquisition of the fee simple and the interest of the applicant in the land expires before the application is heard and determined, the applicant shall be entitled to remain in possession of the land until the application is finally heard and determined on the terms (so far as applicable) on which he previously held it, subject to all proper recoupments or adjustments”.
Apart from the wording difference when dealing with recoupments and readjustments there is also some difference in the body of each of these sections themselves. Section 28 refers to continuing “in occupation” and “while so continuing”; section 40(1) enables a person “to hold land” and “during such period he shall hold …”, whereas ss (2) entitles a person “to remain in possession”. Section 12 (1) of the 1984 Act replicates ss (1) of section 40 with section 12(2) equally reflecting ss (2) of section 40.
For the purposes of the issues under consideration in this case nothing in my view turns on the different phraseology used in the aforesaid Sections of the 1980 and 1984 Acts. The reason is that such wording does not call for interpretation, strictly speaking, in the context of a Landlord and Tenant relationship. In my opinion the right conferred by these sections does not create or establish any new statutory tenancy. It most certainly does not create any new contractual tenancy as where for example a tenant remains in possession after the expiry of his term and rent is paid and accepted, then without more the parties by operation of law are presumed to have agreed to a yearly tenancy on the same terms and conditions as are applicable. See Phoenix Picture Palace Ltd .v. Capital And Allied Theatres Ltd (1951) Ir Jur Rep 55. The right is simply one to continue in occupation and no more. Such continuation is of course on the terms as decreed by the various sections but though such terms and conditions may differ, this does not change the nature of the right so conferred. Such a right is I think personal, that is personal to the pre-existing tenant and, quite unlike a contractual tenancy, does not create any estate or interest capable of being transferred or transmitted either inter vivos or on death. It is also quite unlike any traditional statutory tenancies which existed previously such as those under section 32 of the Rent Restrictions Act 1960 as amended by both section 10 of the 1967 amendment act and section 11 of the Landlord & Tenant (Amendment) Act 1971. Such a tenancy so created, which is now of course governed by the Housing (Private Rented Dwellings) Act 1982 as amended, is expressly capable of conferring rights on identifiable persons in certain specified circumstances. That is not the situation under discussion, which incidentally is also quite unlike the old renewable 15 year “judicial tenancies”, which arose under the Land Law (IR) Act of 1881 as amended, see Wylie Land Law at para. 149. As I have said in my view, the right in this and similar situations is a bare one, and by itself does not confer on the tenant any estate or interest in the land. Consequently, though in other areas of landlord and tenant law the above phraseology could and indeed would convey quite different meanings, nevertheless I don’t believe that there is any significant difference between them in the context of these sections.
The overriding duty of a Court when asked to construe any piece of legislation is to try and ascertain what the true will and intention of the legislature is. The first step in this process is to consider, in the context in which they appear, the words themselves and, in the absence of any contra indicator to give to such words their ordinary and natural meaning. If in so doing, the Court can in this way, clearly identify what was intended by the Oireachtas then it will not be necessary to invoke any of the very numerous subsidiary rules of construction which have been established over the years. In Cork County Council v. Whillock 1993 I IR 231 at 237 Mr. Justice O’Flaherty stated:-
“… it is clear to me that the first rule of construction requires that a literal construction must be applied. If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences.”
In the Inspector of Taxes v. Kiernan 1981 IR 117, Mr. Justice Henchy at pages 121 to 122 explored the meaning as contextually based when he said:-
“A word or expression in a given statute must be given meaning and scope according to its immediate context, in line with the scheme and purpose of the particular statutory pattern as a whole, and to an extent that will truly effectuate the particular legislation or a particular definition therein …
Leaving aside any Judicial decision on the point, I would approach the matter by the application of three basic rules of statutory interpretation. First, if the statutory provision is one directed to the public at large, rather than to a particular class who may be expected to use the word or expression in question in either a narrowed or an extended connotation, or as a term of art, then, in the absence of internal evidence suggesting the contrary, the word or expression should be given its ordinary or colloquial meaning …
The statutory provisions we are concerned with here are plainly addressed to the public generally, rather than to a selected section thereof who might be expected to use the words in a specialised sense. Accordingly the word “cattle” should be given the meaning which an ordinary member of the public would intend it to have when using it ordinarily.
Secondly, if a word or expression is used in a statute creating a penal or taxation liability …
Thirdly, when the word which requires to be given its natural and ordinary meaning is a simple word which has widespread and unambiguous currency the judge construing it should draw primarily on his own experience of its use …”
McCarthy J., in Texaco (Ireland) Ltd. v. Murphy 1991 2 IR 449, reaffirmed the role of giving the words under construction their ordinary and natural meaning and of doing so in the context in which they appear. He said:-
“… the first rule of statutory construction remains that the words be given their ordinary literal meaning …”.
In Howard v. Commissioners of Public Works 1994, 1 IR 101 at p.151, Mr Justice Blayney likewise took a similar view by decreeing that:-
“The cardinal rule for the construction of acts of parliament is that they should be construed according to the intention expressed in the acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the lawgiver.”
And finally see also Lawlor v. Flood 1999, 3 IR 107 at 136 where Mrs. Justice Denham said:-
“The words of the Statute are clear and unambiguous. Thus the ordinary sense of the words should be applied …
As plain words make clear the meaning and intent of the section it is unnecessary to apply any further Canon of Construction.”
Where however an application of this literal approach leads to an “absurdity” then recourse may be had to an alternative approach, such as the one previously articulated as the golden or mischief rule but more modernly being referred to as the schematic or teleological approach. This permits the Court to attribute to the words a secondary or modified meaning which they are capable of bearing. See for example Frescati Estate Limited -v- Walker 1975 IR 177; Nestor -v- Murphy 1979 IR 326 and DPP (Ivers) -v- Murphy 1999 1 IR 98.
In applying these principles to section 28 of the 1980 Act, it seems to me that the relevant wording is clear, indeed unquestionably so, as to when and in what circumstances recoupments or readjustments may be made under that section. These can occur, the section says, “in the event of a new tenancy being granted … ” There is I feel no doubt, ambiguity or uncertainty about this phrase. The plain meaning and understanding of the words can only convey the view that under this section a tenant must have been successful in his assertion for a new tenancy before there can be any question of recoupments or readjustments. In my opinion it would be very difficult to read the section otherwise. If I was to construe these words, in the manner suggested by the Plaintiff’s Company, I would either have to delete a significant part of the section or else insert words to the effect that a similar power exists even if the application was unsuccessful. I firmly believe, that under the rules of interpretation as above set forth, there would be no justification for me in so doing.
Nor do I believe that the interpretation which I propose to give section 28 and which necessarily follows from what I have already said, leads to an absurd result. If it does then the absurdity may be either way. There are at least three possible results which may follow the operation of section 28. The first is that the rent, at expiry, is equivalent to the market rent and so remains for the duration of the period of occupation. If so the landlord could have no complaint in these circumstances. The second is what has occurred in this case with the tenant, of course, having no complaint in such circumstances. But there is a third where in a falling market a tenant could indeed feel quite aggrieved at having to pay a pre-existing rent which could be much higher than the market rent. True the latter has not tended to happen in the recent past but this illustration shows that it is the market, at least in part, which dictates the result. I can see nothing anomalous about that. Furthermore from a landlord’s point of view there is no reason, certainly for the past 30 years, even with inflation, as to why, with the use of rent review clauses, the rent of a pre-existing tenancy should not be in keeping with or at least very close to the market rent at any given time. There are different forces at play in this relationship from time to time with variable consequences. Simply because in this case the result is adverse to the landlord, this does not in my view, even if otherwise one had power to so do, afford any compelling reason to depart from the otherwise clear meaning of the section.
There are a number of other reasons why I believe the above approach to section 28 is justified. When a tenant is successful in his application for new tenancy, the accruing benefit to a landlord is the guarantee of a return, fixed by the Court if necessary, over a specified period as well as having his asset preserved through the insuring and repairing obligations normally imposed on such a tenant. For an unsuccessful applicant however, there is nothing. Compensation for Improvements is but a method by which a tenant may recoup his expenditure on the demised property, which expenditure has enhanced its value for the landlord but in respect of which the tenant no longer enjoys occupation. Compensation for Disturbance arises where a tenant has satisfied all of the statutory preconditions for the obtaining of a new tenancy, but is denied such a tenancy because of the landlord’s plans for the property. So under neither hearing is there any additional benefit accruing to the former tenant. Indeed under section 18 (4) of the 1980 Act, a tenant is expressly denied any right to compensation in respect of the termination of his previous tenancy. Being so unsuccessful therefore the tenant finds himself in this situation, whereas the landlord’s position may be significantly enhanced because, by recovering possession of an asset without an occupying tenant, it may indeed be very valuable to him. In such circumstances the Legislature may well have made a deliberate decision in this regard.
If the aim of the Oireachtas was otherwise, it could in 1980 have re-enacted section 38 of the 1931 Act in a different form, perhaps as in section 12 of the 1984 Act, and in this way, at least have left open the possibility of a landlord being in a position to seek what the Plaintiff Company now seeks against its former tenant. Compare, for example, the wording of section 40 (2) with section 28. Moreover, when inserting section 12 in 1984, the Oireachtas could have taken the opportunity of treating applicants for a new tenancy, who continue in occupation, in the same way as it treated those who likewise continue in occupation, but instead who sought the acquisition of the fee simple. It did neither, and to date has not done so. To effectively rewrite the section, would I feel, be to unfairly attribute to the draughtsman an oversight which I think may very well have been intentional. Of course if a tenant attempted to use section 28 solely as a device or pretence then that would constitute an abuse of the process and could be dealt with accordingly.
On behalf of the landlord it is suggested that this Court should apply a purpositive approach to the interpretation of section 28, an approach which it is said was adopted by the Supreme Court in Twill Ltd. v. John F. Kearney, U/R 28/6/2001. In that case what was in issue was the correct interpretation of the phrase ” at any time” as contained in Section 13 (i) (a) of the 1980 Act. No fewer that seven possible meanings were canvassed in respect of these words which according to Mr. Justice Murphy :-
“most, if not all, of the foregoing candidates held significant attractions but also serious shortcomings in their bid to fill the position as the operative or relevant date by reference to which the performance of the tenant’s conditions precedent to the grant of a new tenancy must be determined.”
Such a situation is immediately distinguishable from the present case where in my view there are no such competing interpretations and where that opted for does not produce a “serious anomaly”. The Twill judgment is however of interest in that in the opinion of Mr. Justice Fennelly the phrase in question should to be considered in the context of the 1980 Act and should be given a meaning “which is most consistent with the aims of the legislation … (and)… the legislative history including the Act of 1931” and the report of the Conroy Commission. Such an approach is I feel supportive of the conclusion above reached.
In any event even if I was to apply a schematic approach, I would arrive at a conclusion which would not be of any benefit to the Plaintiff in these proceedings. In my view, irrespective as to what approach is taken, the most advantageous position which could result to the landlord, would be a conclusion that section 28 was moot on the point in that it did not contain a prohibition against the seeking of the higher return. However, on the other hand I could not under any circumstances see the section being used as a legal basis for such recovery. That being the situation the question then arises, even on this interpretation, as to what other basis the Plaintiff company can rely upon as grounding this claim. In my view there is none.
Where an owner has been deprived of his property, he is as a result, entitled to recover possession and in addition in an action for trespass, all the profits derived out of the lands by the person wrongfully withholding them.This from the time when the owners title accrued. Mesne rates are recoverable from the day on which the Plaintiff’s title to re-enter accrues. In ejectments for overholding this is the day on which the tenancy was terminated by efflux of time or by notice to quit, or otherwise. In forfeiture it runs from the day on which possession under the forfeiture is demanded, as up to that date the tenant is in possession with consent (Meares v. Redmond 1879 4 L.R. Ir 533). Even in the case of overholding, if the tenant remains on with the consent of the landlord, he is not liable for mesne rates, as there cannot be a trespass with consent. See pages 446-447 of Harrison, Ejectments in Ireland, and p. 69 of the Black Deale where, in the commentary on section 77 of Deasy’s Act, it is reiterated that such a claim for mesne profits arise only on trespass that is where the Defendant wrongfully withholds possession of the plaintiff’s lands . Quite evidently for the period in question Mr. Duncan was not a trespasser and therefore I cannot see how recovery of the sum sought can be based on a claim for mesne profits. Nor do I think has section 5 of Deasy’s Act any relevance or that the Plaintiff company can mount an action for “use and occupation”. Under section 46 of the 1860 Act, a landlord is entitled to recover “a reasonable satisfaction”, for a tenant’s use and occupation of a demised premises but only where such tenant is occupying with the agreement of the landlord and in circumstances where no rent has been specified or determined. Obviously quite unlike section 28. In addition there is no suggestion that an action could be founded, much less successfully so, on the basis of any alleged breach by the defendant of his covenant to deliver up quite enjoyment of the property on the expiration of the term created by the said Lease. Furthermore, it cannot I feel be claimed that Mr. Duncan was a tenant at will or at sufferance or that some sort of estoppel exist which could operate against him in defending these proceedings. The fundamental position is that at no time up to the 4th day of December 2000 could it be said that the Defendant was a trespasser and accordingly none of the aforesaid circumstances can be relied upon by the Plaintiff in order to afford to it a cause of action wherein it could successfully seek the relief now demanded. Consequently, in my opinion, by virtue of section 28 of the 1980 Act, and in the absence of any other cause of action available to the Plaintiff in which it may recover mesne rates, the tenant is obliged to the landlord only to the extent of the rent which was then current at the expiry of his tenancy. This obligation has been acknowledged. Since in my view no greater sum is due this part of the landlord’s claim cannot succeed.
In such circumstances quite evidently there is no necessity to consider the measure of any such profits.
ISSUE NO. 3 :-
In the Notice of Intention to Claim Relief served pursuant to section 20 of the aforesaid Act of 1980, the defendant, in addition to seeking a new tenancy, also claimed in the alternative, a sum of £3 million compensation for Disturbance and £10,000 compensation for Improvements. In the original Defence and Counterclaim, at paragraph 7(c) thereof, an order for compensation for Disturbance and Improvements was also sought. This relief was repeated in the amended Defence and Counterclaim. Equally so such a claim for both Disturbance and Improvements was contained in the Notice of Application dated the 19th day of October, 1998, which was made under section 21 of the Act. All of this documentation was before the Circuit Court, when that Court at the same hearing dealt with the Plaintiff’s Ejectment Civil Bill for Overholding and the Defendant’s Application for a new tenancy. The resulting order is dated the 5th day of November, 1998 and therein it is expressly recorded that
“the court doth order:- (1) that the Defendant’s Counterclaim herein be and the same is hereby dismissed with no Order as to costs.”
An appeal was taken from this Order. It was heard by and resulted in Mr. Justice Butler on the 4th of December, 2000 making an order on this Circuit appeal. Again it is expressly recorded in this Order that the “appeal be dismissed and the order of the Circuit Court be affirmed”. Consequently there is no doubt but that in the documentation which was brought into existence for the purposes of dealing with this Landlord and Tenant dispute, the Defendant at all stages asserted an entitlement to compensation for Improvements. Equally so there is no doubt but that the order of both courts expressly dismissed that claim. In these circumstances I cannot see how Mr. Duncan can now, once again, attempt to reinstate and effectively argue afresh this ground of relief. On his behalf it is said that since no evidence was called in either courts dealing with this claim, it is now open to him to relitigate this matter. I cannot agree with this submission. If what is said is correct, then that course of action in not calling evidence, must have followed from a decision deliberately taken by or on behalf of Mr. Duncan. It was at all times open to him, on the pleadings, to adduce such evidence and make such submissions on the question of improvements as he saw fit. If he choose not to do so then the consequences are his and he must abide by them. Therefore I am quite satisfied that by reason of the Orders of the Circuit Court and the High Court, taken in conjunction with the pleadings, it is not now open to the Defendant to reopen this issue of compensation and accordingly I would refuse leave to defend on this point.
ISSUE No 4 :-
It is also claimed by Mr. Duncan, that if the within matter should be remitted to plenary hearing it would be his intention to counterclaim against the plaintiff for wrongful
re-entry, for trespass, for breach of the covenant for quite enjoyment which was contained in the 1977 Lease, and for assault and battery. All of these matters arise out of the actions and activities of the plaintiff, its servants or agents in the beginning of October, 1997, when on at least one and probably on more than one occasion, it changed the locks on the external doors of the demised premises and gained entry to it via this method. That in turn prompted a similar response from Mr. Duncan which was followed by the parties instituting cross-proceedings in the High Court on the 13th and 14th of October, 1997 respectively. Arising out of these matters the defendant claims that he has suffered loss and damage. Whilst it is surprising to note that in the October 1997 High Court proceedings there was no mention of any relief being sought on any of these grounds, an omission continued in the original and amended defence and counterclaim, nevertheless save for the allegation of assault and battery, I am satisfied, on the test set forth at par 9 above, that the defendant’s cause of action is such, that it meet the threshold as therein specified. Consequently if permission was needed, which is questionable given the intention to progress this matter through a counterclaim but if it was, then I would grant such leave and do so unconditionally.
The situation of the alleged assault and battery is in a different category in that if there is any foundation for such a claim, it occurred from circumstances which happened not later than the end of week number two in October, 1997. It is clear that Mr. Duncan had at the time full knowledge of all of these circumstances including the identity of the persons allegedly involved. It would therefore seem to me that his claim, if any, which might have existed is statute barred, there being no grounds upon which I could see any court granting an order enlarging the time under the Statute of Limitations (Amendment) Act of 1991. I would therefore, if such a matter is properly before me, refuse to permit the Defendant to proceed with these allegations of assault and battery in this case.
However if in the manner permitted, this counterclaim is to travel it must in my view do so independently of the Plaintiff’s claim. I would not be disposed to making any Order of set off in this case. Clearly neither section 21 of the 1860 Act or sections 61 or 87 of the 1980 Act have any application. The closest provision is perhaps section 48 of Deasy’s act which reads “All claims and demands by any landlord against his tenant in respect of rent shall be subject to deduction or set off in respect of all just debts due by the landlord to the tenant.” Even if it could be said that the Plaintiff’s claim is one for rent, the section it would appear can only be invoked where the cross claim is for a liquidated sum only. See the judgment of Maguire P in Mac Causland and Kimmitt -v- Carroll and Dooley (1938) 72 ILTR 158. Consequently there will be no order of set off in this case.
Finally could I say that the unseemly events demonstrated by the landlords conduct at the beginning of October 1997 are to be seriously disapproved of. No re-entry is to take place unless it, and the method used, are lawful and in accordance with law. The procedures available are quite adequate to vindicate any persons rights and access to the Courts for that purpose is unlimited. Those who refuse to avail of such rights and such access can only intend to steal a march on the rule of law. This should not be allowed to happen.
M’Nally v Donnelly
Supreme Court of Judicature.
Court of Appeal.
12 December 1893
[1894] 28 I.L.T.R 85
Walker C., FitzGibbon, Barry L.JJ.
Walker, C.
The question in this case is one of practice, and it turns on a very peculiarly framed rule, O. III., r. 6, which for the first time brings into the class of liquidated demands subjects that by the existing law are not and were not intended to be of that character. A plaintiff in an ejectment always got judgment to recover the land, and when he did get mesne rates he got them by the verdict of a jury in the same action or in a separate action in proof of his title and the amount. In all essentials it was a liquidated claim; the form of an action for mesne rates was that the defendant broke and entered the plaintiff’s land: hence this rule came to be framed. [Reads r. 6 of O. III.] What is the meaning of that rule? I think that the action is for the recovery of the land, and, as a consequential matter, with or without a claim for mesne rates. We are referred then to Appendix C., s. IV., for the form, and that form is, “the plaintiff claims possession and £50 for mesne profits.” The claim for mesne profits is included as an incident of that which is final, but the question is—In what character is it to be included? Is it an incident to that which is definite and final—the recovery of the land? It must be intended by the rule that a claim for recovery of land, with an indefinite claim for mesne rates, should be a special indorsement, and therefore a claim for the land with mesne rates is a subject for which a plaintiff may have final judgment. Mr. Meredith relied on the words of O. XIV., which require an affidavit verifying the cause of action and the amount claimed. If the Court give judgment for the recovery of land and mesne profits, it may well be that the plaintiff is not precluded from showing that he has a right to proceed as in an ordinary action for trespass to ascertain what is the amount when it is not given up. It appears to me that when an unliquidated claim is added to a liquidated claim of right, both authorised to form a special indorsement, and the unliquidated part as here is given up we are quite at liberty to enter judgment for what is final and complete. On the point of whether the 2nd of Nov. was the date on which the tenancy terminated, Sandill v. Franklin, L. R. 10 C. P. 377, is an a fortiori case to this. In the agreement here it appears there is no date, but the first quarter’s rent is to be paid on a day which is only consistent with this, that the day when the tenancy began was on the 1st Nov., and the fact that Mrs. M’Nally in the assignment treated the terms beginning on the 2nd of Nov., and not on the 1st, is no evidence to control the effect of the agreement. In my opinion, the Queen’s Bench Division is right, and this appeal must be disallowed.
FitzGibbon, L.J.
Upon the last point, if I thought that the date of the defendant’s entry on the lands was material to fix the commencement of the tenancy I should have a difficulty in allowing final judgment, because the proposal was made on the 2nd Nov., and the contract of tenancy began then. I do not think that the effect of the original proposal and acceptance can be altered by the statement in the subsequent assignment that the term began on Nov. 2nd; on the construction of the document itself I hold that the term ran from Nov. 1st. and was determinable on 1st Nov. The letting was for 10 years at £85 a year. There were to be ten yearly rents. The rent was payable quarterly, the first quarter to be paid on the 1st Feb., 1883. Therefore the rent accrued from 1st Nov. Mr. Meredith argued that the quarterly days for payment of the rent were not conclusive, because the quarter of the term might be different from the quarter of the rent. That is possible, but I think this document shows that it is not so in this case. “I am to be at liberty to surrender the house at the end of three years” must give a power of surrendering at the end of three years of which the first quarter ends on Feb. 1, 1883. But it goes on—“If I should not pay my rent punctually as it becomes due you shall have power to terminate my tenancy by giving me three months’ notice in writing.” That must be three months calculated from the time when the rent becomes due, and is to be punctually paid. In my opinion, the letting under this agreement terminated on 1st Nov., 1892, and the new tenancy on the old terms sprang up on that date.
Our order will be prefaced by these words—“The plaintiff by her counsel waiving all or any claim to mesne rates in respect of the premises in the writ mentioned,” and with that declaration I think the plaintiff is entitled to final judgment. The difficulty arises from the general order, which permits an unliquidated claim to be made in an action for recovery of land, and at the same time directs that in such an action a specially indorsed writ shall be allowed. Mr. Meredith contended that a plaintiff who wants to get final judgment in such an action must so indorse his claim for mesne rates as to show that the amount is liquidated. The answer is, first, that a claim for mesne rates cannot be liquidated, and secondly, that the rule expressly directs that the indorsement shall be to the effect of a form in Appendix C., which, when referred to, plainly claims an unliquidated sum of £50 for mesne rates. O. III., r. 6, refers to the forms in Appendix C., s. IV, and that section sends us on to s. VII., form No. 1, which we are directed to regard as a special indorsement, though it is really the ordinary form of a writ for possession and mesne profits by way of damages. I can give this extraordinary rule no construction short of a declaration that a claim for possession of land, with an indefinite claim for mesne rates, shall be a special indorsement, upon which final judgment of some kind may be granted. O. XIV., r. 1, says that the plaintiff may apply for liberty to enter final judgment “for recovery of the land with or without mesne profits,” and unless the defendant shows that he has a good defence the Court may “make an order empowering the plaintiff to enter judgment accordingly.” If the plaintiff insists on his claim for mesne rates, and fails to prove that a liquidated demand is due, he cannot get summary judgment for any specified sum. If the defendant shows that he is entitled to dispute the amount the Court must allow him to do so, but if the plaintiff abandons the claim for mesne rates, it would take away the whole effect of the rule if we were to hold that the fact of his having insertedan unqualified claim in his indorsement prevented the plaintiff from getting summary judgment for the possession of the land when he was plainly entitled to it. That reduces this case to the question whether this plaintiff has deprived herself of the right to judgment for the possession by putting forward a claim for a specific sum calculated at the rate of the old rent brought down to the time of *86 serving the notice of motion. Plaintiffs would be better advised not to ask for mesne rates at all where they want judgment for possession. But—without deciding now that a specific sum for mesne rates may not be proved for on a motion for final judgment, or that the court may not give judgment for the possession with mesne rates generally, and then, as in case of an interlocutory judgment, direct how the amount is to be ascertained—I think that we may here, on the maxim utile per inutile non vitiatur, allow the plaintiff to abandon the mesne rates altogether, and take the judgment for the possession of the lands to which she is clearly entitled. Though it is a curious rule that a plaintiff may ask final judgment with mesne rates, and the Court may give it to him without it, I have no doubt that it was here intended to prevent a plaintiff who had claimed mesne rates from recovering his land by summary judgment. It is better not to discuss unnecessarily here cases in which the Court has struck out one cause of action in order to allow final judgment for another.
Barry, L.J.
In this case I feel the same difficulty as that suggested by the Lord Chancellor and Lord Justice FitzGibbon in their judgments. It is plain that the difficulty has arisen from this most remarkably framed rule, and from the fact that the gentleman who drafted it was wholly unacquainted with the proceeding of an action of ejectment for non-payment of rent. I am bound to remember that the Irish rule is copied from the English, because we are obliged to keep the rules of procedure as far as possible the same. But the English rule was drafted by a gentleman who did not know of an ejectment for non-payment of rent, and we must now try to do the best we can to interpret this provision. My idea is, that the new rule was intended to remedy a system of things which led to gross injustice. Where there was an ejectment quite clear and no defence to it, and the defendant by taking defence had kept the landlord out of possession for a year, to remedy that a man who has a clear demand for land is entitled to be put in the same position as a man who has a clear demand for a debt of £100 by contract. If we de not enable a man who has a clear demand for land to come in, without trying to embarrass him by a question of mesne rates, and ask for final judgment, for what is clear and indisputable, namely, his land, we cannot remove the injustice. It is suggested that one solution might be, that the Court might give judgment for the mesne rates and then that there might be a collateral proceeding to ascertain the amount of the mesne rates. I see great difficulty about that, and therefore I think it would be wise if plaintiffs under this rule would ask for the land without mesne rates, and then after that, without embarrassing themselves with a claim for mesne rates, they should have an opportunity of moving for final judgment for the land, and if the mesne rates are worth considering, they could bring a separate action for them. The main difficulty is that suggested by Mr. Meredith, that the Court has power to give judgment with or without mesne rates. But I think the best suggestion is, to give final judgment for the land without saying anything about mesne rates at all. Concerning the other question, I agree with Lord Justice FitzGibbon that, on the correct construction of the contract of tenancy, the 1st Nov. was the date of the termination of the tenancy.
.
Hynes Ltd v O’Malley Property Ltd
1988 No. 25
Supreme Court
31 January 1989
[1989] I.L.R.M. 619
(Finlay CJ, Walsh, Griffin JJ)
FINLAY CJ
(Walsh and Griffin JJ concurring) delivered his judgment on 31 January 1989 saying: This is an appeal against an order made in the High Court on 14 December 1987 on a case stated to the High Court at the request of the parties by an arbitrator, pursuant to the provisions of the Arbitration Acts 1954 to 1980.
Hynes Ltd are the lessees, and O’Malley Property Ltd are now the owners of the lessor’s interest in premises situate in the City of Galway which were demised by predecessors in title of O’Malley Property Ltd to Hynes Ltd by indenture of lease dated 29 March 1972 for the term of 99 years from 1 January 1972. The premises concerned were commercial premises and the rent provided for in the lease was subject to review at seven-yearly intervals in accordance with detailed terms provided in the lease itself, the review in the absence of agreement to be determined by arbitration.
The parties failed to agree on the rent payable as and from 1 January 1986 by reason of the review then falling due, and submitted the dispute thus arising to the determination of a sole arbitrator, namely, John F. Mulcahy, a fellow of the Royal Institute of Chartered Surveyors.
In the course of the hearing before the said arbitrator, differences arose between the parties as to the proper interpretation of the rent review clause contained in the lease, and as a result he stated a case submitting three questions for the determination of the High Court. After hearing the parties to the case stated, Gannon J reserved judgment in the High Court and delivered his reserved judgment on 30 November 1987.
That judgment is in the form of guidance to the arbitrator in regard to the questions raised by him as distinct from express answers to each question. The guidance given by the learned trial judge with regard to the first two questions raised *621 by the arbitrator has been accepted by both the parties and is not the subject matter of any appeal before this Court. The guidance afforded by the judgment in relation to the third question raised is the only issue which was before this Court and was the subject matter of an appeal brought by the lessees.
That third question is in the following form:
1. Whether upon the proper construction of the lease and the rent review clause contained in the lease the market rental value of the premises, as of 1 January 1986, should be determined taking into account any improvements lawfully made by the lessee (otherwise than in pursuance of an obligation under the lease).
In short, the judgment of the learned trial judge was to the effect that the obligation of the arbitrator was to determine the market rental value of the premises as they were on 1 January 1986, including any improvements which had lawfully been made by the lessee thereto, without allowance or deduction to the lessee. It is against that decision that the lessee has appealed to this Court.
Rent review clause in the lease
The relevant portion of the rent review clause in the lease reads as follows:
… such arbitration shall fix the amount of the new rent at a sum equal to whichever of the following shall be the greater:
(1) The then existing rent payable hereunder, or
(2) A sum equal to the yearly rent which, having regard to the terms of this lease, (other than the amount of the rent reserved) might then reasonably be expected on a letting of the demised premises, with vacant possession, on an open market by a willing lessor to a willing tenant for a term equivalent to the residue then remaining unexpired of the term hereby created, without having regard to the effect on the letting value of the trade or business then carried on thereat (except in respect of that portion of the demised premises in the actual occupation of the lessee itself) and without having regard to any improvements lawfully made by the lessee (otherwise than in pursuance of any obligation under this lease) provided that in respect of these parts of the demised premises lawfully sublet by the lessee the rent shall be assessed having regard to the rent recoverable by the lessee, including any restrictions on such rent imposed by the Landlord and Tenant Acts and also to the lessee’s responsibility for maintenance, repairs and the other outgoings not recoverable under the subleases.
Clauses 5 and 7 of the lease impose obligations on the lessee to paint, repair and maintain the premises, and clause 10 imposes an obligation in a usual form to yield up at the expiration or sooner determination of the term the premises so painted, repaired, cleansed, maintained, etc. Clause 15 provides as follows:
Not without the consent in writing of the lessor first obtained, nor except in accordance with plans and specifications previously submitted to and approved by the lessor nor, except to the satisfaction of the lessor, to erect or suffer to be erected any new building or erection on the demised premises or make any alteration or addition whatsoever, either externally or internally in or to the demised premises or any building or erection which may be erected thereon provided always that the lessor shall not unreasonably withhold its consent to any improvement within the meaning of the Landlord and Tenant Acts 1931 to 1958 or any amendment thereof.
It was agreed by counsel that the reference to improvements lawfully made in the rent review clause already quoted would, having regard to the provisions of clause 15, be properly construed as to be interpreted as a reference to improvements *622 within the meaning of the Landlord and Tenant Acts 1931 to 1958 and that if any such purported improvements had been carried out without the consent of the lessor they would not be deemed to have been lawfully made.
The submissions of the parties
On behalf of the lessees it was contended that the proper interpretation of the rent review clause was that it provided for a clear ‘disregard’ by the arbitrator of improvements lawfully done by the lessee, and that accordingly in determining the market rental under the review clause the arbitrator would have to make allowance in favour of the lessee in respect of the rental value of any improvements lawfully done by him. This contention was based on two alternative submissions. The first was that the terms of the lease itself provided in a clear and unambiguous manner for such a consequence.
The second submission was that if contrary to that first submission there were any ambiguity in the terms of the lease dealing with the question of improvements lawfully made by the lessee it should be interpreted by the court, on the principles applicable, on the assumption that the parties to the lease were likely to have shared a commercial intention which would be contrary to the concept of a windfall to the lessor. Such a windfall it was urged would arise were the improvements lawfully made by the lessee to be included in any review of rent.
On behalf of the lessor it was contended that the fundamental obligation imposed on the arbitrator pursuant to clause D 3(ii) of the lease was to determine the rent which might then reasonably be expected on a letting of the demised premises with vacant possession on an open market by a willing lessor to a willing tenant. Such a fundamental obligation, it was said, could only be complied with if the arbitrator valued from a rental point of view the premises as they actually were at the time of the review of rent. If, it was urged, the arbitrator was valuing the premises as they were, then of necessity he was disregarding the distinction between any contribution made to their rental value by reason of improvements carried out by the lessee and any contribution arising from any other factor. Having regard to that fundamental construction of the clause it was urged that the special provision contained in it concerning improvements lawfully made by the lessee must be construed that the arbitrator was to ignore the special category of such improvements and, in effect, not to make any allowance to the lessee in respect of them.
This Court was referred to a number of authorities concerning the interpretation of different clauses in leases with regard to rent review. I have appended as a schedule to this judgment a note of the authorities submitted.
In the course of his judgment, Gannon J having reviewed with great care a number of the authorities which were submitted to him, stated as follows:
while the foregoing quotations indicate that there are many matters which might arise for consideration on an arbitration of this nature which have not specifically been raised on this case stated, they also demonstrate that this Court can be of assistance to the arbitrator only in so far as it can afford guidance by construing the agreement as expressed in the lease between the lessor *623 and the lessee and so presenting to him for application by him the directions, as the court construes them, which are set out by the parties in the lease.
I would find myself in complete agreement with this succinct exposition of what the function of the court is on the determination of this case stated.
The first function then is to look at the terms of the lease itself and if it is possible from those terms to arrive at a conclusion that there is an unambiguous provision with a certain effect concerning the question of improvements made by the lessee, then that provision must be given its unambiguous effect, and it would neither be appropriate nor necessary to consider decisions on other cases or principles which might be applicable to instances where clauses were ambiguous or deficient in some provision.
The really vital words contained in clause D (3)(ii) of the review clause in the lease are:
Without having regard to any improvements lawfully made by the lessee (otherwise than in pursuance of any obligation under this lease).
The improvements here dealt with have, it would seem to me three characteristics, that is to say:
(a) They are improvements made by the lessee.
(b) They are improvements lawfully made and, as I have indicated this would involve improvements made otherwise than in breach of the terms of the lease.
(c) They are improvements other than those made by the lessee lawfully in pursuance of any obligation under the lease.
If one applies to improvements carrying these three characteristics the construction of this portion of the clause contended for on behalf of the lessee one arrives at a wholly logical result. That result may thus be summarised.
1. If a lessee having duly notified and obtained the consent of the lessor carries out an improvement to the premises which will on the termination of the term be to the advantage of the lessor, he will not be damnified by having to pay an increase in his rent on review which is referable to that improvement.
2. If, however, notwithstanding the fact that an improvement of this description is carried out by the lessee and was to the advantage of the lessor on the final termination of the term, it was at the time when the lease was created part of the burden which the lease imposed on the lessee as distinct from imposing them on the lessor he would not be freed from having to pay an extra amount of rent in respect of an increased rental value due to that improvement. To do so would be to relieve him to some extent of a burden which the general provisions of the lease had imposed upon him, or to put the matter in another manner would be to deprive the lessor of an advantage which he had obtained from the obligations on the part of the lessee contained in the original lease.
3. Improvements made in breach of the lease would involve no allowance to the lessee making them.
If, however, one applies to the clause which I have outlined and sought to analyse the construction contended for on behalf of the lessor, a wholly unsatisfactory *624 situation would appear to be effected.
Firstly, it would constitute an express provision that the lessee should not be relieved of any increase in the rent due to improvements lawfully carried out by him. Such a provision which, whilst it may be unusual, would certainly be logical and sensible, and if it was the agreement of the parties would have to be implemented by the court. The characteristics of the improvements mentioned in the clause which I have outlined raise two complete anomalies in the further interpretation of this part of the clause in accordance with the lessor’s contention. The first would appear to be that if the lessee lawfully made an improvement he would have to pay for its value, but if he had made it unlawfully or in breach of the terms of the lease he would not. Secondly, it would seem to suggest that whereas the value of an improvement made lawfully and voluntarily by the lessee would be payable for by him as a factor in the increase of his rent where it was made by him under obligation in the lease he would not have to pay for it. There is an element of absurdity in these two consequences and that very absurdity might make a court lean against so interpreting the clause. If it does not have that effect, however, it would appear that the two qualifications, namely, with regard to lawfully made improvements and with regard to improvements arising from an obligation contained in the lease on the lessor’s submitted interpretation become superfluous.
I have no doubt that the proper construction of this clause must give, as far as possible, to each part of it a logical effect and consequence. It seems to me that that contended for by the lessee, namely, that it excludes from the calculation in the increase of rent a factor arising from improvements lawfully made is, in these circumstances, the correct one.
Having regard to that view, arising from the interpretation of the lease itself, I do not consider it appropriate nor find it necessary to reach any decision on the other issues raised of general principle in the hearing before us. I would therefore allow the appeal and vary the order made in the High Court so as to answer the third question raised on the case stated to the effect that the arbitrator should allow to the lessee a reduction of any portion of the rent to be fixed on the arbitration which he is satisfied, on the evidence, is solely attributable to an improvement lawfully made by the lessee otherwise than under an obligation imposed by the lease.
Coley O’Farrell and Patrick Joseph Geraghty v. Henry Marc Cochrane
[1991] 2 IR 513
Murphy J.
18th October 1991
In this case the plaintiffs, the trustees of Woodbrook Golf Club, (“the club”)claim a declaration that the arbitrator, John Cooke S.C., in his award made in November, 1989, erred as a matter of law in seeking to fix the rent payable by the plaintiffs to their landlord, Mr. Henry Marc Sursoc Cochrane, the respondent herein.
The award is brief in its terms. It determines what is described as the fair annual rent of the lands comprised in the lease of the golf club for the following 15 years at £36,000. The plaintiffs contend that in arriving at that figure the arbitrator erred in law in his interpretation of clause 6 of the schedule to the lease which in turn adopted the provisions contained in s. 6 of the Landlord and Tenant (Amendment) Act, 1971. It is the plaintiffs’ contention that in fixing what is described as “a fair rent” under the lease of the property for the purposes of the game of golf, the arbitrator should have disregarded and failed to disregard any increase in the value of the lands and buildings concerned, brought about by or resultant upon additions and improvements which the club made to the buildings and lands at its own expense.
The origin of this dispute is to be found in one sense in s. 6 of the Landlord and Tenant (Amendment) Act, 1971, which gave certain rights of renewal to what are described therein as “sporting leases”. Section 6 of the Act directed how the rent under such leases was to be determined and it did so in the following terms:
“6. (1) Where the rent under a sporting lease is to be determined by the Court, the Court shall fix a fair rent for the grant of a lease of the property for the purpose of carrying on the sport.
(2) In fixing the rent the Court shall have regard to the general intention of this Act in relation to sports clubs which is the advancement of outdoor sports, games and recreations and the preservation of open spaces for the common good and, without prejudice to such other considerations as it considers relevant, may take into account the rent or other sum previously paid for the property by the sports club and any covenants and conditions under which it was so paid, to the rent paid by other sports clubs of the same kind in the same or a comparable locality, to the contribution made by the sports club to the enhancement of the property, and to the price paid by any person who is a necessary party to the granting of the lease in the acquisition of his estate or interest.”
In the present case, of course, the court is not being asked to fix the rent or to exercise the powers conferred upon this or any other court by the Act. The present issue arises from the fact that the lease dated the 8th November, 1974, between the respondent and the then trustees of the club incorporated the provisions contained in s. 6 of the Act as the means of determining the rent on a revision thereof at the expiration of 15 years from the term thereby granted. So what were statutory terms under the Act became contractual terms under the 1974 lease.
The lease itself is of immense importance, for the crucial covenants contained therein which require that the lands thereby demised and the premises erected thereon should be used as a golf course. The covenant in restraint of assignment expressly provides that the club may be sold or assigned only to another golf club, and that a members’ club to be used for the purpose of playing golf. Effectively it follows that the commercial value of the lands is enormously depleted, but it is not my task to determine the rent. The issue on the present summons is whether the arbitrator erred in adopting the particular approach which he did.
What the trustees (the plaintiffs in the present case) contended before the arbitrator and contend in this court is that the provisions contained in s. 6 of the Act, as adopted and incorporated in the schedule to the 1974 lease, require the arbitrator, or the parties determining the revised rent, to have regard in an effective way to the contribution made by the club to the enhancement of the property. It seems to me that, effectively, what was contended before the arbitrator was that no part of the revised rent of the premises comprised in the lease should be attributable to what were in effect improvements made to the demised premises by the lessees subsequent to the date of the lease. That issue was recited in the award of the arbitrator and he sets out the arguments made to him in relation to it and in the operative part of the award deals with it as follows:
“I accordingly accepted the submission made on behalf of the claimant (that is to say, the landlord) to the effect that the revised rent might include an appropriate element attributable to an increased value of the property brought about by the tenants’ contribution towards the enhancement of the property but subject to the qualification that the respondents were entitled to require that the contribution towards enhancement of the property which their expenditure on improvements had made be taken into account as a factor . . .”
For the moment I stop there.
In so far as that was the issue between the parties I believe that the interpretation by the arbitrator placed on the clause was entirely correct. If he erred at all, perhaps he might have expressed or placed greater emphasis on the rights of the landlord in the passage which I have quoted. It seems to me that the arbitrator was correct. Indeed, both parties rightly concede that under the general law a landlord is entitled to the benefit of all improvements, permanent improvements made to property even though paid for by the lessee. Harsh though it may seem, that is the unquestioned law of the land. Accordingly, it seems to me that it might be more appropriate for the arbitrator to have said that the revised rent should or must include an appropriate element of the increased value of the property in the interests of the landlord instead of the words “it might include”.
Dealing, then, with the position of the respondents to the arbitration, that is to say, they were entitled to require that the contribution which they made towards enhancement of the property be taken into account, to my mind that reflects precisely the terms of the original section and the terms of the Act. Indeed, it seems to me that it would be impossible logically to have regard to the contribution made by the lessees or by the members of the club to the improvements unless one first assumes that the landlord would otherwise have the benefit thereof. So to that extent it seems to me that there was no error in the arbitrator’s award. The more controversial aspect of the award is in the final three lines of the same paragraph which go on to say:
“. . . which would serve to reduce the full open market rental value of the property which might otherwise be fixed in its enhanced condition.”
What is objected to here is the statement by the arbitrator that the extent of the interest to be allocated to the lessee is to be determined by a deduction from the full open market rental value and that this represented a serious error and a fatal flaw in the award.
The plaintiffs (the trustees) say that the full open market rental value has no relevance whatsoever in a case of this nature and that the function of the arbitrator in applying the provisions contained originally in s. 6 of the Act was to ascertain a fair rent. In that connection counsel on behalf of the trustees referred to two interesting English cases which dealt with the expressions “reasonable rent” or “reasonable rent for the demised premises”. They are Cuff v. J. & F. Stone Property Co. Ltd. (Note) [1979] A.C. 87 and Ponsford v. H.M.S. Aerosols Ltd. [1979] A.C. 63 and very impressive judgments they were. In Ponsford the learned Law Lords made it clear that they did not feel constrained to limit the concept of “reasonable rent” to an objective examination of the premises themselves but held that such a term or words would in their view include an examination of the circumstances of the case and the activities of the parties, in particular the activity of the lessee in paying for improvements which had been carried out to the premises.
Interesting though those judgments are, I do not think that the trustees were obliged to rely on them in the present case for the purposes of the argument made to this court because s. 6 does not limit itself to two or three words which might be ambiguous in their construction if taken alone, that is to say, the words “fair rent”. “Fair rent” could mean a variety of things, depending at whose conduct one was looking or the circumstances to be taken into account and whether one was to consider the interests of the lessee, the landlord or the public. Section 6 goes on to define to a large extent what is meant and to give very helpful guidance as to how the objective should be achieved.
First of all, the duty imposed on the court by the section was to fix a fair rent for the granting of a lease of the property for the purpose of carrying on a sport. As I have already mentioned (and I am sure there could be no debate about it) the grant of a lease of property for the purpose of carrying on sporting activities would differ materially from the open market value of almost any other property. In addition to that specific statement, the guidance given by s. 6, sub-s. 2 is to direct the court to have regard to the general intention of the Act in relation to sports clubs and the advancement of outdoor sports, recreations and the preservation of open spaces. Clearly, these are factors which would significantly diminish the type of rent one might hope to achieve. Having so provided, the Oireachtas directed that the court might take into account certain other factors which are specified. These include (1) the rent or other sums previously paid by a club; (2) the rent paid by other clubs of the same kind in the same or comparable localities; (3) the contribution made by the club to the enhancement of the property, and (4) the price paid by any party to the granting of the lease.
The Oireachtas did not quantify the effect of these considerations. In directing that they should be taken into account, however, it did indicate the general approach which the court was to take and the factors which should influence it. I do not accept that it would be mandatory on the court, having regard to the terms of the section, or mandatory on the arbitrator, having regard to the terms of the lease, to follow slavishly each of these considerations. It seems to me that both the arbitrator and the court would be bound to have regard to them but might well dismiss them for good and sufficient reason. But even where these factors are properly taken into account there must be considerable difficulty in determining the weight and value to be given to each such factor.
As I have already said, I am satisfied that the third of the factors which I have identified from s. 6 (that is, the contribution made by the club to the enhancement of the property) is a factor to be taken into account where appropriate as reducing the rent which would otherwise be payable. But if the arbitrator had understood and acted in the belief that his only task was to ascertain the full market rental value of the premises and then made a calculation in respect of one factor (that is, the additions made by the members of the club since the date of the lease and the appropriate element of those improvements which should be attributed to the landlord and the deduction which should be allowed to the lessee in respect thereof) and decided that this should be deducted from the open market value and that the balance would be a fair rent, clearly the arbitrator would have been in grave error. I do not believe that that was the view of the arbitrator. Of course, it may be said that in paragraph 2 of his award he appears to have said something close to this, but it does not stand up to serious analysis. That view could only be founded on a precise analysis of the award and by approaching it as if it were an Act of the Oireachtas itself.
It seems inconceiveable that the distinguished arbitrator, particularly having had the benefit of the argument of learned leading counsel, could have so misconceived his function as to think it was his task to determine the open market rental and to deduct from that one item and that this would give a fair rent. He must have known that he was seeking to conclude a fair rent and that is precisely what he purported to award. Having before him s. 6 and/or its translation into the lease, he knew full well that he was fixing the fair rent of a lease of property for the carrying on of a sport. He had the terms of the lease and comparable rents in relation to other leases of sporting venues before him and the matter was thrashed out before him. Indeed, the figures put before the arbitrator for an open market rental bear little resemblance to the figure which he ultimately determined.
I conclude, therefore, that what the arbitrator was seeking to express was the manner in which one dealt with the particular issue in relation to which the parties were at odds, namely, whether or not the landlord obtained, in the first instance at any rate, the benefit of the improvements made by the lessees subject to the duty of the court or the arbitrator to have regard to the fact that these improvements were made at the expense of the lessee. And it seems to me that that is the point which the arbitrator was underscoring at the particular request of the parties and that that alone was what he was doing, because he did not refer in his award to the other factors which manifestly he considered: the fact that it was a lease of a sporting club and that other rents were referred to and that presumably his attention was drawn to the rents previously payable under the same lease, even though they were paid at a time when inflation had not achieved the heights which it subsequently achieved, as counsel for the plaintiffs pointed out.
It may be that the arbitrator was merely seeking to say that the contribution of the lessees should be taken into account as a deduction from the rent otherwise payable, or it may be that he was making a computation in relation to the element for which he would make allowance by reference to some other factor. If he did, I do not think that that is a fault either. There must be room for a very wide approach to this problem. The rents to be fixed and the weight to be attached to different factors and the allowance to be made must leave room for a wide range of interpretation. If it is merely a question of the arbitrator having regard to the members’ contribution in relation to the effect which that would have on an open market rental simply for the purpose of giving him a figure, I do not think that that in itself would be an error. The error would be if the arbitrator believed that his task was to start with the open market rental value and make one or two deductions from that and ignore his overall task of determining a fair rent for the carrying on of the sport. I do not believe that the arbitrator fell into that obvious trap. I believe that in paragraph 1 of his award he was dealing with the issue which he was expressly invited to deal with as a method of solving the dispute. He was solving the dispute and he was ruling, in my view correctly, on the interpretation of the third factor in the second part of s. 6, sub-s. 2 of the Act. He was effectively saying that improvements made by lessees must, in the ordinary course of law, benefit the landlord in the first instance but that the lessees were entitled under the particular provisions to require the arbitrator to look at their contribution and make a deduction in respect of it.
I believe that that is what the arbitrator did and I believe that the plaintiffs have not therefore demonstrated that there is an error in the award. Accordingly, I refuse the declaration sought.
The Governor and Company of the
Bank of Ireland v Gregory Fitzmaurice
LARDNER J
delivered his judgment on 28 July 1988 saying: The plaintiffs’ claim in this action is for £32,646.10 as the balance of two quarters rent due by the defendant on 1 June 1986 and 1 September 1986 out of premises consisting of the ground, first, second and third floors of No. 9 and the ground floor of No. 10 Barron Strand Street in the City of Waterford under an indenture of lease dated 2 November 1982 and made between the plaintiffs and the defendant. Numbers 9 and 10 Barron Strand Street were initially two of several properties in Barron Strand Street owned by Coads Ltd, a company carrying on the business of retail sale of shoes. Two brothers, Messrs Kenneth and Geoffrey Coad inherited this business and the share capital of the company on the deaths of their father and their uncle. Shortly after this some of the properties previously used for the business by the company were let on leases and Mr Kenneth Coad withdrew from the business. Mr Colin Chapman who was solicitor to the company and for Mr Coad said that at the time of the lettings it was not clear whether the company might not require later to recover possession of these premises but that in any case the company wished to obtain rents which would be equivalent to the commercial return which might have been earned by using them in the shoe business.
In 1977 the defendant, who was a schoolmaster and was minded to establish the business of a stationery and book shop, purchased from Pendulum Boutique their interest in the ground floor of No. 9 Barron Strand Street, taking an assignment of a lease dated 13 January 1977 and made between Coads Ltd and Pendulum Ltd for a term of 18 years from 1 January 1975. This lease provided for an initial rent of £2,048 per annum and for periodic increases of rent at successive periods of two years by a process of indexation and then multiplication. The lessees’ consent to the assignment was negotiated by the defendant with Mr Kenneth Coad. In the summer of 1978 the defendant leased the first, second and third floors of No. 9 by lease dated 1 August 1978 made by Coads Ltd. This lease was negotiated directly *454 with Mr Kenneth Coad and was for a term of 15 years from 1 January 1978 at an initial rent of £1,500 with provision for increase every two years by way of indexation and multiplication as in the Pendulum lease. Subsequently the defendant acquired by assignment the lease of No. 10 Barron Strand Street, again obtaining the lessors’ consent from Mr Coad and also negotiating with him and obtaining their consent to the removal of a dividing wall between Nos. 9 and 10. This lease contained similar provisions to the other two leases with regard to rent reviews. In evidence the defendant said that in each case he had read the clauses in the leases relating to the rent and understood them. In each lease it was provided that for the second and third periods of two years of the term the rent should be increased by reference to the ‘Consumer Price Index published by the Central Statistics Office….’ In respect of the fifth and sixth periods of two years provision was made for similar increases by reference to this index and then for the resultant figure to be multiplied by a multiplier of four.
At some date in the 1970’s, which has not been established by the evidence Mr Kenneth Coad having executed a deed of settlement dated 21 September 1973 which appointed the plaintiffs to be trustees and created certain discretionary trusts in favour of his children and other relatives, then transferred to the trustees upon these trusts a certain portion of the ordinary share capital in Coads Ltd which he owned. Subsequently in 1978 or 1979 Coads Ltd was put into liquidation by its shareholders and the lessors’ interest in Numbers 9 and 10 Barron Strand Street became vested in the plaintiffs upon the trusts of the settlement. Prior to vesting in the plaintiffs Mr Kenneth Coad had discussed with the defendant the sale of these properties to him and when this did not take place had urged the defendant to surrender the three leases I have referred to and to take in lieu a new composite lease. These negotiations and discussions I will refer to in more detail later in the judgment. They resulted in the defendant taking a new lease of Number 9 and the ground floor of Number 10 Barron Strand Street from the plaintiffs dated 2 November 1982 for a term of 18 years from 1 June 1981 at the rent provided for in the sixth schedule which is in the following terms:
15.01 The yearly rent payable hereunder shall be as follows:
(i) In respect of the first period of the term hereby created which shall consist of two years ending on 31 May 1983 the sum of £12,600 per annum without any deductions whatsoever together with such additional sum or sums as may from time to time be payable hereunder by way of further or additional rent as set out in clause 15.01 (viii) hereof.
(ii) In respect of the second and third periods of the term hereby created which shall consist respectively of two years and one year ending on 31 May 1985 and 31 May 1986 the rent shall be calculated on the termination of the preceding period of this demise in the following manner:
(a) The sum payable as rent during the second and third periods hereinbefore provided shall be calculated by reference to the proportion which the rent payable at the commencement of the immediately preceding period bore to the Cost of Living Index published by the Central Statistics Office in the Republic of Ireland (hereinafter called the ‘Index’) at the commencement of such period by comparison with the index at the commencement of the new period so that the new figure then arrived at shall be in the same proportion to the said index figure at such commencement as the rent payable at the commencement of the preceding period bore to the then index figure.
(b) The index figure shall be calculated as the index figure representing the average monthly *455 index figure published in each of the twelve preceding months to the date of commencement of such period whether preceding or commencing as may be required.
(c) The new figure arrived at in accordance with the said foregoing paragraphs (a) and (b) together with such additional sum or sums by way of further or additional rent as made from time to time be payable as set out in clause 15.01 (viii) hereof shall be the rent for the second and third periods.
(iii) In respect of the fourth period of the term hereby created which shall consist of two years ending on 31 May 1988 and the sum payable as rent shall be calculated in the manner prescribed in clause 15.01 (ii) paragraphs (a) and (b) hereof as if such paragraphs were incorporated in this sub-clause and the words fourth period substituted for the words second and third periods and the new figure then arrived at together with such additional sum or sums by way of further or additional rent as made from time to time be payable as set out in clause 15.01 (viii) hereof shall then be multiplied by four and the figure arrived at after such multiplication shall be the rent for the fourth period of two years.
(iv) In respect of the fifth and sixth periods of the term hereby created which shall consist of two years each ending respectively on 31 May 1990 and 31 May 1992 the sum payable as rent shall be calculated in the manner prescribed in clause 15.01 (ii) paragraphs (a) and (b) hereof as if such paragraphs were incorporated in this sub-clause and the words fifth and sixth substituted for the words second and third and the new figure then arrived at together with such additional sum or sums by way of further or additional rent as may from time to time be payable as set in clause 15.01 (viii) hereof shall be the rent for the fifth and sixth periods of two years each.
(v) In respect of the seventh period of the term hereby created which shall consist of two years ending on 31 May 1994 the sum payable as rent shall be calculated in the manner prescribed in clause 15.01 (ii) paragraphs (a) and (b) hereof as if such paragraphs were incorporated in this sub-clause and the words seventh period substituted for the words second and third periods and the new figure then arrived at together with such additional sum or sums by way of further or additional rent as may from time to time be payable as set out in clause 15.01 (viii) hereof shall then be multiplied by four and the figure arrived at after such multiplication shall be the rent for the seventh period of two years.
(vi) In respect of the eighth and ninth periods of the term hereby created which shall consist of two years each ending respectively on 31 May 1996 and on 31 May 1998 the sum payable as rent shall be calculated in the manner prescribed in clause 15.01 (ii) paragraphs (a) and (b) hereof as if such paragraphs were incorporated in this sub-clause and the words ‘eighth’ and ‘ninth’ substituted for the words ‘second’ and ‘third’ and the new figures then arrived at together with such additional sum or sums by way of further or additional rent as may from time to time be payable as set in clause 15.01 (viii) hereof shall be the rent for the eighth and ninth periods of two years each.
(vii) In respect of the tenth period of the term hereby created which shall consist of one year ending on 31 May 1999 the sum payable as rent shall be calculated in the manner prescribed in clause 15.01 (ii) paragraphs (a) and (b) hereof as if such paragraphs were incorporated in this sub-clause and the words ‘tenth period’ substituted for the words ‘second and third periods’ and the new figure then arrived at together with such additional sum or sums by way of further or additional rent as may from time to time be payable as set out in clause 15.01 (viii) hereof shall then be multiplied by four and the figure arrived at after such multiplication shall be the rent for the tenth period of two years.
(viii) Such sum or sums by way of further or additional rent from time to time shall be equal to the expenditure by the lessor in effecting and maintaining the insurance of the demised premises in the full reinstatement value thereof in accordance with the lessors’ covenant in that behalf contained in the eighth schedule hereto including architects’ and quantity surveyors’ fees, planning requirements and other incidental expenses, against loss or damage by fire, explosions, storm or tempest (including lightning) and other such risks as the lessor may from time to time reasonably deem it desirable to insure against (hereinafter together referred to as the insured risks) such sum or sums to be paid without deduction on the gale day next ensuing after the expenditure thereof. 15.02 All the rent throughout the entire of the term hereby created shall be paid in quarterly payments in advance on the first working day in March, June, September and December in each *456 year respectively without any deduction, the first of such payments being a proportionate payment to be made on the execution hereof.
The rent due under these provisions has been paid since the commencement of the term up to 31 May 1986. In respect of the quarters rent due on 1 June and 1 September 1987 which were in the first period in which the multiplier in clause 15.01 (iii) became operable, the defendant has failed to pay the increased rent attributable to the multiplier and it is in respect of the balance of the rent for these quarters that the present claim arises. By his defence the defendant contests on a number of grounds that the balance claimed is due.
Firstly, it is alleged that the provisions of clause 15.01 (iii) of the lease insofar as they purport to quadruple the rent payable from 1 June 1986 constitute a device to force the defendant to surrender the tenancy as is permitted by clause 18 of the lease and so avoid the provisions of the Landlord and Tenant (Amendment) Act 1980 and clause 15.01 (iii) is therefore in contravention of s. 85 of the Act of 1980 and is void and unenforceable against the defendant. Secondly, it is alleged that the plaintiffs are estopped from enforcing the rent multiplier in clause 15.01 (iii) by reason of representations made to the defendant by Mr Kenneth Coad prior to the execution of the lease and it is said Mr Coad was allowed by the plaintiffs to act as their agent in this respect. Thirdly, as a result of an amendment of the defence made by consent after the commencement of the trial (which had been sought by a letter from the defendant’s solicitors dated 8 March 1988) it was pleaded that, insofar as clause 15 of the sixth schedule of the lease provided for periodic indexation of the rent by reference to ‘the Cost of Living Index published by the Central Statistics Office’, it was incapable of being operated because no such index has at any material time been published by the Central Statistics Office or any other source.
In regard to this last matter evidence has been given that the Central Statistics Office publishes an index called ‘The Consumer Price Index’ and also a wholesale index described as a Price Index of Industrial Commodities. The index called ‘The Consumer Price Index’ is based on percentage changes of a fixed basket of household goods and services. An index of this kind has been produced since 1922. It’s basis has been revised several times over the years. Until 1953 it was known as ‘The Cost of Living Index’. In 1953 its title was changed to ‘The Consumer Price Index’. Doctor Anton Murphy, an economist who gave evidence for the defendant, said that in his view the Consumer Price Index was a measure of the change in the level of prices of a range of household goods purchased over the year. He thought there had been a substantial change in its composition in 1953 when ‘The Consumer Price Index’ replaced ‘The Cost of Living Index’ but that it did not include and never had included a number of elements necessary to any complete cost of living index, such as payments for pensions, mortgages, the cost of houses, rents, social insurance contributions and income tax, which would all be relevant to the cost of living. The second objection of the defendant is that ‘The Consumer Price Index’ has never been produced or published on a monthly basis but only on a quarterly basis and that it is impossible to give effect to the provisions of clause 15 (ii)(b).
It seems to be established by the evidence that the Central Statistics Office does *457 not and has never published an index which in fact measured the cost of living and has not since 1953 published an index called ‘The Cost of Living Index’. The plaintiffs submit that both parties understood what was referred to and that the reference in clause 15 (ii)(a) to ‘The Cost of Living Index published by the Central Statistics Office’ should be construed as referring to ‘The Consumer Price Index’ and that this is an appropriate case for the application of the maximim falsa demonstratic non nocet cum de corpore constat . I am unable to accept this submission. The basis for the application of this maxim does not exist. The plaintiffs chose to use the phrase ‘The Cost of Living Index’ in the lease and it is not open to them to substitute an alternative phrase. In my view having regard to the plain meaning of the words ‘The Cost of Living Index published by the Central Statistics Office’ and the reference in clause 15 (ii)(b) to ‘the average monthly index figure published’, they cannot properly be construed as meaning ‘The Consumer Price Index’ which is and always has been published quarterly. Further, as clause 15 (ii)(b) requires that ‘The index figure shall be calculated as the figure representing the average monthly index figure published in each of the twelve preceding months’, I find that it is impossible to make this calculation and that the clause is inoperable for this reason.
I now turn to consider the defence of estoppel. In the period after the defendant had taken the assignments and a lease of the properties to which I have referred and prior to vesting of the properties in the plaintiffs, Mr Kenneth Coad on behalf of Coads Ltd dealt with this property and with Mr Fitzmaurice concerning it. He gave the consent of the landlord for the demolition of a wall and he also gave consent to the original assignments to the defendant. Later he proposed that the defendant should take a new composite lease of the properties comprised in the three earlier leases — the new lease to be in similar terms, including the rent multiplier clause. Mr Fitzmaurice was not averse to a composite lease but was concerned at the inclusion of the multiplier clause. He asked could it be omitted. Mr Coad refused and said its purpose was in case Coads should wish to sell the block but that in the event of a sale being contemplated Mr Fitzmaurice would be given the first option to purchase. Mr Fitzmaurice asked what would happen in five years when the multiplier clause became operative. Mr Coad said it would not be enforced and that Mr Fitzmaurice would be offered a new lease. Mr Fitzmaurice said he assumed from this that the lease would continue subject to the indexation clause but without the multiplier. He felt happier having received this assurance from Mr Coad. Mr Coad, being, it is said, in hospital at the time of the trial, did not give evidence.
The circumstances disclosed by the evidence, which are really not in dispute, are that prior to the liquidation of this family company, Mr Kenneth Coad in his relations with Mr Fitzmaurice always acted as if he had the full authority to deal with this property. He expressed the company’s consent to the three assignments and to a substantial alteration of the premises. He collected the rents and the insurance premiums as they fell due and he discussed a sale to the defendant. All the evidence supports the conclusion that at this period Mr Fitzmaurice, when dealing with Mr Coad, was led to believe that Mr Coad was in control of these *458 matters or had full authority to deal with them. Indeed as not infrequently occurs in small family companies controlled by one or two members of the family the strong probability is that this was the fact. The solicitors to the company at all relevant times were Messrs Kenny Stephenson and Chapman, (of which firm Mr Colin Chapman was a senior partner), who advised the company and Mr Coad during the period of the leases, the liquidation and the settlement of property made by Mr Kenneth Coad, under which the present plaintiffs became trustees. After the transfer of the properties to the trustees of the settlement the same solicitors subsequently advised and acted for the plaintiffs. I am satisfied by the evidence that, after the company had gone into liquidation and the property had been transferred to the trustees of the settlement, Mr Kenneth Coad continued to act in regard to the property in the same way as when it was in the company’s ownership. He continued to collect the rent and insurance premiums. The rent was paid directly into his bank account and it appears that he applied it for the beneficiaries of the settlement as he thought proper and only afterwards rendered an account to the plaintiffs of what had been done. He also continued to discuss and negotiate with Mr Fitzmaurice in relation to the composite lease. Probably until the spring of 1986 Mr Fitzmaurice did not learn of the transfer to the plaintiffs. He said in evidence he did not think it made any difference to Mr Coad’s position. It seems to me as a matter of strong probability that these matters were known to Mr Chapman and through him to the trustees and that they allowed this to continue up to the time when there was a meeting at Mr Chapman’s office with Mr Fitzmaurice and Mr Coad and discussions took place concerning proposals for a further new lease to replace the lease of 2 November 1982, after the claim for rent under the multiplier clause in 1986 was first made and had been contested by Mr Fitzmaurice. Then for the first time Mr Chapman made it clear to Mr Fitzmaurice that Mr Coad did not have any power to negotiate on behalf of the plaintiffs and these discussions did not result in any agreement. Until that time I think the plaintiffs allowed Mr Coad to represent himself as having authority and to negotiate in regard to the property and to manage it. If Mr Kenneth Coad was the lessor seeking to enforce this rent clause, I should have no doubt that the plea of estoppel must succeed. The evidence I have just referred to satisfies me that he gave the defendant a clear assurance that the clause in the new lease would not be enforced against him. This was intended to reassure the defendant and on the strength of it the defendant entered into a new lease containing this clause. Mr Coad’s assurance can only affect the trustees if he was their authorised agent or if (while not having any actual authority) he was held out as their agent by being allowed to appear as agent when he was not. See Re Henry Bentley and the Yourkshire Breweries: ex parte Harrison (1893) 69 L.T. 204. I think he was allowed to appear as agent when he was not. In my view the trustees are now estopped from denying Mr Kenneth Coad’s assurance to Mr Fitzmaurice that the multiplier clause would not be enforced against him.
I turn now to the third submission made on behalf of the plaintiffs in regard to s. 85 of the Landlord and Tenant Act 1980. S. 85 provides:
So much of any contract, whether made before or after the commencement of this Act, as provides *459 that any provision of this Act shall not apply in relation to a person or that the application of any such provision shall be varied, modified or restricted in any way in relation to a person shall be void.
Has this section any application to the lease in the present case? For the plaintiffs it is said that s. 85 is concerned only with what the ‘contract’ between the parties ‘provides’: that the clause complained of by the tenant, namely, clause 15 does not go beyond providing for the payment of a rent to be calculated in an agreed way: that, even if this rent exceeds the going commercial rate, the 1980 Act does not prohibit excessive rents: and if the parties agreed to such a rent it is not unlawful. Finally on this matter it is submitted that s. 85 only applies to contracts which directly provide that any provision of the Act shall be restricted in any way in relation to a person and that here no such direct provision exists.
It is well settled that the words of a section should be construed in their ordinary and natural meaning and in the light of their context and this includes not only the particular phrase or section in which they occur but also the other parts of the statute. (See Halsbury 4th Ed. Vol. 44 para. 872 and the cases there cited). The Landlord and Tenant (Amendment) Act 1980 seems to me to have had the purpose or intention of conferring (subject to certain conditions not material to the issues in this case) the following rights:
(a) It gives a tenant whose lease expires and who comes within s. 16 a right to a new tenancy in his tenement.
(b) It allows the landlord and tenant in such circumstances to negotiate and agree the terms of the new tenancy including rent, reviews of rent and the term but subject to the proviso that in default of agreement on the terms the Court shall fix the terms in accordance with certain guidelines specified inter alia by s. 23 — viz that the term should be for 35 years or such less term as the tenant may nominate; that the rent should be the rent which in the opinion of the Court a willing lessee not already in occupation would give and a willing lessor would take for the tenement, in each case on the basis of vacant possession being given, and having regard to the other terms of the tenancy and to the letting values of tenements of a similar character to the tenement and situate in a comparable area without regard to any goodwill which may exist in respect to the tenement.
(c) A tenant who surrenders his lease is by s. 17(1)(a)(iii) excluded from the right to claim a new tenancy.
S. 24 provides in the case of a tenancy the terms of which are fixed by the court that the landlord or the tenant shall be entitled to apply to the court for a review of the rent at any time after the expiration of five years from the date on which the terms are fixed. And there is then provision for further reviews of rent at any time after the expiration of five years from the first or any subsequent review.
These guidelines require that a rent determined by the court thall be related to what may be described in general terms as the going open market rent. They are bound to influence what rent a landlord and tenant will be disposed to offer or to take or agree upon when negotiations are taking place in regard to the terms of a new tenancy. Each party will be aware that upon a failure to agree, the Court may *460 be asked to fix the rent in accordance with the guidelines. In my opinion the intention of the legislature as expressed by these provisions was to give a tenant in the circumstances prescribed the security of tenure of a new tenancy upon the terms I have mentioned.
Does clause 15 of the lease, which contains the multiplier clause, provide that any provision of the 1980 Act shall not apply in relation to a person or does it provide that the application of any such provision shall be varied, modified or restricted in any way in relation to a person? In respect of the quarters’ rent due on 1 June 1986 and 1 September 1986, after the previous years rent has been recalculated in accordance with the multiplier clause, i.e., multiplied by four, a rent far in excess of the current open market commercial rents is arrived at. On the evidence it exceeds by more than 300% the then current commercial rent for comparable premises. I am satisfied that this rent was intended by the plaintiff and was designed to exercise a compelling pressure on the defendant to surrender his tenancy in order to escape liability for the increased rent. This pressure was likely to be increased by the provision that the increased rent will during the remainder of the term be subject to two further fourfold multiplications viz for the two years ending on 31 May 1994 and for the period of one year ending on 31 May 1999. The position then is that, if the defendant succumbing to this pressure, surrenders his lease he excludes himself from any right to claim a new tenancy under s. 17(1)(a)(iii) of the 1980 Act: any negotiations which may then take place between the plaintiff and the defendant in regard to a new lease will be free from the provision that in default of agreement the court will fix the terms of any new lease and will not be affected by the guidelines which should be applied by the court in fixing such terms. And lastly the compelling pressure to surrender exercised by the multiplier clause restricts and reduces the lessees security of tenure which it is one of the purposes of the Act to confer. In my judgment clause 15 of the lease is and was designed as an ingenious method of circumventing the provisions of the 1980 Act to which I have referred and it does this by putting the defendant under compelling pressure to surrender and thereby exclude himself from the benefits of Part II of the 1980 Act. I think this can properly be regarded as a provision which, in effect, restricts the application of the provisions of the Act in relation to the defendant in this case.
One further point arises. It was contended by the plaintiffs that the words of s. 85 only invalidate contracts which directly ‘provide that any provision of this Act shall not apply in relation to a person or that the application of any such provision shall be varied, modified or restricted in any way in relation to a person’ and that here no such direct provision exists. I am unable to accept this submission. In my judgment on its true construction in the section the word ‘provides’ means ‘has the effect that’.
In these circumstances the plaintiffs’ claim for £32,646.10, the balance of two quarters rent due on 1 June 1986 and 1 September 1986 fails and must be dismissed.
Mills v. Healy
[1937] IR 437
SULLIVAN P. :
I have come to the conclusion, not without some doubt, that this appeal must be allowed.
This is an action to recover a deposit paid under an agreement in writing, dated the 25th October, 1930, whereby the plaintiff agreed to purchase certain premises from the defendant for the sum of £280. The date fixed in that agreement for closing the sale was the 24th November, 1930. Negotiations between the respective solicitors as to the vendor’s title continued to a date long subsequent to the date fixed for completion, and accordingly the time fixed by the agreement was no longer binding.
There has been extraordinary delay, not only in bringing this matter to trial, but throughout the negotiations between the solicitors, and the Circuit Judge pointed out one difficulty in deciding the case, namely, the uncertainty whether there were conversations between the solicitors supplementing the correspondence.
However, on the 22nd December, 1931, the vendor’s solicitors wrote the purchaser’s solicitors as follows:”We beg to refer you to previous correspondence herein and particularly to a copy of the agreement to purchase signed by your client on the 25th October, 1930. If you will refer to this agreement you will observe that the contract should have been completed on the 24th November, 1930, but up to the present no serious effort has been made to carry it out, therefore we give you notice that the deposit of £50 is now forfeited and our client is about to resell the premises.”
There can be no doubt as to the legal position of the parties at the time that letter was written. As negotiations had continued after the date fixed for completion, before either party could terminate the contract on the ground of delay notice should have been served fixing a reasonable time for completion, and that time should have expired. No notice fixing a time for completion had been served prior to the letter of 22nd December. The legal position of the parties after that letter was received was this: The purchaser could have accepted that letter as a repudiation of the contract, and brought an action to recover his deposit and damages. Instead of taking that course, his solicitors wrote the letter of the 24th December, 1931: “In reply to your letter, you cannot declare a forfeiture in this matter and you still have not replied to our requisitions as to the licence.”
There is no doubt as to the meaning of that letter. It is that the purchaser’s solicitors took up the position that the vendor had no right to forfeit the deposit and that the contract was still in existence. A week after that the vendor’s solicitors replied as follows:”We are in receipt of your letter, dated the 24th inst., and refer you to your requisitions on title with our replies, dated 10th December, 1930, from which you will observe that our client was then in a position to hand over clear possession. On the 26th February, 1931, you submitted to us a deed of assignment for execution by our client and on the 28th of that month you wrote stating that you would call to our office and definitely complete this sale, but since then you have been putting us off with different excuses, so that our client’s patience has now become exhausted and we have nothing further to add to ours of the 22nd instant.”
The meaning of that letter is equally clear. The vendor’s solicitors are adhering to the position that the vendor was entitled to rescind, and to forfeit the deposit, and had done so by the letter of the 22nd December.
I now turn to the letter from the purchaser’s solicitors to the vendor’s solicitors, dated 26th September, 1932. What had happened between January, 1932, and September, 1932, we do not know. The letter of the 26th September, 1932, is as follows:”We enclose herewith notice of rescission in this matter. Kindly acknowledge receipt of same.” The notice enclosed with the letter stated:”Take notice that the purchaser hereby rescinds the contract of sale entered into by him in this matter on the 25th day of October, 1930, with Patrick Healy for the purchase by him of a certain house and premises situate in Newport, County of Mayo, and hereby requires the return to him, or to the undersigned solicitors, of the sum of £50 (Fifty pounds) deposit paid on foot of said contract.”
The same objection is made on behalf of the vendor to the validity of that notice as was made on behalf of the purchaser to the validity of the notice of 22nd December, 1931, given by the vendor’s solicitorsthat the contract could not be rescinded until a notice had been served fixing a reasonable time for completion, and that time had expired.
The Circuit Judge held that as the contract was repudiated by the vendor in December, 1931, the purchaser was not bound to fix a time for completion before he could rescind the contract on the ground of the vendor’s delay, and he held that the plaintiff was entitled to recover his deposit.
I do not take that view. I think that the contract was never legally terminated and is still existing. I must, therefore, hold that the decision of the Circuit Judge was wrong, and that this appeal should be allowed.
O’BYRNE J. :
The agreement in writing in this case fixed the 24th November, 1930, as the date for the completion of the sale, but by reason of the negotiations which continued long after that date in regard to the requisitions on the title it is now common case that that date ceased to be binding on the parties. Accordingly, we have a contract for the sale of certain premises with no fixed date for completion. There were lengthy negotiations between the parties, and, finally, on the 22nd December, 1931, the defendant’s solicitors served notice purporting to rescind the contract. It is common case now that that notice was inoperative for the purpose for which it was served, and there is no dispute as to what were the rights of the purchaser when that was served. He was entitled to adopt one of two courses: 1, he could have treated the notice as a repudiation of the contract by the vendor, and have then sought recovery of his deposit, and damages for breach of contract; or 2, he could have treated the notice as being ineffective to rescind the contract, and treated the contract as still subsisting. The only difficulty which I had was in determining which option the purchaser really decided to take.
On the 24th December, 1931, the solicitors for the purchaser wrote in reply:”In reply to your letter you cannot declare a forfeiture in this matter and you still have not replied to our requisitions as to the licence.” So far it is obvious that the purchaser was treating the contract as still subsisting. On the 30th December the vendor’s solicitors wrote in reply to that letter:”We are in receipt of your letter, dated the 24th inst., and refer you to your requisitions on title with our replies, dated 10th December, 1930, from which you will observe that our client was then in a position to hand over clear possession. On the 26th February, 1931, you submitted to us a deed of assignment for execution by our client, and on the 28th of that month you wrote stating that you would call to our office and definitely complete this sale, but since then you have been putting us off with different excuses, so that our client’s patience has now become exhausted, and we have nothing further to add to ours of the 22nd instant.”
On the 8th January, 1932, the purchaser’s solicitors wrote as follows:”In reply to your letter in this matter, you have not at any time produced the Excise licence paper to us, and the engrossment was submitted to you subject to this, and arrangements were made for the closing, subject to this. We cautioned the auctioneer against parting with the deposit, as clearly your client is unable to keep his part of the contract.” That letter is rather ambiguous. In so far as it purports to express any view as to the existence of the contract, it appears to treat it as still in existence. It seems to me to call for the production of the licence paper, but it is not very clear.
After that letter of the 8th January there is a long gap, and so far as the evidence is concerned it is not explained by the next letter, of the 26th September, 1932, from the purchaser to the vendor enclosing the purported notice of rescission. That notice is in the following form:”Take notice that the purchaser hereby rescinds the contract of sale entered into by him in this matter on the 25th day of October, 1930, with Patrick Healy for the purchase by him of a certain house and premises situate in Newport, County of Mayo, and hereby requires the return to him, or to the undersigned solicitors, of the sum of £50 (Fifty pounds) deposit paid on foot of said contract.”
If anything is clear it is that that notice contemplates that the contract is still in existence, and the notice was intended to put an end to the contract.
As I have already said, the purchaser had the option either of treating the contract as repudiated by the vendor, or of treating it as still in existence. He was bound to adopt one or other course, and I have come to the conclusion that he decided to treat it as still subsisting. That being so, it is clear that the notice served by the purchaser was inoperative to rescind the contract, for before the purchaser could rescind it was necessary for him to fix a reasonable date for completion.
Accordingly I am of opinion that, after the 26th September, 1932, there was, and still is, a subsisting contract for sale. That being so, I am of opinion that the decision of the Circuit Judge must be reversed.
H. E. H. C.
The plaintiff applied to the Supreme Court (1), by way of appeal from the judgment and order of the High Court, for an order that the said judgment and order be reversed and discharged and that in lieu thereof the decree of the Circuit Court be affirmed.
FITZGIBBON J. :
There is no question of law involved in this case, once the facts have been clearly ascertained, but it is difficult to arrive at a clear decision upon facts which depend upon the interpretation of a desultory correspondence between parties who were at cross purposes and, it seems to me, labouring under mutual misapprehensions and dim recollections of negotiations which had taken place nearly four years before the hearing of the action. In these circumstances it is not a matter for surprise that different minds have arrived at different conclusions.
The agreement for sale was dated October 25th, 1930, and by it the purchase was to be completed on November 24th, 1930, and time was declared to be of the essence of the contract.
That this stipulation was waived by both parties almost from the date of the agreement is beyond question, the documents to vouch title were not furnished by the vendor until after the date fixed for completion had passed, the draft assignment was not submitted for approval until February 11, 1931, and was actually returned approved on February 21st. It appears to have been the intention of both parties to close the sale early in March, when a mistake or misunderstanding arose which has caused all the trouble and confusion in the case. It is impossible to say who was to blame in the first instance, but in my opinion the reason why no real attempt was made to straighten out the tangle was the firm conviction of Mr. Garvey, the vendor’s solicitor, that the purchaser had not the money to complete the purchase, and had never seriously intended to do so. He knew that the purchaser had been a commercial traveller, but was out of employment at the time and had no means of his own, and he was unaware that the purchase was to be financed by the purchaser’s brother, who is stated to be a well-to-do merchant and to have promised to advance the purchase money to the plaintiff.
The misunderstanding arose in this way. Before completing, the purchaser’s solicitors desired an inspection of the publican’s certificate attached to the premises, and they wrote to the vendor’s solicitors on March 5th, 1931, asking that it should be sent to them for inspection. A certificate was in fact sent to them next day. They replied on March 18th: “The licence as submitted to us is out of date; please let us know if there is a publican’s licence current. The licence is returned herewith.” Now, whether the licence sent to Messrs. Kelly & Byrne and returned by them was in fact the expired licence for the previous year which was sent in error cannot now be ascertained, but there is no doubt that a valid licence was in existence. Messrs. Kelly and Byrne wanted to see it, Messrs. Garvey and Smith insisted that they had sent it and that it had been returned to them, but either they were in error in thinking that they had sent the current licence, or Messrs. Kelly and Byrne were in error in thinking that the licence which had been sent to them was out of date. No one can now say which was right. On October 17th, 1931, Messrs. Kelly and Byrne wrote again to Messrs. Garvey and Smith asking them to comply with their requisitions in the matter. It is common case that the only requisition to which this letter can refer was the request for a loan and inspection of the current licence which Garvey believed he had sent on the 6th of March, and which Byrne believed had never been submitted to him.
Nothing more was done till December 22nd, 1931, when Messrs. Garvey and Smith wrote to Messrs. Kelly and Byrne, referring to previous correspondence and the agreement to purchase, dated October 25th, 1930, and concluding:”If you refer to this agreement you will observe that the contract should have been completed on the 24th November, 1930, but up to the present no serious effort has been made to carry it out, therefore we give you notice that the deposit of £50 is now forfeited and our client is about to re-sell the premises.”
The attitude taken up by the vendor’s solicitors in this letter is wholly untenable. Once the time fixed for completion had passed and the stipulation that time was of the essence of the contract had been waived, neither party was entitled to insist upon mere delay as a ground for treating the contract as at an end until he had by notice fixed a reasonable time within which the other party was required to complete the contract and that time had expired. The purchaser’s solicitors replied at once: “You cannot declare a forfeiture in this matter, and you still have not replied to our requisitions as to the licence.” The vendor’s solicitors instead of abandoning the untenable position they had taken up on December 22nd, and serving a notice requiring completion within a stated and reasonable period, or even trying to clear up the misunderstanding about the licence, adhered to their declaration of December 22nd, that the contract was at an end, the deposit was forfeited, and that the vendor was about to resell the premises. In my opinion the purchaser was entitled to treat this announcement, from which the vendor never receded, as a repudiation of the contract by the vendor, and the purchaser has not lost his right to elect so to treat it by writing the letter of January 8th, 1932, in which he reiterated his protest that the licence had never been produced. I regard the notice of rescission which was served on September 26th, 1932, by the purchaser’s solicitor as an intimation, perhaps formally irregular, of his election to rely upon the vendor’s conduct as a repudiation of the contract and to demand the return of his deposit. I cannot agree with the decision of the High Court that a contract which has been clearly and emphatically repudiated by both parties, still is “a subsisting contract of sale,” especially after the vendor had actually put the premises up for sale again and had entered into a fresh contract with a different purchaser.
Furthermore, if the contract be still subsisting and enforceable by either party, it is difficult to understand a decree which declares the money paid into Court on foot of the deposit to be the property of the vendor, who presumably might yet make default in completion.
In our opinion the purchaser is entitled to the return of the amount of his deposit, together with the sum awarded to him by the Circuit Judge for interest, costs or expenses, and we therefore decide that the order of the High Court should be discharged and that the decree granted by the Circuit Judge should be affirmed. The plaintiff will get a decree for £59 15s., with costs of proceedings in the Circuit Court as awarded by Judge Wyse Power, the costs of the appeal to the High Court, and of this appeal.
MEREDITH J. :
I entirely agree, but I desire to add a few words, as, at the hearing, I inclined to the view that the principle adopted in Howe v. Smith (1) might be applied to this case.
However the letter of 22nd December, 1931, from the vendor’s solicitors to the solicitors for the purchaser is interpreted, the vendor entirely misconceived the position. If he was relying on non-completion on the date originally fixed, then completion on that date had clearly been waived. If he was relying on unreasonable delay after that date he should have served notice fixing a new date. This he did not do. If, however, his point was, as I think it was, that the purchaser had on the 22nd December, 1931, been guilty of such delay as amounted to a constructive repudiation of the contract, then he should have alleged such repudiation in his defence. But he neither alleges nor proves any such repudiation. The vendor, therefore, was not in a position to rescind, or treat the contract as rescinded, on the 22nd December, 1931.
Then, as to what happened subsequently, he never put himself into a position to enable him to rely on the subsequent delay or on any constructive repudiation occurring after the 22nd December, 1931, for he never attempted to withdraw from the position he took up in the letter of that date. Consequently, in his defence he does not, and could not, rely on any such subsequent repudiation. That is what distinguishes the facts of this case from those in Howe v. Smith (1), as summarised by Cotton L.J. at p. 96. It may well be that from a date not long after 22nd December, 1931, the purchaser was never ready and willing to complete. But that is immaterial, since the vendor never gave him the option. Consequently, all the purchaser has done is to be somewhat dilatory in bringing his action for the return of his deposit.
But although the letter of 22nd December, 1931, was wholly ineffectual so far as concerns its purpose, however conceived, I cannot regard it as a nullity from every point of view. The vendor purported to treat the deposit as forfeited, and declared his intention to resell the premises. The purchaser was then entitled to treat the letter as a repudiation of the contract, and both the learned Judges in the High Court so held, and the right so to elect is not disputed. But it may be contended that the right is always lost unless it is promptly exercised. But that is only so in the sense that if the right to elect is not promptly exercised subsequent events and occurrences may readily cause a loss of the right. The vendor may be enabled to mend his hand and restore and revert to the original position. But so long as the vendor maintains the position that gives the right of election so long he preserves and keeps alive the purchaser’s right.
The vendor has never retreated from the position taken up in the letter of 22nd December, 1931, but has repeatedly reaffirmed it in the correspondence, and has finally done so in this action. With the election unmistakeably left open the purchaser has made his election. The contract is therefore terminated.
In Howe v. Smith (1), Bowen L.J. said: “The question as to the right of the purchaser to the return of the deposit money must, in each case, be a question of the conditions of the contract.” Under this contract the only condition of forfeiture of the deposit was on the purchaser’s failure to complete on the date fixed. That condition was waived and no new date fixed. The vendor cannot retain the deposit in the face of his own wrongful repudiation of the contract, just because there may be ground for suspecting that if he had at a subsequent date said to the purchaser:”Very well, I withdraw my letter of 22nd December, the title is accepted, I give you till to complete,” the purchaser would have been unable or unwilling so to do.
GEOGHEGAN J. :
I also agree with the judgment just delivered by Mr. Justice FitzGibbon.
Gordon v Phelan
27 April 1881
[1881] 15 I.L.T.R 70
Fitzgerald, Dowse BB.
Fitzgerald, B.
[The relation of landlord and tenant must subsist with its incidents, or it is nothing, or an unintelligible thing. According to your view I do not see what would continue except the relations established by the Act of 1860 itself. Pluck v. Digges (2 Bli. 31, 2 D. & Cl. 180), and that class of cases, having established that the statutes relating to landlord and tenant could not apply unless there were tenure and service, the intention of the Act of 1860 seems to have been to maintain the known relation of landlord and tenant with its incidents, even though there were neither tenure nor service to support it, provided there was a contract to create the relation.]
Fitzgerald, B.—Section 3 of the Landlord and Tenant (Ir.) Act, 1860, shows an intention that something there called the relation of landlord and tenant should continue to exist, but that from that time it was to continue, not as founded on tenure, but as founded on the contract of the parties. This being so, I am of opinion that the relation must continue with the incidents it had before. The defendant was, therefore, entitled to distrain the day after the rent was due.
As to the second point, the statement of claim contains the material allegation that the defendant broke open the outer door of the house. The plea undertakes to justify this. This it cannot do, and the demurrer must therefore be allowed on this ground.
Dowse, B.
I am of the same opinion as my learned brother as to the meaning and effect of section 3 of the Landlord and Tenant (Ireland) Act, 1860.
As to the other matters, I shall merely add that the plea admits the material allegation that the defendant broke open the onter door, and it is therefore bad. It is urged that the defendant may refer to the traverse contained in paragraph 2 to show that there is no such admission, and Nathan v. Batchelor is relied on for this. But that case merely decided that the first paragraph did not there constitute the whole defence. I would be inclined to follow it in a like instance. Here, however, paragraph 4 is a plea in confession and avoidance, and must stand or fall by itself, and cannot be helped by the traverse, which is an independent defence.