Landlord’s Consents
Sub-Leases Cases
McDaniel Stone v Red Valley Limited
[2011] IEHC 322
Hedigan J.
1. The plaintiff resides at Borleagh Manor, Inch, Gorey, Co Wexford. The first named defendant Red Valley Limited is a limited liability company with its registered office situate at Ballinacarrig Park, Brittas Bay, Co Wicklow. The second named defendant Austrent Limited is a limited liability company with its registered office situate at 29 Earlsfort Terrace, Dublin 2. The third named defendant Ballincarrig Park Club Limited is a limited liability company with its registered office situate at Ballinacarrig Park, Brittas Bay, Co Wicklow.
2. In this action the plaintiff seeks:-
(a) An order for possession of all that and those lands comprised in Folio 6578F of the Register County Wicklow,
(b) Damages for breach of covenant,
(c) Mesne rates continuing to the date of possession,
(d) Interest pursuant to the Courts Act 1981,
(e) Further and other order,
(f) Costs.
3.1 The plaintiff is the owner of lands at Ballinacarrig, Brittas Bay, Co Wicklow. The plaintiff operated the said lands as a caravan and mobile home park from the 1970’s until July 2000. The residents of Ballinacarrig park each held licences from the plaintiff. The residents were eager to establish a more secure system of tenure and approached the plaintiff with a proposal to lease the entire park. In July 2000, the plaintiff agreed to allow the residents to have long leases on their holiday homes instead of renewable licences. The residents established three companies Red Valley Limited, Austrent Limited and Ballinacarrig Park Club Limited for the purpose of leasing the park from the plaintiff.
3.2 On the 1st July, 2000, the plaintiff leased the caravan park to the first named defendant. This lease which is hereinafter referred to as “the head lease” was for a term of 35 years commencing on the 1st January, 2000. By sub-lease dated the 1st July 2000, the first-named defendant demised the park to the second-named defendant for a term of 10 years and the second-named defendant in turn demised the park to the third named defendant for an initial term of 6 years (“the occupational lease”). The term of this lease was extended by a further 4 years on the 26th March, 2007. By a further sub-lease dated 1st July, 2000, hereinafter referred to as “the Ballinacarrig lease”, the first named defendant demised its reversionary interest in the park to the third-named defendant for a term of 35 years. The purpose of the various leases was to secure a VAT advantage. On foot of their increased security of tenure mobile home owners invested significantly in their mobile homes and improvements were also made to the park.
3.3 Under the head lease the tenant covenanted to pay the rents reserved and also to provide a bank guarantee for the payment of the rent during the currency of the lease. A dispute arose between the plaintiff and the first named defendant in and around the end of 2009. The first named defendant failed to pay an increase in the rent due under the terms of the head lease. Furthermore on the 31st December, 2009, the bank guarantee procured by the first-named defendant expired. The first named defendant contacted a number of banks but was unable to obtain a new guarantee.
3.4 On the 29th March, 2010, the plaintiff served a forfeiture notice on the first-named defendant calling on it to remedy the alleged breaches of covenants in the head lease within 28 days of the date of service. On the 26th April, 2010, the period allowed by the forfeiture notice expired. The plaintiff issued forfeiture proceedings seeking an order for possession. The plenary summons and statement of claim were forwarded to the defendants solicitors Lavelle Coleman on the 15th June, 2010. The first and second named defendants did not contest the plaintiff’s entitlement to re-enter the demised lands. However the third named defendant asserted that the lease under which it held the property namely the Ballinacarrig lease continued to subsist.
3.5 Around 176 mobile homes are situated in the park and each of the home owners were in occupation of their site pursuant to a licence granted by the third-named defendant. At an AGM on the 2nd August, 2010, the third named defendant resolved to grant subleases to each of the mobile homes owners. On the 11th November, 2010, the plaintiff’s solicitors Ivor Fitzpatrick and Company wrote to the defendant’s solicitors Lavelle Coleman objecting to this course of action on the basis that sub leases could not be created as the head lease was forfeit.
3.6 On the 8th December, 2010, a letter was written by Noel Smyth on behalf of the third named defendant to each of the mobile home owners recommending that the mobile home owners cancel all standing orders in favour of the plaintiff. In that letter the third named defendant also indicated that it intended to issue and grant sub leases for a 24 year term at a fixed rent, without any bank guarantee and with annual break options in favour of the sub-lessees/mobile home owners. On the 16th December, 2010 the plaintiff’s solicitors wrote to the defendants’ solicitors seeking an undertaking from the first and third named defendants to “desist from issuing such sub-leases until the final determination of proceedings between the parties”. The letter went on to state that “failing receipt of same our client shall take such action as may be necessary to protect his interests which will include an application to Court for injunctive relief”. On the 18th December, 2010 the defendant’s solicitors responded stating that the third named defendant intended to issue the sub leases to the mobile home owners, but that it would not execute any returned leases pending resolution of the proceedings. On the 20th December, 2010 the plaintiff’s solicitor sent a fax to the defendant’s solicitors seeking an undertaking that the third named defendant would not issue the sub leases. When no response was received to this fax, proceedings were issued.
3.7 A statement of claim was delivered on the 20th December, 2010. Pending resolution of the matter the plaintiff sought and obtained an interlocutory injunction on the 21st December 2010, restraining the third named defendant from sub-leasing its interest in the lands. Further consolidated statements of claim were delivered on 11th February, 2011 and the 14thApril, 2011. In this action the plaintiff seeks an order for possession of the caravan park, damages for breach of covenant, mesne rates outstanding to date, and interest.
Submissions on behalf of the Plaintiff
4.1 As the first and second named defendants do not contest the plaintiff’s entitlement to the relief sought these submissions are directed to the claim against the third named defendant Ballinacarrig Park Club Limited. The third named defendant does not dispute the forfeiture of the lease dated 14th August, 2001 between the plaintiff and the first named defendant (the Red Valley lease) but asserts that the lease under which it holds the property, namely the lease dated the 13th February, 2001, between Red Valley Ltd and Ballinacarrig Park Club Ltd ( “the Ballinacarrig lease”) continues to subsist due to the inclusion in the Ballinacarrig lease and the other leases, of a provision which it is alleged confers rights akin to landlord and tenant rights on the third named defendant. It is asserted that as a result of the inclusion of this provision an estoppel arises.
4.2 As a matter of common law, the termination of a lease by forfeiture has the effect of automatically terminating all sub-leases and sub-tenancies in the premises in question. In Pennell v. Payne [1995] 2 All ER 952 Brown LJ stated (at 596):-
“At common law, the general rule is that when the head tenancy comes to an end, any sub-tenancy derived out of it also automatically and simultaneously comes to an end.”
The common law rule is subject to statutory exceptions such as those contained in section 78 of the Landlord and Tenant (Amendment) Act, 1980. The plaintiff submits that unless the provisions of section 78 of the 1980 Act apply, the forfeiture of the Red Valley lease automatically terminates the Ballinacarrig lease. The third named defendant seeks to rely on special condition one of the fifth schedule to the Ballinacarrig lease which reads as follows:
“For the avoidance of doubt, the Landlord hereby agrees that the Lease hereby granted shall obtain the benefit of all existing Landlord and Tenant legislation for the time being in force notwithstanding the fact that the premises hereby demised may not constitute a ‘tenement’ under existing landlord and tenant legislation or may for some other reason not comprise a qualifying lease to obtain the benefit of present or future landlord and tenant legislation. The Tenant shall have the right to renew this lease on the expiration of its term upon terms and conditions no less favourable than the terms and conditions herein contained (including this right of renewal).”
The plaintiff submits that the intention of this clause is to confer on the lessee under the Ballinacarrig lease renewal rights similar to such rights that would exist if the provisions of the Landlord and Tenant Act did apply. Any other interpretation of this clause would be ineffective because parties cannot contract out of the common law rule identified above.
4.3 Parties cannot seek to bring themselves within a statutory framework such as a landlord and tenant framework, where the statutory criteria necessary to come within that framework are not satisfied. In Carr v. Phelan [1967] ILRM 149 a lease conferred on a lessee an option to purchase the freehold at a price to be ascertained under the Landlord and Tenant (Ground Rents) Act, 1967 as if the rent reserved by the lease was a ground rent. The rent was not in fact a ground rent and the County Registrar refused to entertain the application to fix the purchase price, a course of action which Hamilton J. in the High Court considered correct. Similarly, in the present case, it is not open to the third named defendant to seek to avail of the various rights conferred on certain lessees under the 1980 Act. The third named defendant does not appear to assert that the Ballinacarrig lease is a lease to which any part of the 1980 Act applies. Even if the interpretation of the special condition is as appears to be suggested by the third named defendant, the basis for the estoppel as asserted by that defendant does not exist. The mobile home owners who it is alleged placed reliance on the alleged “scheme” are not parties to the litigation and the third named defendant has expressly agreed that it has not placed reliance on any statement or representation other than statements and representations set out in the Ballinacarrig lease. In this regard clause 6.4 of the Ballinacarrig lease states as follows:-
“The Tenant acknowledges that this lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord, except any such statement or representation that is expressly set out in this Lease.”
4.4 The automatic termination of the Ballinacarrig lease as a result of the forfeiture of the Red Valley lease does not leave the third named defendant, as lessee under the Ballinacarrig lease, without any remedy. Section 4 of the Conveyancing Act, 1982 confers on a court jurisdiction to grant relief to a sub lessee where a superior lease is forfeit. Section 4 provides as follows:-
“Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture under any covenant, proviso, or stipulation in a lease, the Court may, on application by any person claiming as under-lessee any estate or interest in the property comprised in the lease … make an order vesting for the whole term of the lease or any less term, the property comprised in the lease or any part thereof …”
Thus, it is open to the third named defendant to seek to step into the shoes of the lessee under the Red Valley lease. Significantly, no such application has been made, presumably because having regard to the conduct of the third named defendant that application would be bound to fail. Stepping into the shoes of the lessee would require the third named defendant to pay rent and provide a bank guarantee. It appears that the third named defendant is unwilling to take either of these steps.
4.5 In the event that the Court determines that the Ballinacarrig lease has not automatically terminated by virtue of the forfeiture of the Red Valley lease, the plaintiff submits that the Ballinacarrig lease has been forfeit due to non-payment of rent. Under the Ballinacarrig lease rent is payable quarterly. Clause 6.1 provides for forfeiture of the Ballinacarrig lease where:
“The whole or any part of the rents or other sums reserved by this Lease is unpaid for fourteen days after becoming payable.”
The third named defendant failed to pay the entire of the rent falling due on 1st October, 2010. The third named defendant also failed to pay any of the rent falling due on 1st January, 2011. As of the 18th May, 2011, the total amount outstanding for “rent” and interest calculated in accordance with the Ballinacarrig lease is €670,044.60. The plaintiff relies on this rent as his only source of income.
4.6 The third named defendant does not deny non payment of the rent but asserts that the non-payment arises because the plaintiff wrongfully obtained an injunction on the 21st December, 2010, restraining the third named defendants from sub-leasing the lands making it impossible for the third defendant to seek to collect monies from the users of the park with which to pay the rent to the plaintiff. The plaintiff submits that this is merely an excuse. On the 8th December, 2010, Noel Smyth, on behalf of the third named defendant, wrote to each of the mobile home owners recommending that the mobile home owner cancel all standing orders and/or direct debit payments theretofore existing in favour of the plaintiff. This letter was written prior to the injunction referred to above and consequently, it is this letter, and the recommendation contained therein, that is the reason why the monies have not been paid to the plaintiff.
4.7 The letter of 8th December, 2010, also identifies a strategy whereby the third named defendant is offering to each mobile home owners a sub-lease for a 24 year term at a fixed rent, without any bank guarantee, with annual break options in favour of the sub-lessees/mobile home owners. This strategy is clearly designed to interfere with and damage the economic interests of the plaintiff. The terms of the sub-lease are significantly more favourable to the mobile home owners than the existing licences enjoyed by those home owners, in particular, having regard to the annual break options. The third named defendant is consciously and willingly placing itself in a position where it will not be able to discharge the rent and other financial contributions for which it is liable under the terms of the Ballinacarrig lease. The result of this is that the plaintiff instead of receiving an annual rent of €1,284,974.88 which is supported by a bank guarantee, will now merely receive rent from such limited number of mobile home owners that enter into a sub-lease, and only then for so long as those homeowners do not exercise the break option.
Submissions on behalf of the Third Named Defendant
5.1 The plaintiff alleges that the third named defendant had no “estate, right, title or interest” in the lands as of December, 2010. The plaintiff alleges that consequently the third named defendant could not lawfully issue sub-leases to mobile home owners. The basis for this assertion is the forfeiture of the Red Valley lease. The plaintiff also contends that if he is incorrect in the foregoing assertion and the third defendant had an interest in the lands as of December, 2010, on foot of the Ballinacarrig lease then that lease is nevertheless forfeit by reason of the failure by the third defendant to pay rent for the first two quarters of 2011. The third defendant submits that the answer to these claims is straightforward. Under common law when a head tenancy ends, any sub tenancy derived out of it also ends. But this rule is subject to statutory exceptions. One such exception is contained in the Landlord and Tenant (Amendment) Act 1980. This Act applies to the Ballinacarrig lease by virtue of special condition one of the fifth schedule of the lease which states:-
“For the avoidance of doubt, the Landlord hereby agrees that the Lease hereby granted shall obtain the benefit of all existing Landlord and Tenant legislation for the time being in force…”
5.2 Section 78 of the Landlord and Tenant Act 1980 states that where a lease is terminated before its normal expiration then:
“(a) a lease or other contract of tenancy or any premises comprised in the terminated lease or contract shall not, if it is a lease or contract, to which any part of this Act applies, inferior to the terminated lease or contract, be terminated by the termination.
(b) the person who would, but for this subsection, become entitled by virtue of the termination of the terminated lease or contract to the possession of the premises shall become entitled to the reversion on the inferior lease or contract.”
The third defendant alleges that by reason of special condition one of the fifth schedule which is contained in each of the leases, the third defendant was as of December, 2010, as a matter of contract or in the alternative on foot of an estoppel, lawfully in possession of the premises. In those circumstances the third defendant had the right to issue sub leases of the lands to the mobile home owners. Both the Red Valley lease and the Ballinacarrig lease give the tenants an express right to issue such sub leases. Further, the plaintiff freely admitted in his evidence that it was always envisaged that either Red Valley Limited or the third defendant would have the right to issue sub leases to the mobile home owners. The third defendant claims that the plaintiff is not entitled to seek to forfeit the lease in circumstances where the plaintiff had unlawfully prevented the third defendant from raising revenue by issuing sub leases. It is submitted that it is clear on the evidence that the third defendant was bona fide engaged in a course of action, which in its opinion would generate sufficient revenue to pay the rent. The suggestion that the third defendant had devised “a strategy” designed to interfere with the plaintiffs economic interests is wholly unsustainable.
5.3 The plaintiff maintains that the Court should construe the terms of the fifth schedule to each of the leases as only referring to rights of renewal under Landlord and Tenant Legislation. The fifth schedule of the Ballinacarrig lease states:
“For the avoidance of doubt, the Landlord hereby agrees that the Lease hereby granted shall obtain the benefit of all existing Landlord and Tenants legislation for the time being in force . . . The Tenant shall have the right to renew this lease on the expiration of its term upon terms and conditions no less favourable than the terms and conditions herein contained (including this right of renewal).”
It is submitted that the Court should give the terms of the fifth schedule their natural and ordinary meaning, i.e. that the rights conferred on the first and third defendant are all of the rights provided for in legislation that is deemed, by agreement, to be applicable. In I.C.S v. West Bromwich B.S. [1998] 1 WLR 896 Hoffman J stated at 912:-
“The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents”.
The third defendant submits the phrase “the benefit of all existing Landlord and Tenant legislation” is entirely clear and unambiguous. If the plaintiff is contending that the parties agreed that the benefit was to be confined to renewal rights, then he should have sought to have the contract rectified. He did not do this nor did he plead in the original or amended statement of claim that the Ballinacarrig and Red Valley leases were to be so construed. The actual pleading made by the plaintiff is that the provisions of the fifth schedule in the Ballinacarrig did not bind the plaintiff in circumstances where he was not a party to that lease. That argument has now apparently been abandoned, presumably because in light of the evidence given by the plaintiff concerning his knowledge of the structure put in place by the defendants, the lack of privity argument cannot be maintained.
5.4 If the third defendant is correct in asserting that benefits referred to in the fifth schedule include the provisions of section 78 of the 1980 Act, then its interests must have survived the forfeiture of the Red Valley lease. The third defendant does not need to establish that it is entitled, as a matter of contract, to the benefit of the provisions of section 78 of the 1980 Act. The same result can be achieved through an estoppel. This is clear from PW & Co v. Milton Gate Investments [2004] Ch 14 where Neuberger J referred to the principle of estoppel by deed. At page 181 Neuberger J quoted from Halsburys Laws of England, (4th Ed. vol. 16 (1992) para. 1018) where the concept of estoppel by deed is explained as follows at:-
“Estoppel by deed is based on the principle that, when a person has entered into a solemn engagement by deed as to certain facts, he will not be permitted to deny any matter which he has so asserted . . . The averment relied upon to work an estoppel must be ‘certain to every intent’ without any ambiguity, but may be contained in the recital or in any part of the deed.”
It is submitted that special condition one of the fifth schedule is clear insofar as the provisions of section 78 of the 1980 Act are concerned. Even if there is no estoppel by deed then the fifth schedule taken together with the provisions expressly conferring on Red Valley and Ballinacarrig the right to grant subleases would unarguably found an estoppel by convention. The plaintiff contends that it is not possible to contract out of the common law rule that the termination of a tenancy brings all inferior interests to an end. On one view, the entire rationale of a contract is to avoid the common law rules that would otherwise apply and it is hard to see any principled basis for a court refusing to give effect to the parties clear intentions as manifested in the terms of the Red Valley and Ballinacarrig leases.
5.5 If the third defendant did have an interest in the lands as of December 2010, then the balance of the plaintiff’s case falls away. During the course of evidence it became clear that, in reality, the plaintiff’s principal objection to the granting of sub leases and the subsistence of the Ballinacarrig lease is the absence of a bank guarantee in the sub leases and the Ballinacarrig lease. It is submitted that this objection cannot avail the plaintiff if the third named defendant can show that it is otherwise entitled to an interest in the lands as of December, 2010. If the plaintiff had wished to insert provisions in the terms of the Red Valley lease or Ballinacarrig lease restricting the terms of any sub leases issued, then it was open to him to do so. He did not. Even if Ballinacarrig is obliged to obtain a bank guarantee then that cannot avail the plaintiff in these proceedings. In the first instance, the third defendant does not accept that it is required to furnish a guarantee. In any event, the plaintiff has not sought to forfeit the Ballinacarrig lease on that basis and to do so would require a notice under the Conveyancing Act. Were such a notice to be served the third defendant would seek, and would it is submitted, obtain relief against forfeiture on the grounds that the technical requirement to obtain a bank guarantee has, for reasons outside its control, become impossible to fulfil. Insofar as complaint is made about the non-payment of interest, that is equally not an issue in these proceedings and would again require a notice under the 1884 Act.
Decision of the Court
6.1 On the evidence I find the following; after protracted negotiations in the year 2000, the parties agreed that the plaintiff would lease to the defendant the holiday park at Ballinacarrig. The landlord would give a head lease to Red Valley Ltd for a term of 35 years. It would sublease to another company Austrent Ltd for a term of ten years who in turn would grant an occupational lease to Ballinacarrig Ltd initially for a term of 6 years. This was subsequently extended for a further 4 years in March 2007. The quid pro quo was that the landlord would have one tenant, which would manage the holiday park that he had previously managed. In addition he would have a bank guarantee for the payment of the rent. The tenants, for their part, would arrange their affairs so that by use of the three above companies they would be able to avoid liability for VAT on their rent payments. They would obtain security of tenure so that they could invest in improvements to the park and their properties thereon. They would thereby also obtain something of value.
6.2 The Ballinacarrig holiday park developed as a real community. Substantial sums of money were spent by the tenants on developing and improving the facility. It has been emphasised that there is a very strong sense of community within the park. The plaintiff himself has a home there. This arrangement worked well up to the end of 2009. Unfortunately, at this time, the effects of recent economic difficulties in Ireland began to manifest themselves. Some tenants were forced to leave. An increase of rent was awarded. On the 31st December 2009, the bank guarantee expired. Eight Banks including AIB, ACC, NIB, and Bank of Ireland were contacted to provide a bank guarantee. All refused to do so. No bank guarantee was possible. The tenants did not pay the increased rent. On 29th March 2010, a forfeiture notice was served on Red Valley calling on it to remedy the alleged breach i.e. non payment of rent. 28 days later, on 26th April, 2010 the forfeiture notice expired. The plaintiff issued forfeiture proceedings seeking an order for possession. The first and second defendants did not contest the forfeiture. Ballinacarrig Ltd however asserted that its lease continued to exist because it had survived the forfeiture of the head lease.
6.3 Throughout this time, the tenants of Ballinacarrig notably Noel Smyth, tried to devise some modus operandi whereby the community could continue and the relationship with the landlord be altered to reflect the difficult times now affecting everyone. Ultimately there evolved a plan for Ballinacarrig to issue subleases to the individual tenants. This would be for a 24 year term and would contain break clauses permitting the tenants to leave if they so chose. Reflecting apparent financial reality, there would be no bank guarantee. This in itself would make a considerable saving for the tenants. Mr Smyth and his colleagues who were working on this plan were convinced that with this proposal they could get a sufficiently large take-up of tenants to enable Ballinacarrig to pay the rent required under its lease. They thought they might get 135-150 of the tenants to take up such sub leases. In the event they could not get sufficient numbers, it was understood they would have to give up the Ballinacarrig lease and hand back the park to the landlord. This plan was blocked when the plaintiff, believing that Ballinacarrig had no right to issue subleases because its own lease had been forfeited with that of Red Valley, sought and obtained an injunction restraining Ballinacarrig from issuing any subleases. In consequence of the uncertainty then pertaining, 120 of the tenants had already cancelled their standing order to pay their rent. 50 tenants had continued these orders. Ballinacarrig advised this 50 to cancel their orders. The reason for this was because the company looked like it might go into liquidation. If this happened, these 50 most loyal supporters would lose their money. Thus a complete impasse has been reached. Ballinacarrig cannot generate the income to pay its rent or mesne rates as the case may be. The plaintiff whose sole income is derived from this rent is left bereft of his only source of support.
6.4 It has been asserted throughout by the plaintiff that the whole subleasing project by Ballinacarrig was a sham to avoid paying the rent and to force him to accept terms much less favourable to him and more favourable to the tenants. I do not accept this. I am convinced from the evidence I have heard on behalf of the third defendant that they were genuinely trying to sort out a very difficult situation. The issuance of subleases was a central plank of this project.
6.5 In my view, special condition one of the fifth schedule to the Ballinacarrig lease may be and should be read literally without importing anything into it. It is not ambiguous. It is an undoubted fact that the plaintiff was well aware of the existence of this lease. This lease was in effect, the community or club lease. He himself is a member of this community or club. It was a logical and sensible part of a somewhat complex mechanism whereby the tenants in effect held title of the landlord. This special condition provides;
“for the avoidance of doubt, the landlord hereby agrees that the lease hereby granted shall obtain the benefit of all existing landlord and tenant legislation for the time being in force.”
This means, inter alia, that section 78 of the Landlord and Tenant Act, 1980 is brought into play for the benefit of the Ballinacarrig lease. Section 78 of the Landlord and Tenant Act 1980 states that where a lease is terminated before its normal expiration then:
“(a) a lease or other contract of tenancy or any premises comprised in the terminated lease or contract shall not, if it is a lease or contract, to which any part of this act applies, inferior to the terminated lease or contract, be terminated by the termination.
(b) the person who would, but for this subsection, become entitled by virtue of the termination of the terminated lease or contract to the possession of the premises shall become entitled to the reversion on the inferior lease or contract.”
I accept the submission of Mr. Brady that parties in Ireland may contract out of a common law rule. Thus there is nothing to prevent the condition being effected, as was the clear intention of the parties. This means and I hold that the Ballinacarrig lease survived the forfeiture of the Red Valley lease. This in turn means that, in accordance with that lease, Ballinacarrig was entitled to issue subleases. This indeed was the whole point of the arrangement in the first place. Thus the plaintiff is estopped by deed from denying the right and title of the third defendant to issue subleases. Were this not so, I would still have held that he was estopped by conduct because he was well aware of the leasehold structure put in place in 2000 of which he himself was a part and benefited thereby.
6.6 Thus the plaintiff wrongfully obtained the injunction restraining the third defendant from issuing subleases. It was as a direct result of this action that the plaintiff prevented the third defendant generating the income to pay the rent due to him. In this regard, as I have held above, the third defendant was at the time bona fide attempting to find a solution to the difficulties which faced everyone including the landlord, whether he chose to admit it or not. The plaintiff has moved to forfeit the Ballinacarrig lease for non-payment of rent. As he himself prevented the third defendant from paying the rent, he is not entitled to do so.
6.7 The plaintiff admitted in evidence that it was always envisaged that either Red Valley or the third defendant would have the right to issue subleases. The plaintiff’s central objection to the project involving the issuance of subleases by the third defendant was the absence of any bank guarantee, the break clauses provided in the subleases and the prospect that if Ballinacarrig ends up forfeiting its lease, he will then ,on the basis of condition one, end up as landlord directly of each individual leaseholder. It is clear from the evidence that for the present and for the foreseeable future, bank guarantees of rent payment are unavailable. The condition has thus become impossible. Were the plaintiff to seek to forfeit the lease on this basis, he would clearly fail as the third defendant would be entitled to claim relief from such a condition. If any of the sub-lessees exercised their right to break the lease and walk away, Ballinacarrig’s obligation to pay the rent due by it would remain. The clause breaking provision would thus throw onto the remaining sub-lessees the burden of covering the loss of income from the broken lease. If a sufficiently large number exercised the break option, then Ballinacarrig will no longer be able to pay its rent and the lease will be forfeit. If that results in the unbroken sub leases surviving and the plaintiff ending up as landlord directly of the sub-lessees, then he is in little different position from where he was in 2000. On the evidence his main concern was the absence of a bank guarantee. As is also clear from the evidence, this non-availability is now an economic fact of life.
6.8 The plaintiff therefore, is not entitled to an order for possession nor to damages as claimed. The injunction granted herein was wrongly obtained and it will be necessary to have an inquiry as to damage incurred thereby.
Ahern v M’Swiney
5 June 1874
[1875] 9 I.L.T.R 26
Whiteside C.J. O’Brien, Fitzgerald JJ.
Whiteside, C.J.
This is an action to recover the sum of £79 6s. 10d., money paid by plaintiff for defendant’s use. The defendant has pleaded a traverse of the cause of action, and also a plea of the Statute of Limitations. The case was tried before my brother Fitzgerald, and a common jury of the county of Cork, at the last Spring Assizes. It appeared from the evidence that, by lease bearing date the 15th of June, 1770. part of the lands of Maglin was demised by Edward Dove for 700 years, at a yearly rent of £174 17s. 8d., payable half-yearly, every 25th March and 29th September. The lessor’s interest afterwards vested in Messrs Popham and Galway, whose agent is Mr. Joseph Bennett. By lease of the 29th November, 1783, a person named Walsh sub-demised the premises to Patrick and John Linehan for 679 years, at a yearly rent equal to £207 8s. 8d., payable half-yearly, every 25th March and 29th September. It appears that all the interest of Walsh in the premises came to the defendant, and all the interest of Linehan vested in the plaintiff by a deed of purchase dated the 7th May, 1866. Therefore we have a subdemise from Morgan M’Swiney to Ahern, both being liable to the head-rent under the lease of 1770, vested in Messrs. Popham and Galway, whose agent was Mr. Joseph Bennett. The question now to be determined arises upon the fact of the payment, by the plaintiff, of head-rent to Bennett for his principals, Popham and Galway, which rent should properly have been paid by the defendant as representing Walsh, the lessee in the original lease of 1770. When the plaintiff became the purchaser, there was half a year’s head-rent due to the head landlord by the mesne landlord, the defendant; and although the plaintiff had unquestionably paid that half-year’s rent for the benefit and in relief of the defendant, yet having paid it voluntarily, and after an action was brought against him by the defendant, his immediate landlord, he failed upon technical reasons to get credit for the sum. Two or three days after the writ of summons and plaint had been served upon the plaintiff in an action by his immediate landlord, he endeavoured to get this credit, but it was refused to him, on the ground that it was a voluntary payment of the gale of rent, and that before it was so paid the proceedings had been commenced. The plaintiff had paid £109 3s. 5d., in addition to the March rent, and, besides, had to pay the costs of the action. Upon the 25th of March, 1866, the plaintiff tendered to defendant the balance between the sum he had paid and his rent due to defendant, but the defendant refused to allow any credit for the same; and upon the 28th of June, 1867, the defendant caused plaintiff to be served with a writ for £163 14s. 4d., being half a year’s rent to the 25th March, 1867. Upon the 15th of July, 1867, plaintiff filed his defence in that action, claiming credit for the sum so paid upon the 25th October, 1866, to the head landlord, for M’Swiney’s rent. The defendant (who was in that action plaintiff) replied that it was a voluntary payment, and he said that the payment so made was officious, before the action was brought against the intermediate tenant, and upon that point the defendant defeated the plaintiff in the second action, and the plaintiff had to pay the rent over again. I think he is getting a lesson in law which will be of use to him.1 It appears that upon the 5th of *26 February, 1868, the plaintiff went to Mr Bennett, the agent for the head landlord, and paid him one year’s rent, ending the 29th September, 1867, claiming and getting credit for that half-year’s rent so paid by him on the 25th October, 1866, for the September gale (1866), and he got and took a receipt from Mr Bennett stating the fact that the September rent had been so paid, which operated practically for the benefit of M’Swiney. Two questions, therefore, arose—one upon the Statute of Limitations, the facts applicable to which are these.—The actual payment by the plaintiff (Ahern) of the rent for the benefit of the defendant on the 25th October, 1866; the adoption and ratification of that payment by the defendant on the 5th February, 1868. The writ in this cause issued on the 28th October, 1873. For the defendant, M’Swiney, it was argued that the plea of the Statute of Limitations was an answer to the action. It is a legal, but not a meritorious, defence—that is, that the money was paid, but that six years had elapsed from that date before the action was brought. For the plaintiff it was submitted that he had no cause of action, and could not maintain an action against the defendant till February, 1868, and that the Statute of Limitations could not run till the time when he (plaintiff) first became entitled to maintain his action, and that, therefore, the case did not fall within the Statute of Limitations. If, therefore, the cause of action arose from the date of the adoption of the payment by the defendant, i.e., February, 1868, the Statute of Limitations was no bar; whereas, if the cause of action arose trom October, 1866, the date of the payment in fact, the statute was a bar.
The second question was as to the effect of the proceedings already referred to, in debaring plaintiff from raising the question now, and the construction of the L. & T. Act, 1860. The 21st section of the Act, the 23 & 24 Vic, ch. 154, which applies to this case, is as follows:—“Where any tenant, sub-letting, shall neglect to pay his landlord the rent payable in respect of the lands comprised in the lease, it shall be lawful for the sub tenant, after and as often as any one gale of rent shall have accrued due, and remain unpaid to such landlord, and before any action brought by such tenant against the sub-tenant, voluntarily to make payment of so much of the rent due by such sub-tenant to such tenant as may be sufficient to discharge such gale or gales; and the receipt of the landlord or his agent shall be a full discharge to the sub-tenant against the tenant in respect of all rent so paid.” The argument of Mr Exham is that by this section the sub-tenant may, before any action brought by his immediate landlord, voluntarily make payment of so much of the rent due by the sub-tenant to the tenant as may be sufficient to discharge the gale due to the head landlord, and, he insisted, that if such rent was paid by the sub-tenant to the head landlord, not before, but after, action brought against him (the sub-tenant) by the tenant (his immediate lessor), no action could be maintained by the sub-tenant against the tenant, his landlord, for such voluntary payment, and it is clear that, according to the words of the 21st section, the sub-tenant must pay the head landlord before any action brought against him for his rent due to his immediate lessor, in order to gain the benefit of this section, and the very point was determined in the action by the defendant, as plaintiff, against the now plaintiff, arising on the replication of the defendant, then plaintiff in that action, making the very point But we decline to decide on a rigid construction of this section, that if the sub tenant cannot, under the words of this section, gain the benefit of a payment made to the head landlord, after action brought against him by his immediate landlord, that he can never, and under any circumstances, establish his right to recover against his immediate lessor. Plaintiff tried to be allowed this sum as a deduction and failed, by the acts of the defendant, if he omitted to deduct, and failed, as not claiming at the right time, it does not follow that he should be deprived of his right of action, under different circumstances, for money paid for the use and benefit of his immediate landlord, the now defendant. Upon what principle does the plaintiff’s right depend? Upon the principle that when a defendant adopts and enjoys the benefit of the consideration, the maxim applies, “ Omnis ratihabitio retrotrahitur et mandato priori œquiparatur ” (Pawle v. Gunn, Smith’s Leading Cases, 4 Bing. N. C. 448; Barber v. Brown, 1 C. B. N. S. 121). It appears to me that the case for the plaintiff can be supported on the principle, that the defendant has adopted and enjoyed the benefit of the payment made by the plaintiff. There was not, in Pawle v. Gunn, any compulsion, threat, or demand made by the head landlord upon the plaintiff to pay the head-rent, yet the relation in which the parties stood proved that such a payment as was made by the plaintiff could be regarded as a payment, not merely officious, but one that might eventually be for the pecuniary benefit of the defendant, if he chose to adopt it. In that case, the defendant had, naturally enough, adopted and obtained the benefit of the payment by the plaintiff, which, but for that act of adoption, the defendant would have been eventually liable and compellable himself to make. The promise to pay on such facts as here exist is implied by law. What seems to be direct in the affirmance of the principle here asserted is the passage in the note to the case of Osborne v. Roger, executor of Weston, 1 Saunders (Williams’ Ed.) 264, which is thus expressed:—“But where a party derives benefit from the consideration, it is sufficient, because equivalent to a previous request, as where a man pays a sum of money, or buys any goods for me, without my knowledge or request, and afterwards I agree to the payment, or receive the goods, this is equivalent to a previous request to pay the money, but it is still necessary to aver in the declaration that it was money paid and laid out for me at my special instance and request, and my subsequent conduct will be evidence of it.” This authority applies exactly to the present case. The conduct of the defendant, subsequently to the payment by the plaintiff, proves that the defendant adopted and took the benefit of the payment; and; therefore, we are of opinion he is liable in the action. Then, upon the point of the Statute of Limitations, the question here is—The money was paid for defendant in 1866, but never adopted, nor actually available, till 1868, and, forany practical purpose, did not reach him till then. Mr. Exham, for the plaintiff, relied chiefly on the principle affirmed in the case of Garden v. Bruce, L. R. 3 C. P. 301. There a cheque for money, lent by plaintiff to defendant, was given by him to the defendant, but the cheque was not paid by plaintiff’s bankers till some days later than the day upon which the defendant paid the amount into his bankers, receiving credit for it; and the Court held that the Statute of Limitations ran from the time of the payment of the cheque by the plaintiff’s bankers. In fact, the defendant had omitted to endorse the cheque, though payable to his order, and it had been sent back to him. In that case Willes, J., said that “the six years must be six years on every day of which the plaintiff could have sued out a writ against the defendant.” I presume the plaintiff’s counsel applies the case thus.—There the Statute of Limitations did not apply till the fact of payment had taken place, and in the principal case the statute could not apply till the fact of adoption of the payment, or of getting credit for the same by the defendant against his landlord, as then, and not until then, did defendant deal with this payment as made to his use, and for his benefit, and not till then did the cash reach his pocket. The case of Wilkinson v. Verity, L. R. 6 C. P. 206, 211, may be referred to as proving that when the fact is discovered of adopting the payment by plaintiff for defendant’s use, the action may then be brought, and is not too late, if the action could ever be brought. The case of Murray v. The East India Company, 5 B. & Ald. 205, establishes that there is no cause of action until there is a party capable of suing. The reasoning of the Chief Justice, in the case of Mackey v. Hawkins, 4 C. B 655, is also worth notice, and is applicable here, because he said the meaning of “a cause of action” is “a cause of action capable of being enforced.” We think the plaintiff is entitled to recover against the defendant, and it is satisfactory to know that this decision will be in accordance with the justice of the case. *27
O’Brien, J.
I concur in the judgment pronounced by my Lord Chief Justice, that the verdict should be entered for the plaintiffs, pursuant to the liberty reserved at the trial. Plaintiff’s counsel contend that, as the payment by plaintiff of the sum of £79 6s. 10d., for the half year’s head rent, due 29th September, 1866, was, in the first instance, a voluntary payment, it did not give him any right of action at that time against the defendant; and that plaintiff had not any such right until February, 1868, when defendant, on settling his rent-account with Mr. Bennett, the head landlord’s agent, got credit for the payment; and they further contend, that the defendant, by then agreeing to be credited with that payment, adopted it, and got the benefit of it; that such adoption had the same effect of rendering defendant liable to plaintiff as if the payment had been originally made at defendant’s request; and that, accordingly, the defence of the Statute of Limitations fails, as plaintiff brought this action in October, 1863, within six years from that settlement of February, 1868. The sum in question was paid by plaintiff for the half year’s head-rent, due 29th September previous, although the head landlord had not distrained or threatened to take any proceedings for it, or even demanded the payment of it; and I think it clear, upon the authorities, that such payment was, at the time, a voluntary payment, and did not give the plaintiff then any right of action against the defendant. We have been referred to several cases in which it was held that an under-tenant, who had paid the head-rent, had a right to deduct it from the rent payable by him to his immediate landlord, and that such payment was not to be considered as a mere voluntary one. See (amongst others) the case of Sappford v. Fletcher, 4 T. R. 511; Taylor v. Zamira, 6 Taunt. 524; Carter v. Carter, 5 Bingh. 407; Jones v. Morris, 3 Exch. 742. And the defendant’s counsel contend that, according to the principle on which those cases were decided, an under-tenant, paying the head-rent, might maintain an action to recover the amount from his immediate landlord, as money paid to his use, and at his request. But, upon referring to those cases, it will be seen that in all of them the head landlord had either distrained, or threatened to distrain the under-tenant, or demanded the head rent from him; and, according to the judgment of Baron Rolfe in Graham v. Alsopp, 3 Exch. 198, the principle to be deduced from those cases is, that if a tenant be compelled by the head landlord to pay the head-rent, he may tieat such payment as made in discharge of the rent due by him to his immediate landlord. In the present case it cannot be said that plaintiff was in any way compelled to make the payment in question, and no authority has been cited deciding that a payment made under circumstances similar to those in the present case was otherwise than a voluntary payment, or gave the under-tenant any present right of action against his immediate landlord The 21st section of the Landlord and Tenant Act, 1860, has been referied to, but as the plaintiff made the payment after defendant brought his action against plaintiff for the rent due 29th September, 1866, the plaintiff was not entitled to the benefit of that section with respect to such payment. In the second action, which was brought by the defendant for the rent due in March, 1867, the plaintiff relied upon the payment in question, but the defendant, by his replication, denied that such payment could be relied on, either as part payment of the rent sued for, or as a set-off. It appears that plaintiff abandoned that defence, and paid defendant the full amount of the rent of March, 1868, without deducting the payment now sued for. It appears, however, that afterwards, in February, 1868, the defendant, in settling his rent account with Mr. Bennett (the head landlord’s agent), got credit for this sum of £79 6s. 10d., paid by plaintiff in October, 1866, and that defendant, accordingly, only paid the agent the balance of the year’s head-rent, after deducting that sum. By the reservation at the trial, we are at liberty to draw inferences of fact from the evidence. From what passed between defendant and Mr. Bennett on the occasion of that settlement, and the receipt given to defendant by Mr. Bennett, the clear inference is, that defendant then adopted, and got the benefit of the payment made by the plaintiff in October, 1866. This brings the case within the rule stated in 1st Saund. (p. 264, n. 1), to the effect that if A. pay a sum of money for B, without his knowledge or request, and if B agrees to the payment, and derives benefit from it, this would be equivalent to a previous request. The result, accordingly, is that, on this settlement of defendant with Mr. Bennett, in February, 1868, plaintiff, for the first time, acquired a right of action for the sum in question, and that the defence on the ground of the Statute of Limitations fails, as this action was brought within six years from that date. The cases to which we have been referred, with respect to the Statute of Limitations, show that the statute begins to run only from the time when first there was a right of action. It was suggested during the argument, that although defendant’s second action against plaintiff was brought for the half year’s rent which accrued in March, 1867, after the payment in question was made, still that plaintiff, under the 21st section of the Landlord and Tenant Act of 1860, was entitled to rely on that previous payment as part payment of the half year’s rent for which he was sued. But whether he could or not, that section did not entitle him to bring any action against defendant for that payment, or to rely on it as a set-off, and the fact of defendant having both in 1866 and 1867 repudiated that payment, and refused to acknowledge it as made on his behalf, is altogether inconsistent with his now contending that plaintiff until February, 4868, had any right of action in respect of that payment.
Fitzgerald, J.
The defendant’s contention was that the plaintiff (the sub-tenant) had a complete right of action immediately on paying the head-rent in October, 1866, or as soon after as the defendant had refused to allow him credit for the amount paid. If he might have sustained the action at either of these periods, then he is barred by the Statute of Limitations. The case involves a very important question—viz., whether, having regard to the relations of the parties, and the provisions of the 21st and 48th sections of the Landlord and Tenant Act, 1860, the plaintiff could not have maintained his action, at a period more than six years before the commencement of the present suit. When that question comes to be determined by a Court of Appeal, a larger interpretation may be given to section 21 than we are disposed to put upon it, and it may be held that the plaintiff, in October, 1866, was entitled to maintain the action, or, at least, that he was so entitled when the defendant refused to allow the deduction out of the gales rent, which fell due in March, 1867. The payment of the head-rent having been made voluntarily, without any pressure or request on the part of the head-landlord, the tenant was not, according to decided cases, in a position to maintain an action, and the Court is disposed to hold that the 21st section gives only a right of deduction, or set-off, and not a right of action; but it may come to be determined that where the tenant is, by the 21st section of the Act of 1860, authorized to pay the head-rent, and deduct the amount from his immediate landlord, and, by section 48, has a right of set-off, if the landlord refused to allow the deduction, the tenant may bring his action. The decision of the Court, however, is, that he could not then maintain an action, and the general authorities which are binding on the Court show that, to maintain it, there should have been, at least, a demand upon the part of the head-landlord before the tenant paid the rent. The Court, also, holds that, the construction of the 21st section is that, whilst it authorizes the tenant to pay the rent and get a deduction, it does not give him a right of action against his immediate landlord. As to the transaction of 1867-8, there can be no doubt of its character. The memorandum on the receipt given to the defendant was:—“The gale of September, 1866, was not paid us by M’Swiney, but was paid us by J. Ahern.” If a question had been sent to the jury whether the transaction of 1868 was an adoption of this payment, I apprehend the jury would not have had any doubt that it was What are the consequences of that? The law says, “If you pay money for another, except upon compulsion or request, it is a voluntary payment, and you cannot *28 recover, but, if the payment is adopted, the law implies a promise so repay the amount, and gives to the person who has paid, for the first time, a complete cause of action. The opinion of the Court is, that a complete cause of action, capable of being sued upon, did not exist till March, 1868, and, if this decision is well founded, the Statute of Limitations is no bar to the action.
Ryan v Byrne
Exchequer Division.
19 November 1883
[1883] 17 I.L.T.R 102
Palles C.B., Dowse B., Andrews J.
Palles, C.B.
Everything has been said that could be said in this case, and we do not think it necessary to reserve our judgment. The facts are very simple. Jeremiah Ryan held certain lands under lease; it is alleged that he assigned his interest in the lease to William Ryan, and that William Ryan created a tenancy in the plaintiff and afterwards assigned the reversion in his lease to the defendant. Under these circumstances, if there were no special clauses in the lease, Ryan, the plaintiff, would have been tenant to Byrne; and a civil bill decree of ejectment having been obtained against both parties, it is clear that if the plaintiff paid the rent due by Byrne in order to prevent himself being evicted, he would be entitled to recover the amount in an action for money paid for the use of the defendant. But the lease contained a covenant against alienation, prohibiting both assignment and sub-letting; and the defendant’s counsel at the trial called for a direction, on the ground that there was no evidence of assent to the assignment to William Ryan. It is not competent for him now therefore to assert that the assignment was valid. I am unable to hold that it was with the landlord’s consent, and, that being so, there is no reason for saying that the sub-letting to the plaintiff was void, as contrary to the clause in the lease against sub-letting, since William Ryan did not in that case hold under the lease at all. I am unwilling, however, to dispose of the question on that ground when I have formed an opinion on the merits of the case—that is, the legal merits. Assuming the landlord’s consent to the assignment to William Ryan, the next objection of the defendant is that there is no evidence that the agreement of 1874, assigning the premises to Byrne, was with his consent. In my opinion, however, there is evidence of such consent. In the first place, it is provided in the agreement itself that the balance of the purchase money should not be paid until it be obtained. The purchaser is not entitled to go into possession until the purchase money is fully paid; we have it proved that he went into possession; that is evidence in my opinion of the full payment, and therefore of the landlord’s consent to the assignment. In the next place, there were several civil bill decrees in ejectment between the head landlord and Byrne put in evidence, and these recite that Byrne held under lease; that is to my mind very strong evidence that the landlord assented to the assignment. The defendant was not examined to contradict this presumption, therefore I think we may hold that there was good evidence of the assignment of 1874 to Byrne by William Ryan being with the lessor’s consent. I do not think that there was any evidence that the letting to the plaintiff here by Byrne was with the landlord’s consent; it is plain, however, that Ryan obtained lawful possession of the lands upon a contract which was void as to a tenancy. He is lawfully in possession of premises which are about being evicted for non-payment of rent, and in order to save himself from being evicted he pays the rent due; the question is, is that a voluntary payment which he is unable to recover from the person for whose benefit it is made? and in my opinion it is not. Ryan had legal possession of the lands good against everybody except the landlord; as having such possession he had peculiar rights—rights of such a character that if the landlord assented by an act ex post facto to his possession he would be in as of his original estate. This is the ground of my judgment. He had lawful possession and was entitled to protect that possession. He paid the rent under compulsion of law, and is entitled to recover the amount paid from the defendant. The cause shown must therefore be allowed with costs, and the verdict directed for plaintiff must stand.
Dowse, B.—concurred.
Andrews, J.
I concur also, and I wish merely to state that I base my judgment on the course taken by the defendants at the trial and the requisition handed in by them. Upon the other question discussed by my Lord Chief Baron, I express no dissent from him, but I do not base my judgment upon it.
Michael Enock and Leon Hairstylist Ltd v Lambert Jones Estates Ltd and Sydney Vard Ltd
[1983] I.L.R.M. 532
Costello J
The plaintiffs early this year demised to the first-named defendants, ‘Lambert Jones’ premises at 55 South King Street for thirty five years. The yearly rent was to be £32,500 during the first five years of the demise. Lambert Jones soon after taking the lease ran into serious financial difficulties. A cheque for £324.00 in respect of an insurance contribution to the plaintiffs was dishonoured at the end of April 1982. A receiver was appointed over the company’s assets on 11 May 1982 and the quarter rent due on 1 May was not paid. As the lease contained a forfeiture clause for non-payment of rent proceedings were instituted on 17 May claiming inter alia possession of the demised premises. The plenary summons was followed by a statement of claim. As no defence was filed a motion for default judgment was brought at which counsel for the receiver intimated that it was not proposed to defend the action. The lease had been forfeited and as no relief against forfeiture was available to Lambert Jones, the plaintiffs are entitled to a decree for possession against them as claimed in the statement of claim.
So far the case is a perfectly straightforward and simple one. It becomes somewhat complicated because the second-named defendants, Sydney Vard Ltd, are in occupation of part of the demised premises and their rights in relation to remain in occupation fall for consideration. Like Lambert Jones they failed to file a defence in the prescribed time and a default motion was brought against them. They wish to defend the action and will plead, their counsel says, relief as sub-lessees under s. 4 of the Conveyancing Act 1892, the rights as ‘inferior lessees’, under s. 78 of the Landlord and Tenant (Amendment) Act 1980. The plaintiffs’ counsel rightly concedes that in these circumstances he cannot object to an order extending the time for the delivery of the defence and I will extend the time for three weeks from today’s date and give liberty to file pleadings during the long vacation.
But the matter does not end there. Joined with the claim for possession is a claim for an injunction to restrain Sydney Vard Ltd, from entering, occupying or being on the demised premises and by a second motion, a claim for an interlocutory order in those terms, has been brought. To determine this claim I should firstly outline the circumstances in which these defendants are now in occupation.
Sydney Vard Ltd had carried on business as furriers in two rooms on the ground floor of Number 10 South King Street, for a number of years. Their landlord was Lambert Jones. Lambert Jones wished to develop this property and wanted vacant possession. Proceedings which they instituted were settled by means of an agreement of 1 March 1982 by which, inter alia, Lambert Jones agreed to procure the granting to Sydney Vard Ltd of a lease of portion of Number 55 South King Street, the premises which are the subject matter of these proceedings, described in a draft lease whose terms had previously been agreed between the parties. Pursuant to the agreement Sydney Vard Ltd vacated *534 Number 10 South King Street, and on 27 March moved to portion of Number 55 South King Street and has since then carried on in these premises their business as furriers. But when they went into occupation the sub-lease had not been executed and indeed it never has been executed.
The head lease from the plaintiffs to Lambert Jones contained restrictions of a stringent nature which prohibited Lambert Jones from sub-letting or parting with possession of any part of the premises at 55 South King Street without consent. Both Lambert Jones and Sydney Vard Ltd were well aware of these restrictions and on 10 February Lambert Jones’ solicitor wrote to the plaintiffs’ agent seeking a consent to a sub-letting to Sydney Vard Ltd of the ground floor shop and basement workshop. The plaintiffs’ solicitors replied on 16 February stating that their clients were prepared to consent to a proposed sub-letting subject to the following conditions:
1. Satisfactory trade references from Sydney Vard Ltd together with references from their existing Landlord and their bankers be submitted to us.
2. A copy of the proposed sub-lease between the parties be forwarded to us for approval.
3. Your undertaking to furnish us with a certified copy of the completed lease in due course.
4. Your clients agree to be responsible for our clients’ reasonable costs.
On 19 February Lambert Jones’ solicitor replied stating that these conditions were acceptable to their clients. Inexplicably, there the matter was allowed to rest. When the plaintiffs heard that Sydney Vard had gone into occupation they wrote a letter of complaint about the matter but apart from an acknowledgment of the letters no steps were taken by Lambert Jones to produce the trade and other references referred to in condition (1) of the letter of 11 February and no copy of the proposed sub-lease for approval by the plaintiffs as was required by condition (2) was sent. The financial collapse of Lambert Jones has, as far as the plaintiffs are concerned, radically altered their attitude to the proposed sub-lease to Sydney Vard Ltd. Their view is, and it is in my opinion a reasonable one, that it would not be consistent with good estate management to permit Sydney Vard to remain in occupation of part of the premises. It would be difficult to make another letting of the premises demised by the lease of 16 February 1982 if the defendants remained in portion of it and properties of this sort should be let as one unit to facilitate the sale of the reversion to institutional investors.
To determine the parties’ rights on the interlocutory motion it seems to me I must examine the validity and strength of the submission by Sydney Vard Ltd that they are entitled to relief under the Conveyancing Act 1892 and the Landlord and Tenant Act 1980. Mr Kenny on the plaintiffs’ behalf says that they are trespassers devoid of statutory rights and that if they wish to defend the plaintiffs’ claim the plaintiffs cannot stop them but they should not be allowed to remain in possession pending the hearing. In effect he submits that he has made out a strong prima facie case that the premises are his clients and that on the balance of convenience they are entitled to interlocutory relief.
I will begin my consideration of the plaintiffs’ case by looking at s. 4 of the Conveyancing Act, 1892. This provides: *535
Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture under any covenant, proviso, or stipulation in a lease, the court may on application by any person claiming as under-lessee any estate or interest in the property comprised in the lease or any part thereof … make an order vesting for the whole term of the lease or any lease term the property comprised in the lease or any part thereof in any person entitled as under-lessee to any estate or interest in such property upon such conditions … as the court in the circumstances of each case shall think fit …
It will be noted that the relief referred to in the section is available to ‘any person claiming as under-lessee’. Mr Brady, on Sydney Vard’s Ltd behalf, accepts that his clients do not occuply under a ‘lease’ but he relies on s. 5 of the Act which provides that ‘under-lease’ in the Act ‘includes an agreement for an under-lease where the under-leasee has become entitled to have his under-lease granted’. But I do not think that this artificial definition of ‘under-leasee’ is likely to be of much avail to these defendants at the trial of this action as the agreement of 1 March by which Lambert Jones agreed to procure the granting of the lease to Sydney Vard Ltd is not one which entitled these defendants to obtain a lease. Lambert Jones (as both parties knew perfectly well) were not entitled to grant a lease in the absence of the consent of the head landlord and until that consent was forthcoming no entitlement to the lease arose. As pointed out in Wolstenholme ‘ Conveyancing Acts ’ at pages 61 and 189 the extension of the s. 4 rights afforded by s. 5 to agreements for under-leases is intended to embrace cases in which an agreement to grant a lease could be specifically enforced. Clearly, in this case 1 March agreement was a conditional one and it could not be specifically enforced until the landlord’s consent to the sub-demise had been obtained. Such consent has not been obtained at the time the head lease had been terminated.
But even if these defendants could show that they were entitled to claim the benefit of s. 4, it seems to me on the evidence before me at the present time that it is highly improbable at the hearing the court would exercise its discretionary powers under the section in their favour. Undoubtedly a vesting order under s. 4 would cause the plaintiffs financial loss because of the resulting inability to let the entire premises as a single unit. But the defendants went into occupation of the premises with full knowledge of the restrictive covenants in the head lease. Who should bear the financial loss? The defendants who ran the risk and contributed to the loss-making situation? Or the innocent owners of the property? I think these questions would be answered in the plaintiffs’ favour.
Are these defendants in any better position by virtue of s. 78 of the 1980 Act? I do not think they are. This section provides that where a ‘lease’ expires then an inferior lease (as defined) shall not be terminated by such expiry and the person holding the inferior lease will be entitled to hold the premises subject to a rent as set out in sub-s (2) of the section. But Sydney Vard Ltd have no ‘lease’ of the premises and so prima facie cannot claim the benefit of the section. Even if the term ‘lease’ in the section is to be interpreted as embracing a person in occupation under an agreement for a lease (and on this I express no concluded view) these defendants would still have no right under the section as the agree *536 ment of 1 March is, for reasons I have already explained, an unenforceable one and the section could in no circumstances be interpreted as granting rights to a person in occupation under an unenforceable agreement.
I approach the claim for an interlocutory injunction therefore on the basis that the plaintiffs have made out a strong prima facie case that these defendants have no statutory rights to remain in possession and that at the hearing it is probable that they will be ordered to leave the premises.
On the balance of convenience it seems to me that the plaintiffs are entitled to the relief they now claim. If an injunction is now granted and if it subsequently transpires that it should not have been, undoubtedly these defendants will have suffered financial loss. On the other hand if an injunction is now refused and if it subsequently appears that it should have been granted then the plaintiffs will have suffered financial loss. The plaintiffs’ possible loss would in my view be much greater than that which the defendants would suffer if an injunction is now granted and is at the subsequent trial refused. The plaintiffs would be deprived of a very considerable income for an appreciable time if they cannot now take steps to let their premises as a single unit and this will be so even if the defendants pay into court pending the hearing of the action a rent calculated at the rate of £14,000 per annum as they have offered to do. On the other hand, the defendants, if they are now required to leave the premises should be able to find comparable premises from which to trade and their losses (particularly if I put a stay on the injunction to give them time to find alternative accommodation) need not be very great.
For these reasons I will grant the plaintiffs interlocutory relief. In reaching these conclusions I did not deem it necessary to consider whether damages in lieu of an injunction might be granted in this case, as the plaintiffs, if the defendants’ defence failed, would be clearly entitled to possession of their premises.
O’Toole v. Lyons.
[1948] IR 115
Maguire J. 115
The premises which are the subject of these proceedings are held under a lease of the 16th of November, 1928, the lessor’s interest being vested in the plaintiff and the lessee’s interest vested in the defendant. Among the covenants contained in this lease there is an express covenant by the lessee not to sub-let, assign or part with possession of the premises or any part of them during the continuance of the lease without the consent in writing of the lessor. It is quite clear that, by an indenture, dated the 29th of March, 1946, the defendant sub-let the premises to a Mrs. Dyson for the term of three years from the 15th of December, 1945, and that the defendant did not obtain or seek the consent of the plaintiff to this sub-letting.
The evidence satisfies me beyond doubt that Mrs. Dyson took possession of the premises some time in the year 1946, and that she went into occupation of them without the plaintiff being told about the matter. It was only subsequent to this that the plaintiff’s husband, from gossip he had heard around the district, ascertained that Mrs. Dyson was in possession of the premises as a sub-tenant. The plaintiff certainly never gave her consent to the sub-letting and that is common case. Her knowledge of the sub-letting appears to have been only what she heard from her husband.
Mr. Bell raises the point that, for a period from September, 1946 until May, 1947, the rent was accepted by Mr. O’Toole, acting on behalf of the plaintiff, notwithstanding the fact that he was aware of the sub-letting. He contends that this acceptance of rent amounts to a waiver of the particular breach of covenant complained of. That this should be a waiver is, in my opinion, right in the teeth of s. 18 of the Landlord and Tenant Act, 1860. [His Lordship read the section.]
The latter part of that section was enacted to get over an English decision that the acceptance of rent would operate as a waiver of the breach of covenant. There is no similar section in any of the English statutes referred to in the cases which Mr. Bell has cited, nor is it part of the law of landlord and tenant in England that any such provision should be super-imposed on the ordinary law. I must give effect to s. 18 of the Landlord and Tenant Act, 1860, in holding that there has been a breach of the covenant and that the sub-letting to Mrs. Dyson was a nullity. On the forfeiture, I hold that the plaintiff is entitled to succeed and, accordingly, I am obliged to give a decree for possession of the premises.
Oliver Gough v Anne Kinsella
The Circuit Court
2 February 1971
[1971] 105 I.L.T.R 116
Deale Judge
This case raises two questions. The first is whether the premises are a “tenement” within the meaning of the 1931 Act, and the second is whether the word “alienation” in section 56 includes sub-letting. If it does not, then this application does not lie at all. I have considered all the judgments delivered in Westmeath County Council v. Claffcy (supra). In my view, a sub-letting is an “alienation” within the meaning of section 56. The essence of alienation is the parting with what one has. In the case of a tenant, what one has is the exclusive right to possession, and if one parts with that right, or part of it, there is an alienation.
The plaintiff in the present case has already made sub-lettings of a substantial part of ehe entire premises, in breach of the covenant contained in his lease. Premises must be occupied by the tenant in order to come within the definition of “tenement” in section 2. Accordingly, these premises are no longer a “tenement”, and section 56 does not apply to them, and I must dismiss this claim, with costs.