Tenancies & Licences
Lease Licence Cases
Irish Shell and BP Ltd v John Costello Ltd
Supreme Court
[1981] I.L.R.M. 66
(OHiggins CJ, Griffin, Kenny JJ)
GRIFFIN J
delivered his judgment on 10 April 1981 saying: The plaintiffs are and were at all material times the owners of the premises known as the Friarsland Service Station at Roebuck Road, Clonskeagh, Dublin. In the said premises, the defendants and their predecessor John Costello have since 1967 carried on the business of garage proprietors engaging in the sale, repair and service of motor vehicles, and the sale of petrol, oil, tyres, batteries and such other motor accessories as are usually available for sale in garages. John Costello and the defendants occupied the premises under successive agreements made with the plaintiffs in 1967, 1968, 1970, 1971, 1973 and 1974. This appeal is concerned with the nature of these agreements, and in particular with that made in 1974.
The first agreement between the parties was made in 1967. No copy of that agreement is now available, but it is agreed that it was in similar terms to that of 18 July 1968. By that agreement, the plaintiffs (called the Company) agreed to let and John Costello (called the Hirer) agreed to hire the (petrol) tanks and pumps, and the machinery goods and articles described and set out in the schedule to the agreement (called the said equipment) for one year from 1 July 1968 subject to the provisions and conditions for determination of the agreement therein after set out. The Hirer agreed to pay the sum of 375 for the hire of the *67 said equipment for the said period of one year by equal quarterly payments of 93.15.0 each.
By clause 3 the Company licensed and authorised the Hirer during the said period of one year
free of any payment by the Hirers to the Company to enter upon (the said premises) for the purpose only of the Hirer personally using so much of the said premises as may be required by the Hirer for using thereon the said equipment and for carrying on personally thereon the business of the reception, storage, sale and distribution of the products marketed by the Company and any business ancillary thereto in accordance with the covenants in that behalf by the Hirer hereinafter contained.
Under clause 4in consideration of the said Agreement and Licence the Hirer agreed with the Company during the said period to comply with the provisions of 28 sub-clauses or covenants, many or most of which would be found in a lease or tenancy agreement. I propose to refer only to those which are of particular relevance in this appeal.
Under clause 4 (e) the Hirer covenanted to permit the Company or its servants or agents at all reasonable times to inspect the said equipment for the purpose of viewing the state thereof or for any other reasonable purpose.
Under Clause 4 (g) there was a covenant to use the said equipment and so much of the said premises as shall be required solely for the reception, storage, sale and distribution personally by the Hirer of products supplied by the Company to the Hirer and for other purposes ancillary thereto and to use his best endeavours to develop and extend the said business and the sale of the Companys products in such manner as the Company should from time to time direct.
Clause 4 (i) provided that the Hirer covenanted not without the previous written consent of the Company to carry on or permit or suffer to be carried on in or upon the said premises or any part thereof any trade or business whatsoever other than that to be personally carried on by the Hirer of a petrol filling station, motor engineer, motor garage, dealer in motor tyres, batteries and accessories. Under this covenant, the Hirer was not prohibited from carrying on the business usually carried on by garage proprietors, but under clause 3 he was licensed only to use so much of the premises as might be required for using the equipment hired to him and for the sale of the plaintiffs petrol and oils and any business ancillary, i.e. subservient or subordinate, thereto. The sale of petrol and oil is ancillary to a motor garage business, but it does not appear to me that carrying on a full garage business could be described as being ancillary to the sale of petrol and oil.
Under clause 4 (q) the Hirer covenanted not to assign or charge the benefit of the Agreement or part with the possession of the said equipment or any part thereof or the right of entry on and user of the said premises. Clause 4 (r) contained a covenant not to make any alterations or erect any buildings or facilities on the said premises without the consent in writing of the Company. Clause 4 (x) was a covenant not to interfere in any way with the possession and user by the Company of the said premises. This clause was an express recognition by the Hirer that the Company retained possession of the premises. Clause 4 (aa) was a covenant to pay the Company cash on delivery for all petroleum products *68 delivered by the Company to the premises. When the petrol was delivered, and paid for, it became the property of the operator of the site to be used in connection with his business and not with the Companys business.
Under clause 5, the plaintiffs covenanted to insure the equipment and premises, to pay all rent, rates and outgoings, and to keep the premises and equipment in repair.
Because of the important part clause 6 played in the argument, I propose to quote it in full. It is in the following terms:
PROVIDED ALWAYS and it is HEREBY agreed and declared that if any of the said quarterly payments or any part thereof shall remain unpaid for fourteen days after any of the days when the same ought to be paid or if the Hirer shall commit any breach of any of the Agreement on his part herein contained or if the Hirer shall die or commit an act of bankruptcy or become a bankrupt or shall make any arrangement or composition with his creditors or suffer any execution to be levied on his goods or if the Hirer being a Company shall enter into liquidation whether compulsory or voluntary or have a Receiver appointed over its assets then and in any such case this Agreement shall thereupon absolutely determine (but without prejudice to the rights of action of either party by reason of any antecedent breach of any of the Agreements herein contained) and thereupon the Hirer or his personal representative shall forthwith permit the Company to resume possession of the said equipment and shall forthwith cease to enter upon or use the said premises or any part thereof and the Licence hereinbefore in that behalf contained shall be revoked.
This proviso is effectively the proviso to be found in a lease providing for re-entry.
Clause 8 contained another proviso which in my view is very important. It is as follows:
PROVIDED ALSO and it is HEREBY FURTHER AGREED by and between the parties hereto that nothing herein contained shall be deemed to confer upon the Hirer the right to exclusive possession of the said premises or to create the relationship of Landlord and Tenant or of Partners between the Company and the Hirer.
On the expiration of the term of one year provided for in that Agreement, John Costello continued in occupation on the same terms (save as to the amount of the payments) as those contained in the 1968 Agreement, and so continued until the end of the year 1971. In the meantime, significant changes had taken place. The business carried on by Mr Costello had prospered to the mutual benefit of himself and the plaintiffs. At his request, the plaintiffs during the year 1971 erected on the premises and equipped an extensive workshop which included twin hoists or lifts, a quick oil changer, a tyre changer, and greasing equipment. John Costello had formed a company, John Costello Ltd, in February 1971, the only shareholders being himself and his wife. On 29 November 1971 the plaintiffs entered into an agreement with this Company. This agreement was expressed to be for the hire of the equipment in the schedule for one year from 1 January 1972, the Hirer agreeing to pay for the hire the sum of 1,000, by monthly instalments on the first day of each month. This Agreement differed in several material respects from those earlier entered into with John Costello. By clause 3, the plaintiffs simply licensed the Hirer for the duration of the Agreement to use the Service/Filling Station (called the site) for the use *69 thereon of the said equipment. It is to be noted that the provision licensing the Hirer to enter the lands free of any payment by the Hirer to the Company had been omitted from this clause 3, as had the provision to use the premises for the purpose of carrying on the business specified in clause 3 of the earlier Agreements. The scheduled equipment did not include the equipment to which I have already referred in the workshop. The hiring did not therefore include the equipment in the workshop, and the expressed Licence granted by the Agreement did not extend to the use of the workshop, since the Hirer was permitted to use the site only for the use of the scheduled equipment .
Clause 4 contained 24 sub-clauses or covenants almost all of which were similar to those included in the 1968 Agreement. These included provisions similar to clause 4 (e), (g), (i), (q) and (aa) already referred to, but or the right of entry on and user of the said premises was omitted from clause 4 (q). Clause 4 (x), i.e. that providing that the Hirer was not to interfere with the possession and user by the plaintiffs of the premises, was omitted from this Agreement.
Clause 6 contained a proviso similar to that in the 1968 Agreement with the exception that the words and thereupon the Hirer or his personal representative shall forthwith permit the Company to resume possession of the said equipment and shall forthwith cease to enter upon or use the said premises or any part thereof were omitted. One of the most significant changes in this Agreement was the omission of clause 8 of the 1968 Agreement i.e. that nothing in the Agreement should be deemed to confer upon the Hirer the right to exclusive possession of the premises or to create the relationship of Landlord and Tenant between the parties.
On 28 March 1973 a similar Agreement was entered into between the plaintiffs and the defendants for the period of one year from 1 January 1973 at the sum of 1,250 payable by monthly instalments; and on 14 February 1974 a similar Agreement was entered into between the plaintiffs and the defendants for the period of 6 months from 1 January 1974 at the sum of 625 payable by monthly instalments of 104.16. No further agreement was entered into between the parties, as a dispute broke out in relation to the hours of Sunday opening, and negotiations between them were broken off. The plaintiffs gave notice to the defendants that they would require possession of the premises and equipment on 5 November 1974. Possession was demanded of the premises on 12 November 1974, but as this was refused the plaintiffs instituted these proceedings claiming an injunction to restrain the defendants from trespassing and continuing to trespass on the said premises. The learned High Court Judge granted an injunction restraining them, their servants and agents from further trespassing on the said Service Station.
The question for determination on this appeal is a net one. The plaintiffs submit that what is given to the defendants under the 1974 Agreement is a personal privilege and that they occupy the site as licensees. They say that the Agreement was nothing more nor less than a contract of hire of the equipment set out in the Agreement for a given term, with a licence to enter the site and use it only for the use of the equipment. They point to clause 4 (g) as being central to the whole Agreement and as revealing the purpose of the Agreement *70 namely to sell petrol distributed by the plaintiffs. The defendants on the other hand submit that whilst the documents purport to create a hiring of equipment, with an ancillary right to use the equipment on the premises, whatever may have been the situation prior to the erection of the workshop and the making of the Agreement of 29 November 1971, that Agreement and the two subsequent Agreements in effect granted an interest in land, and had more of the attributes of a tenancy than a licence, and that a tenancy results.
Although a document may be described as a licence it does not necessarily follow that, merely on that account, it is to be regarded as amounting only to a licence in law. Whether the transaction is a licence or a tenancy.
does not depend on the label which is put on it. It depends on the nature of the transaction itself: see Addiscombe Garden Estates Ltd v Crabbe (1958 1 QB 513). Broadly speaking, we have to see whether it is a personal privilege given to a person (in which case it is a licence), or whether it grants an interest in land (in which case it is a tenancy). At one time it used to be thought that exclusive possession was a decisive factor. But that is not so. It depends on broader considerations altogether. Primarily on whether it is personal in its nature or not.
Per Lord Denning, MR in Shell-Mex v Manchester Garages, [1971] 1 WLR 612 at 615. One must look at the transaction as a whole and at any indications that one finds in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of landlord and tenant or that of licenser and licensee ibid per Buckley LJ at 618; Gatien Motor Co v Continental Oil [1979] IR 406.
It is therefore right and indeed necessary to look at the substance of the matter. Looked at in this way, what do the licensees get? The premises were intended by the parties for use, and were in fact used, by the defendants as a lock-up garage. They were, according to the evidence, visited approximately once per month only by a representative of the plaintiffs. The defendants carried on what might be called a full garage business there, providing their own mechanics and an apprentice in the workshop, and petrol pump attendants for the sale of petrol on the forecourt. The petrol pumps were kept locked and the plaintiffs or their representatives had no keys to them. It was thought necessary to include clause 4 (e) in relation to permitting the plaintiffs to inspect the equipment; to do so they would of course have to enter the premises. If they had a right to do so, this clause would seem to be completely unnecessary. Further, the omission from the Agreements with the defendants of (a) clause 4 (x), i.e. the covenant not to interfere with the possession and user of the premises by the plaintiffs, and of (b) the proviso in clause 8 that nothing in the Agreement should be deemed to confer on the defendants the right to exclusive possession, shows that it was intended that the defendants should have the right to occupy the premises and that this was intended to be a right to exclusive occupation and possession. In my view, the defendants were in fact in exclusive occupation and possession of the premises.
Whilst the right to exclusive possession is no longer conclusive that a tenancy exists, it is nevertheless still one of the important indicators in an agreement that *71 a tenancy and not a licence is given. There are also in the Agreement other indicators that this is a tenancy. These include:
(i) provisions expressly prohibiting the defendants from doing what they would have no right to do if they were licensees e.g. assigning or charging the benefit of the Agreement: clause 4(q);
(ii) although the plaintiffs had erected the workshop for the defendants, and intended that they should use it as such, the purported licence is only to use the premises for the use therein of the said equipment. If this were the true intention and agreement of the parties, the defendants would not be entitled to use the workshop or carry on the repair and maintenance of motor vehicles notwithstanding that this was the sole purpose for which the workshop was erected;
(iii) clause 6 is essentially a re-entry clause, even though the word re-enter is not used, and is much more appropriate to a tenancy agreement than a licence indeed it would be inconsistent with a licence;
(iv) the proviso in clause 8 of the earlier Agreements, whereby it was agreed that nothing in the Agreement should be deemed to create the relationship of Landlord and Tenant between the parties, was omitted from the Agreements with the defendants. Its omission is in my view clearly of major significance in determining whether a licence or a tenancy was intended.
In all the circumstances of this case, although some of the provisions of the Agreement appear to be personal in their nature (e.g. that in relation to the sale of the plaintiffs products), in my opinion, what was given to the defendants went far beyond a personal privilege given to the occupier of the site, and was in the nature of a tenancy of the site.
In the course of the argument, it was submitted on behalf of the plaintiffs that a tenancy could not subsist having regard to the provisions of s.3 of the Landlord and Tenant Act (Ireland), 1860. This section provides that the relation of landlord and tenant shall be deemed to be founded on the express or implied contract of the parties, and that the relation shall be deemed to subsist in all cases in which there is an agreement by one party to hold land from or under another in consideration of any rent. The plaintiffs say that since there was no rent provided for in the Agreement, there could not be a tenancy. Whilst it is correct to say that the Agreement did not provide for the payment of any rent as such for the premises, when the true nature of the agreement is considered the reality of the position is that the periodic payments made by the defendants were in fact rent, although cloaked under the guise or under the label of payment for hire of the equipment.
In my judgment, therefore, looking at the transaction as a whole, the Agreements between the parties, all three of which were made after the workshop was erected, created the relationship of landlord and tenant, and not that of licensors and licensees, between the plaintiffs and the defendants. In the result, the plaintiffs claim in this action therefore fails and I would accordingly allow the appeal. The rights, if any, to which the defendants may be entitled under the Landlord and Tenant Acts are not a matter for determination in this action.
KENNY J
delivered his judgment on 10 April 1981 saying: On 9 September 1970 Mr Costello formed a company called John Costello Limited of which *72 Mr Costello and his wife were the sole shareholders and directors. The next agreement for the site, made in 1971, was made with that company, the defendants, and the last agreement, that of 14 February 1974, was also made with them. Negotiations for the renewal of this agreement broke down, the plaintiffs allowed the defendants to remain on in the site while the negotiations continued but when they finally broke down, the plaintiffs wrote to the defendants that they would require possession of the site and equipment on 5 November 1974. On 12 November 1974 a representative of the plaintiffs called at the site and demanded possession and the keys and when these were refused, the plaintiffs began these proceedings in which they claimed an injunction to restrain the defendants from trespassing on the site.
The defendants have claimed that the agreement of 14 February 1974 by which the plaintiffs agreed to hire the equipment to the defendants and licensed them to use the filling station for the use of the equipment without any rent for the licence was unreal and that the substance of the agreement was to create a tenancy which, they say, has not been determined. This was the sole defence which was advanced in argument in this court. This makes it necessary to examine the agreement of 14 February 1974 in some detail.
By this agreement, the plaintiffs agreed to hire to the defendants the tanks, pumps and other articles set out in the Schedule for the period of six months from 1 January 1974 subject to the provisions and conditions for the determination of the agreement contained in it and then continued:
the Hirer (the defendants) agrees to pay to the Company (the plaintiffs) and the Company agrees to accept for the hire of the said equipment the sum of 625 plus value added tax at the appropriate rate for the said period, this sum to be paid by monthly instalments of 104.16 plus value added tax at the appropriate rate each. Then as a separate paragraph (paragraph 3) this appears: The Company (the plaintiffs) hereby licences the Hirer (the defendants) for the duration of this agreement to use the service/filling station known as Friarsland Service Station (hereinafter called the site) for the use thereon of the said equipment.
It will be seen that there was no rent charged or payable for the site. But the payment of rent is, in Ireland, an essential for the creation of the relationship of landlord and tenant. This arises from s.3 of the Landlord and Tenant Law Amendment Act, Ireland, 1860 (commonly called Deasys Act) which reads: The relation of landlord and tenant shall be deemed to be founded on the express or implied contract of the parties and not upon tenure or service and a reversion shall not be necessary to such relation which shall be deemed to subsist in all cases in which there shall be an agreement by one party to hold land from or under another in consideration of any rent (emphasis supplied).Rent is defined by s.1 of that Act as any sum or return in the nature of rent payable or given by way of compensation for the holding of any land.
Here there is no rent for the site at Friarsland and there is nothing in the nature of rent payable. The written agreement expresses the true nature of the relationship between the parties just as it did in Gatien Motor Co v Continental Oil [1979] IR 406. The relationship between the parties is that which the agreement says it is, licenser and licensee and not landlord and tenant. This *73 conclusion gains considerable force from the definition of lease in Deasys Act, 1860, for in s.1 of that Act I find this: The word lease shall mean any instrument in writing, whether under seal or not containing a contract of tenancy in respect of any lands in consideration of a rent or return. Counsel for the plaintiffs is right in describing the agreement of 14 February 1974 as a form of hire agreement: it is not a lease: it is a licence (see also the discussion of this subject in Somma v Haxlehurst [1978] 2 All ER 1011).
The plaintiffs are, in my opinion, entitled to a perpetual injunction to restrain the defendants by its servants or agents from trespassing or continuing to trespass or enter on the plaintiffs land known as Friarsland Service Station at Roebuck Road in the City of Dublin. The plaintiffs should have this injunction immediately: they are also entitled to damages for trespass against the defendants for trespass from 12 November 1974 up to date when the defendants leave the premises. The case should in my opinion, be remitted to the High Court to assess the damages payable by the defendants to the plaintiffs.
Murphy & Ors -v- Gowan Distributors Ltd
[2011] IEHC 126
5 April 2011
McMahon J.
Introduction
1. Seán Murphy ran a garage repair business in Dublin in the 1970s and 1980s. He also dealt in used cars. Finbar Murphy and his three brothers grew up in the business with their father and finally took over from their father when he became ill in 1989.
2. Mr. Murphy’s family garage was also a recognised service dealer for Peugeot cars at that time. Mr. Murphy and his sons in that capacity had a good relationship with Gowan Distributors Limited (hereafter “Gowan”) which was the importer and distributor of Peugeot cars in Ireland.
3. In the early 1990s, it was intimated to Finbar Murphy by Gowan that unless the business took “a new route” it would probably lose the service business for Peugeot cars. Finbar Murphy said that he and his brothers came under pressure to develop the family business into a full-blown Peugeot dealership covering not only the servicing side of the business but also the sale of new cars. It was realised, however, that to graduate to this higher level of business, new and better quality premises would be required. Finbar Murphy was on the lookout for suitable premises for approximately six or seven years until finally, Unit 4 Liffey Valley Shopping Centre was suggested to him, probably by Mr. Frank Scanlon, Marketing and Development Manager for Gowan. The Murphy brothers then decided to run with the plan of the new dealership with Peugeot. In April, 2000 they, together with two outside investors, Chris Giblin and Patrick Doyle (hereafter “the outside investors”), incorporated Westland Company Limited (hereafter “Westland”) as the new business vehicle to take the dealership. The premises at Liffey Valley Shopping Centre, however, were owned at that time by Glencullen Retail Limited (hereafter “Glencullen”) which was not prepared to deal directly with Westland, a new company with no track record, and which insisted that, if the property was to be let it would only be let in the first instance to Gowan, which could then sublet it to Westland if it wished. This then was the arrangement: Glencullen would lease the showroom and premises to Gowan and Gowan in turn would appoint Westland as a Peugeot dealer and would then sublet the premises to Westland. The sublease was signed on 18th April, 2001. The first dealership agreement (signed 2001) was in the standard form which carried all the provisions mandated by E.U. regulations. The sublease mirrored the head lease as might be expected and, in addition, the four Murphy brothers, who were directors of Westland, provided certain personal guarantees in respect of Westland’s obligations to Gowan for the rent (schedule 5 of the sublease). The terms of this agreement are a very significant part of Gowan’s case and they will have to be revisited in detail later in this judgment. In addition, before Gowan sublet the premises it spent in excess of €750,000 in an extensive fit-out of the premises. A further agreement was entered into between Gowan and Westland wherein Westland agreed to repay part of the cost of the fit-out over an extended period of years.
4. Westland moved into the premises at the beginning of 2001 and, after a couple of good years trading, it became apparent that the premises were not sufficient for both the sales and servicing aspects of the expanding business. A particular problem arose because of the limited parking space on the site, and Westland decided that new premises would be purchased and that the after sales services and parts department of the Westland business would be relocated to give more comfort to the sales part of the operation. This happened in 2005.
5. When business was good and Westland was making profits, the Murphy brothers together with the outside investors availed of the opportunity to purchase Glencullen’s interest in the Unit 4 premises at Liffey Valley Shopping Centre, as tenants in common of one sixth equal shares. This was done on 26th June, 2003. Gowan was unaware of the transfer until the deal was completed. It was informed, however, by Finbar Murphy and Ms. Butler (an accountant acting for Mr. Doyle) shortly after the deal was concluded. The unusual position that then prevailed was that after that date the Murphy brothers together with the outside investors were the owners/landlord of the Unit 4 property leased to Gowan, while Gowan, in turn, remained the lessor of the sublease to Westland, in which the Murphy brothers and the outside investors were the shareholders and directors. Moreover, the Murphy brothers had given personal guarantees to Gowan in respect of the rent payable by Westland under the sublease.
6. In 2005 Westland’s business began to decline and despite best efforts to save it, the company’s credit line with G.E. Woodchester was cut in January, 2009 and Westland went into liquidation on 13th February, 2009. Westland has paid no rent to Gowan since then and the Unit 4 premises have remained unoccupied from that time.
7. There are two sets of proceedings now before the Court. First, the Murphy brothers and the two outside investors have commenced proceedings against Gowan for rent due to them under the head lease. Gowan in these proceedings has filed a full defence. Second, Gowan is suing the Murphy brothers on the personal guarantees in respect of rent due by Westland on the premises at Unit 4 and calling on them to execute a new lease as they had undertaken to do in the event that Westland went into liquidation. A full defence has been entered by the Murphy brothers. It will be recalled that the applicants in the first set of proceedings include both the Murphy brothers and the two outside investors, who have not guaranteed the payment of Westland’s rent to Gowan. To avoid confusion, I will refer hereafter to the applicants in the first set of proceedings as “the Murphy brothers and the outside investors”; and the respondents in the second set of proceedings as “the Murphy guarantors”.
8. The cases are interlocked and the parties agreed that the best way of proceeding at the hearing was for counsel for Gowan to open its case first and then for the Murphy guarantors to give their evidence in their defence/counterclaim of this, which would also be their evidence in the action in which they, together with the outside investors, are the applicants in the proceedings against Gowan.
9. To establish the rights and obligations of the parties inter se, the Court is obliged to engage in the first instance with the relevant documents. In particular, the Court must consider the head lease between Glencullen and Gowan signed on 6th October, 2000; the sublease between Gowan and Westland (of which the Murphy brothers were guarantors) executed on 18th April, 2001; the dealership agreement between Gowan and Westland dated 25th September, 2003 (which replaced an earlier agreement of 2001); and two letters dated 23rd March, 2001, sent by Gowan personnel to the Murphy guarantors and to Westland respectively.
10. I set out hereunder the relevant provisions of these documents.
The Head Lease
11. The head lease between Glencullen and Gowan was signed on 6th October, 2000, and is a standard form document and requires little elaboration. The initial rent was €110,000 for the first year, €115,000 for the second year and €120,000 for the following three years and was subject to review thereafter. The premises, described as high quality car showrooms, were to be used exclusively for the retail sale of new Peugeot motor vehicles and ancillary purposes only. Both landlord and tenant gave the usual covenants.
The Sublease
12. Gowan leased the property to Westland on 18th April, 2001. By and large the sublease mirrors the head lease in its ordinary terms, with the same rent as in the head lease so that as far as Gowan was concerned it was a cash neutral transaction. Gowan was making no profit on the sublease. There was, however, a guarantee given by the Murphy brothers (but not by the outside investors), the terms of which are important for these proceedings, and for that reason the relevant provisions are reproduced hereunder:-
“THE FIFTH SCHEDULE
(Form of Guarantee Covenant)
Any covenant from a Guarantor given under this Lease will be in the form set out below mutatis mutandis, and the Guarantor named in the Particulars hereby covenants as set out below:
The Guarantor covenants with the Landlord, as a primary obligation, as follows:-
1. The Tenant will pay the rents payable under this Lease on the dates on which rent is due and payable and will comply with all the obligations and conditions contained in this Lease relating to any other matter.
2. In case of default or delay on the part of the Tenant in such performance the Guarantor will by way of primary obligation and not merely as a guarantor or as collateral to the Tenant’s obligation to do so, pay to the Landlord any sum which ought to be paid and make good any breaches of the Tenant’s obligations hereunder including all losses, damages, costs and expenses arising or incurred by the Landlord.
3. The Guarantor further covenants with the Landlord that if a liquidator examiner or trustee in bankruptcy surrenders or disclaims the Lease or if the Lease becomes forfeited then the Guarantor shall upon being required so to do by the Landlord by written notice given at any time take up a new lease of the Premises and deliver a duly executed counterpart to the Landlord upon the same terms as the Lease save that:-
(A) such lease will be subject to and with the benefit of the Lease (or any right which the Tenant shall have to the grant of the same) if and so far as it is subsisting;
(B) the term will be for the residue of the Term which would have remained had there been no surrender disclaimer or forfeiture but commencing on the date of such surrender disclaimer or forfeiture;…”
13. The reason Gowan insisted on this guarantee was that it wanted to have some additional security if Westland failed to pay the rent or went into liquidation. The evidence was that it also asked the two outside investors to sign the guarantee, but they were not willing to do so. In those circumstances, it was content to accept the personal guarantees of the Murphy brothers.
14. Clause 5.13(C) of the sublease is an important clause and is quoted here:-
“In the event of the termination of the Peugeot Dealer Agreement entered into between the Landlord and the Tenant mentioned at clause 5.14(B) for whatever reason either the Tenant or the Landlord will be entitled at any time thereafter to terminate this Lease on giving one month’s notice in writing to the other party of such termination expiring on any day.”
The Dealership Agreement
15. In his affidavit sworn on 18th November, 2009, in the first set of proceedings, that is, Finbar Murphy et al v. Gowan Distributors Limited, Mr. Anthony Maher, a director of Gowan, set out the background to the dealership agreement entered into between Gowan and Westland, at para. 4:-
“The Defendant is the importer into Ireland of new Peugeot motor vehicles, spare parts and accessories. The retail sale of the vehicles is channelled through a network of independent dealers who are contractually appointed pursuant to a standard form dealer contract. All manufacturers of motor vehicles including Peugeot impose standards which must be met in order to qualify for appointment as a dealer, commonly known as selection criteria. Amongst the most important of the selection criteria is the premises from which the dealership operates which must be up to a minimum standard. This involves a significant investment on the part of the dealer.”
16. These standard agreements contain many provisions which are necessary because of E.U. competition rules. Such dealership arrangements are contrary to E.U. law on the face of it, but are exempted by the European Commission if certain conditions are fulfilled. The original dealership agreement was signed in 2001, but because of a new block exemption issued by the European Commission in 2002, a new standard dealership agreement was adopted thereafter. Accordingly, the original dealership agreement of 2001 was replaced in 2003 by a new agreement. This, according to witnesses from Gowan, entirely replaced the earlier agreement.
17. Under the new dealership agreement, the dealer (Westland) has a non-exclusive right to sell new Peugeot vehicles, spare parts, etc. subject to terms and conditions and also on condition that the right is exercised from approved premises. If the dealer wishes to market vehicles other than Peugeot brands, it undertakes to give the grantor (Gowan) at least three months notice thereof by registered letter and to provide it with all relevant information to enable it to ensure that the selection criteria and conditions by which the dealer was selected are respected. There are various terms relating to sale targets, general conditions of sale, resales to non-network retailers, sales to intermediaries, facilities and organisation for sales, after sales service, taking back and sale of used vehicles, etc. The grantor may terminate the contract if the directors of the dealer no longer meet the selection criteria or the financial selection criteria set out in annex one of the agreement.
18. Article XVII stipulates the term of the contract and Article XVIII provides for early termination. Since these two articles are relied on heavily by the Murphy guarantors in the second set of proceedings, Gowan v. Finbar Murphy et al, it is necessary to reproduce their substantive provisions:-
“Article XVII – TERM
This contract shall enter into force on 1st October 2003, except for the provisions of Article IX-2 where is it which shall enter into force on 1st October 2005, and shall end, except in the even (sic) of extraordinary termination, on 31st May 2010. On this date, a new contract shall be concluded, unless one of the two parties has notified the other, by recommended letter with acknowledgement of receipt, of its decision not to enter into a new contract at least twelve (12) months before the expiry of the contract, i.e., by 31st May 2009.
In the event that, despite their intention to conclude a new contract, the parties fail to reach agreement on the clauses and conditions before 31st May 2010, their commercial relationship shall automatically end on 31st May 2010.
Article XVIII – TERMINATION
Without prejudice to any provisions in this Contract allowing early termination, either of the parties may legally terminate this Contract with immediate effect and without prior notice, in the event that the other fails to comply with any one of its essential obligations, subject to all other rights and actions.
It is expressly agreed that such shall be the case particularly:
? in the event that the Dealer acts in such a way as to cause material or moral prejudice to the Grantor, Manufacturer or its brands,
? …
? in the event of non-compliance with the Grantor’s selection criteria, norms and standards,
? in the event that the Dealer’s ability to conduct business is withdrawn, modified or reduced, even if this situation was in existence before the signature of this Contract, unless it was communicated in writing to the Grantor before the signing of this Contract,
? …
? in the event that, for whatever reason, the Dealer can no longer ensure the proper performance of this contract.”
Two Letters of 23rd March, 2001
19. Reference must also be made to the two letters sent by Gowan to the Murphy brothers and to Westland respectively on 23rd March, 2001.
20. The context of these letters is important. When Gowan was negotiating the terms of the lease with the Murphy brothers on behalf of Westland, it sought personal guarantees from all the shareholders. The outside investors were unwilling to give such security, however, and refused to sign any such guarantees. Furthermore, the Murphy brothers sought some concessions and assurances before signing the guarantees. Their concern was with the potential length of the guarantees, which were to be co-extensive with the sublease, and second that there was no ceiling on the amount of the guarantees. The first letter was sent by Mr. Tony Maher, Financial Director for Gowan to the Murphy brothers and sought to give some comfort to the potential guarantors on these issues. Since it is brief, the relevant paragraph can be reproduced in full:-
“In consideration of you entering into personal Guarantees in respect of this Lease, we as Landlord hereby agree with you as follows:-
1. Your maximum joint and several liability as Guarantors of the Tenant’s obligation under the Lease, shall not exceed a maximum sum equivalent to three years arrears of rent and service charge payments under the Lease.
2. In the event that the company falls into serious arrears of rent and service charge payments under the Lease being not less than one year arrears of rent and service charges, we will be prepared to discuss the acceptance of a surrender of the Lease with the company, if so requested, but without any legal obligation to do so.”
21. It can be seen that the letter, addressed to the four potential guarantors (the Murphy brothers), in my view, purported to set a legal limit on their possible liability under schedule 5 of the sublease. The liability was not in any circumstances to exceed three years arrears of rent and charges. Additionally, if Westland fell into more than one year’s arrears, Gowan was prepared to discuss the surrender of the lease without any legal obligation to do so. The extent of the guarantees, however, were disputed and I will refer to this later in this judgment.
22. The second letter, also written on the same date, was addressed to Westland and was signed by Mr. Frank Scanlon, Marketing Development Manager for Gowan. It confirmed the appointment of Westland as a Main Peugeot Dealer, subject to signing the dealership agreement and executing the lease and guarantee, etc., “and upon the following conditions”. It then went on to deal with various matters such as premises development, volume rebates, corporate identity, service and parts equipment and G-Net Communications (internet). The final matter dealt with, and which is of significance since the Murphy guarantors rely on it in their defence, is then addressed under the heading ‘Peugeot Stocking Plan’:-
“You are aware of the workings of the new unit-stocking scheme that uses an agreed credit-limit with GE Capital Woodchester and this credit line is subject to the usual credit checks. An initial credit line of £400,000 has been agreed for Westland and securing and maintaining this credit line is an essential part of your appointment as an authorised Peugeot Dealer. Obviously the continuance of this Credit Line throughout the terms of the Dealer Agreement, (or an extension thereof) is a condition of the franchise.”[Emphasis added].
23. In short, the Murphy guarantors argue that when the credit line was closed by G.E. Woodchester in January, 2009 this clause terminated the dealership agreement which in turn meant that they were no longer bound by the sublease or the guarantee contained in schedule 5 of the sublease.
24. Having considered the matter carefully and in spite of some indicators to the contrary already identified, I have come to the conclusion that the letter from Mr. Frank Scanlon written on 23rd March, 2001, was of no legal significance and gave no legal rights to the Murphy guarantors for the following reasons. First, the letter was headed “Subject to Contract – Contract Denied”. The existing jurisprudence on the meaning of this clause is strong and it normally protects the letter carrying such a heading from a conclusion that it contains legally binding commitments. This view is reinforced since another letter written to the Murphy brothers on the same day was sent by Mr. Tony Maher without such a heading and which, because of this omission, must be construed as giving a legally binding representation. Second, it is specifically confirmed in the body of the letter that the appointment of Westland as a Main Peugeot Dealer was “subject to signing the dealer agreement (as per attached draft) executing the Lease and Guarantees…” The letter in question was written on 23rd March, 2001, but was subsequently followed by the first formal dealership agreement more than six months later, that is in October 2001. It is reasonable to assume in these circumstances that the later document replaced the earlier document and that the more formal document takes precedence over the informal document. The final version of the dealership agreement signed in October, 2001 was not before the Court, but a six month delay weakens the suggestion that the letter continued to have relevance by the time the dealership agreement was finally signed, especially since the word “draft” was used to describe the agreement in the letter. Third, insofar as the letter of 23rd March, 2001, referred to “Peugeot stocking plan” and to the “credit line”, no such reference appears in the later more formal dealership agreement signed in 2003, which replaced the 2001 version of the agreement, and which regulated the relationship between the parties until Westland went into liquidation in 2009. Finally, a reasonable interpretation of the relevant paragraph in the letter of 23rd March, 2001, would suggest that the reference to the maintenance of the credit line was for the benefit of Gowan and was such that the failure to maintain it did not automatically terminate the dealership agreement but, at most, might be invoked by Gowan if it wished to do so. In any event, it would appear that a reasonable construction of the paragraph does not permit the Murphy guarantors to invoke the clause in their favour, especially when the termination of the credit line was largely due to the dealer’s own fault and failings, as will become clear from my analysis later in this judgment.
25. My conclusion, therefore, on the significance of Mr. Scanlon’s letter of 23rd March, 2001, on this issue, is that for reasons advanced by Gowan it does not override the later formal dealership agreement signed in October, 2001 or the later version of the dealership agreement signed in 2003. Even if I accepted that the letter did legally make the continued existence of the credit line a condition of the contract, I am of the opinion that it could not be invoked by the Murphy guarantors in the circumstances of the case where the termination of the credit line was due to Westland’s own fault and failings.
The Issues for Determination
26. The two sets of proceedings contain claims by the landlord for rents due: in the first case, by the Murphy brothers and the outside investors (the new owners of the head lease) against Gowan under the head lease; and in the second case, by Gowan against the Murphy guarantors for rents owed by Westland (now in liquidation) under the sublease.
27. Whether these rents are properly due should in the first instance be determined by the terms of the respective leases, but because of the defences advanced, in particular by the Murphy guarantors in the second case, it is necessary to consider also the dealership agreement and the side letters dated 23rd March, 2001.
A. Clause 5.13(C) of the Sublease.
28. In the second set of proceedings, Gowan v. Finbar Murphy et al, the Murphy brothers are being sued as guarantors for Westland under the sublease. The guarantee is contained in schedule 5 of the sublease. The Murphy guarantors in resisting the claim rely particularly on clause 5.13(C) of the sublease which as already noted reads:-
“In the event of the termination of the Peugeot Dealer Agreement entered into between the Landlord and the Tenant mentioned at clause 5.14(B) for whatever reason either the Tenant or the Landlord will be entitled at any time thereafter to terminate this Lease on giving one month’s notice in writing to the other party of such termination expiring on any day.”
29. This, as can be seen, provides that the tenant (Westland) can terminate the sublease by giving one month’s notice if the dealership agreement has terminated. The Murphy guarantors argue that the dealership agreement has terminated for the following reasons:
i. there has been “extraordinary termination” under Article XVII of the dealership agreement;
ii. Article XVIII provides that one party can terminate if the other party fails to comply with one of the essential obligations of the dealership agreement. The Murphy guarantors invoke this even though it is the failure of Westland that is at issue;
iii. Article XVII is also relevant as it provides that the dealership agreement shall end on 31st May, 2010. A new contract shall be concluded on that day, unless one party has given 12 months notice (i.e. by 31st May, 2009) that it does not intend to renew the dealership.
30. It is obvious that this argument collapses if the Court finds that the dealership agreement has not been terminated in the manner suggested by the Murphy guarantors as, in that case, an essential element of the their argument cannot be sustained.
B. Gowan’s “Bad Faith” and “Misrepresentations”
31. The Murphy guarantors next argue that Gowan acted in “bad faith” and made “misrepresentations” which would make it unjust for the Court to enforce the guarantees in these circumstances. To assess this argument, the Court must examine the evidence to see whether the claims of “bad faith” and “misrepresentation” are established before determining, in the event that such allegations are upheld, what effect such a finding would have on the guarantees.
C. Maximum Liability of Guarantors.
32. If the Court does not hold with the Murphy guarantors in A or B, it must determine the maximum period for which they should be liable. The Murphy guarantors argue that their maximum liability is for twelve months plus one month’s notice. This will be determined by interpreting Article XVII of the dealership agreement and clause 5.13(C) of the sublease. It will also be necessary for the Court to consider Mr. Tony Maher’s letter of 23rd March, 2001, which purports to put a three year ceiling on the guarantor’s liability. Gowan argues that there was no limit placed on the tenant’s liability, that is, the liability of Westland.
D. Rights of the Outside Investors
33. The rights of the outside investors, Chris Giblin and Patrick Doyle, will have to be evaluated separately since (a) they are one sixth owners in common of the head lease; and (b) they are not guarantors under the sublease.
34. I now propose to deal with each of these arguments in turn.
A. The dealership is terminated within the meaning of clause 5.13(C) of the sublease
35. (i) Counsel for the Murphy guarantors, Mr. J. Brennan B.L., relies on Article XVII, the relevant sentence of which reads as follows:-
“This contract shall enter into force on 1st October 2003… and shall end, except in the even (sic) of extraordinary termination, on 31st May 2010.” [Emphasis added]
36. The article clearly sets out that the contract was for a fixed term and that a new contract was to be concluded on 31st May, 2010, unless one of the parties gave notice of its intention to discontinue by 31st May, 2009. There is provision, however, that the contract will not run the full term “in the event of extraordinary termination”. In particular, the Murphy guarantors rely on the following events which they argue amount to “extraordinary termination” in the present circumstances:
i. the general collapse of new motor car sales in the economy, especially since 2008;
ii. the termination of Westland’s credit line with G.E. Woodchester in January, 2009;
iii. the history and the evolution of the relationship between Gowan and the Murphy brothers;
iv. the disparity between the business acumen of the parties where the Murphy brothers were mere motor mechanics to begin with, with limited business experience;
v. the state of the art showrooms sourced by Gowan and fitted out by it prior to their occupation by Westland;
vi. the unusual position that prevailed when the shareholders in Westland purchased the head lease, which resulted in Gowan being the tenant under the head lease, while at the same time continuing as the landlord in the sublease;
vii. the fact that the Murphy brothers were guarantors under the sublease.
37. In the opinion of counsel for the Murphy guarantors, these events were sufficiently extraordinary to trigger the termination of the dealership agreement under Article XVII.
38. Mr. G. McCarthy S.C., on behalf of Gowan, claimed that this wide approach to the interpretation of Article XVII was not what was pleaded or argued by counsel for the Murphy guarantors in the course of the trial. These arguments did not appear in the written submissions made on behalf of the Murphy guarantors and were not in the counterclaim, but were advanced for the first time in oral submissions at the end of the trial. I will postpone engaging with this objection until I examine the merits of the new arguments in the first instance. It is only if I accept Mr. Brennan’s argument that I need to consider the objection.
39. What then does the phrase “except in the event of extraordinary termination” mean? I am satisfied that it does not mean termination for any of the events catered for in the “No Assignment” clause or for breach of the selection criteria insisted upon by Gowan. These matters are expressly dealt with in Article XV of the dealership agreement. Neither, in my view, does it extend to the right of the innocent party to terminate where there is a failure by the other party to comply with any of the essential obligations in the contract. This, as we have seen, is catered for in Article XVIII. Where the dealer suffers financial difficulties, cash flow problems or where a liquidator is appointed, etc., Article XVI provides that the grantor (Gowan) can also legally terminate the contract, but there is no similar provision protecting the dealer (Westland) in such circumstances. It is also clear that Article XVI of itself does not terminate the agreement in such circumstances: it must be invoked.
40. I cannot accept the arguments advanced on behalf of the Murphy guarantors that the circumstances and background against which the contract was signed cast any light on the meaning of the term “extraordinary termination”. Even if the factual matrix and the unusual circumstances listed by counsel for the Murphy guarantors (some of which are objected to by counsel for Gowan as being made too late in the proceedings) are “extraordinary”, this does not cast any light on the meaning of the phrase “extraordinary termination”, as used in Article XVII. The epithet “extraordinary” in Article XVII applies to the termination and not to the formation of the contract. It is to be contrasted with “ordinary termination”, which in my view principally refers to those circumstances where, under ordinary contractual principles, a party may lawfully terminate the contract, and two instances of which are explicitly referred to at Articles XV and XVIII of the dealership agreement.
41. It is my conclusion that the exception mentioned in Article XVII refers to a termination which is brought about, not by an act of a party, but by some supervening act which would in contract law be recognised as frustrating the contract (see Clark Contract Law in Ireland (4th Ed.), (Dublin, 1998), p. 439 et seq). The wording of the exception clause itself – “except in the event of extraordinary termination” (emphasis added) – would to some extent also suggest that what is at issue is some external event over which the parties have no control.
42. I am not prepared to hold in this case that the termination by G.E. Woodchester of Westland’s credit line, in the circumstances in which it occurred, amounted to “extraordinary termination”, as the term is used in Article XVII of the dealership agreement. Even if it were, I am not satisfied that the Murphy guarantors have shown to the satisfaction of the Court that it was not self-induced in any event. (See Clark 4th Ed., pp. 448 to 449).
43. (ii). The second argument relied on by the Murphy guarantors that the dealership agreement is terminated is based on Article XVIII which specifically provides for termination in certain circumstances. The main provision is contained in the first sentence which I set out here:-
“Without prejudice to any provisions in this Contract allowing early termination, either of the parties may legally terminate this Contract with immediate effect and without prior notice, in the event that the other fails to comply with any one of its essential obligations, subject to all other rights and actions.”
44. The article then goes on to specify specific examples where the right to termination may be availed of. Included in this list are: where the grantor’s selection criteria, norms and standards are not complied with; where the dealer’s ability to conduct business is withdrawn, modified or reduced; or, where, for whatever reason, the dealer can no longer ensure the proper performance of this contract.
45. An ordinary reading of this article would clearly suggest that the right to early termination is given to one party where the other party fails to comply with one of the essential obligations of the contract. I interpret the article as only enabling one party to lawfully terminate the contract if the other party is in default. It does not suggest in my view that the party in default can invoke this article in its own favour to terminate the contract and relieve itself of other contractual obligations. This interpretation follows from the language used in the first sentence of the article. The second paragraph sets out examples, non-exhaustive in my opinion, where the grantor (Gowan) would clearly have this right because of the failings/shortcomings of the other party i.e. the dealer (Westland). Even if the dealer “can no longer ensure the proper performance of this contract”, as specified in the last example, this event would only seem to give the grantor the option to terminate. The article does not automatically terminate the dealership agreement in this event and it certainly does not give the dealer the entitlement to end the contract where it is itself at fault. In the present circumstances, it is my opinion that the dealership agreement collapsed because of the inability of the management team at Westland to run the business properly, a fact which was known to them for many years prior to the liquidation. I have come to this conclusion from an examination of the evidence, something I will elaborate on below in greater detail. It is not surprising in the circumstances, given the history of the matter, that its credit line was eventually cut-off by G.E. Woodchester. The credit line was not cut-off solely because of the unforeseen action of a third party.
46. In my view, there is no evidence that Gowan influenced G.E. Woodchester in coming to this decision. Accordingly, I am not satisfied that the Murphy guarantors can rely on the provisions of Article XVIII to support their case.
47. (iii). Having determined this, I must now examine the other circumstances in Article XVII which permit or allow the dealership agreement to be terminated. The relevant provision of the article provides:-
“…On this date [i.e. 31st May, 2010], a new contract shall be concluded, unless one of the two parties has notified the other, by recommended letter with acknowledgement of receipt, of its decision not to enter into a new contract at least twelve (12) months before the expiry of the contract, i.e., by 31st May 2009.
In the event that, despite their intention to conclude a new contract, the parties fail to reach agreement on the clauses and conditions before 31st May 2010, their commercial relationship shall automatically end on 31st May 2010.”
48. The ordinary meaning of the first sentence of the part of Article XVII just quoted is that, although the existing contract is for a fixed term ending on 31st May, 2010, the dealer (Westland) can, if it wishes not to renew the agreement, give twelve months notice to the grantor (Gowan) that it will not be entering a new contract after the expiry date. It would seem to me that Westland has complied with this notice (see infra) and accordingly, the dealership agreement came to an end on 31st May, 2010. In any event, as the parties had not agreed the “clauses and conditions” before the 31st May, 2010, the commercial relationship between them is automatically ended as of that date.
49. The first sentence of Article XVII above quoted strictly speaking does not set out to deal with the situation where one party wishes to terminate the existing contract, but rather deals with the situation where one party does not wish to renew the contract between the parties. It provides that a new contract shall be concluded unless one party indicates in a timely fashion that it does not intend to sign a new contract at the end of the term of the dealership agreement. Such notification must be made more than twelve months before the end of the contract i.e. before 31st May, 2009. Notice was given by letter on 20th February, 2009, which to my mind complies with the article. Further, although the liquidator had been appointed on 13th February, 2009, he subsequently confirmed by letter dated 9th March, 2009, that the dealership agreement was not being renewed. I do not think that this analysis is weakened by the fact (if this is so) that the letter was not a “recommended letter” (the phrase used in the article), whatever that phrase means (no evidence was given on its meaning to the Court).
50. My conclusion, therefore, is that the 2003 dealership agreement ran for its full term, that is until 31st May, 2010, and was not terminated by Westland or by “extraordinary termination” prior to that date. Westland, however, gave notice in a timely manner that there was to be no new dealership contract after that date.
51. What then is the effect of this on the sublease and in particular on schedule 5 thereof?
52. I set out hereunder the relevant provisions of schedule 5:-
“The Guarantor covenants with the Landlord, as a primary obligation, as follows:-
1. The Tenant will pay the rents payable under the Lease …and will comply with all the obligations and conditions contained in this Lease relating to any other matter.
2. In the case of default or delay on the part of the Tenant in such performance the Guarantor will pay by way of primary obligation and not merely as a guarantor or as collateral to the Tenant’s obligation to do so, pay to the Landlord any sum which ought to be paid and make good any breaches of the Tenant’s obligations hereunder including losses, damages, costs and expenses arising or incurred by the Landlord.
3. The Guarantor further covenants with the Landlord that if a liquidator, examiner or trustee in bankruptcy surrenders or disclaims the Lease or if the Lease becomes forfeited then the Guarantor shall upon being required so to do by the Landlord … take up a new lease of the Premises … upon the same terms as the Lease…”
53. It is clear from reading para.1 of the schedule that the guarantor (the Murphy brothers) covenants, as a primary obligation, that the tenant (Westland) “will pay the rent under the Lease”. It is important to appreciate, however, that the guarantor’s obligation in this respect, even though a primary obligation, only arises when the tenant does not pay the rent “under the Lease”. When the lease is lawfully terminated, the tenant has no obligation to pay any rent, and accordingly no primary obligation falls on the guarantor after that date. There is no obligation on the guarantor to pay the rent in all circumstances; the obligation only arises where the tenant is in default or delay under the lease. No liability, primary or otherwise, can arise under paras. 1 or 2, other than for rents etc., which had arisen during the life of the lease. After the lease has been properly terminated or is no longer in existence, there can be no liability under these paragraphs. This conclusion is mandated, in spite of the primary nature of the obligation, by the wording of the covenant itself.
54. To follow the argument the Murphy guarantors’ advance, it is now necessary to recall again that clause 5.13(C) of the sublease provides that “in the event of the termination of the Peugeot Dealer Agreement entered into between the Landlord and the Tenant mentioned at clause 5.14(B) for whatever reason either the Tenant or the Landlord will at any time be entitled thereafter to terminate this Lease on giving one month’s notice…” [Emphasis added].
55. I have already found that the dealership agreement was not terminated under the “extraordinary termination” provision in Article XVIII of the agreement or under the provisions of Article XVII, but continued in existence until it expired on 31st May, 2010. For these reasons, clause 5.13(C) of the sublease, in my view, only comes to the aid of the Murphy guarantors from that date. I hold in these circumstances that the one month’s notice given by Westland in February, 2009 and confirmed by the liquidator in March, 2009 only takes effect from 30th May, 2010. As of that date, the sublease terminated and the Murphy guarantors’ obligations under paras. 1 and 2 of schedule 5 fell with it.
56. To avoid the implications of this interpretation of clause 5.13(C), Gowan argues that “termination” in this context means “being brought to an end” (actively), rather than ending due to the expiry of time. I cannot agree with this interpretation. The alternative, that the guarantor’s obligations continue even when the dealership agreement is not renewed, would be so onerous that it would need to be explicitly stated before the Court should reach that conclusion. A close reading of schedule 5 does not lead to such a conclusion and if there is an ambiguity in the clause, it should, on the basis of contra preferentum, be interpreted against the landlord (Gowan).
57. It follows from this that the Murphy guarantors, by way of primary obligations under paragraphs 1 and 2 of schedule 5, must pay the landlord (Gowan) all arrears of rent and service charges due up to 30th June, 2010, but not after that date. Since this does not exceed the purported ceiling of three years imposed by the letter to the Murphy brothers of 23rd March, 2001, I need not consider the terms of this correspondence further. The question then remains as to what obligations fall on the Murphy guarantors by virtue of para. 3 of schedule 5 of the sublease.
58. It seems to me that the covenant given by the Murphy guarantors does not automatically end when the sublease falls, as is argued on their behalf. Although the guarantee is contained in schedule 5 of the sublease, it is phrased and worded in a way that, in my opinion, creates an agreement in respect of taking up a new lease if required to do so, that was intended to exist even if the sublease fell. From reading para. 3 (supra), it is clear that it stipulates an obligation undertaken by the Murphy guarantors to take up a new lease in the circumstances now before the Court. It is clear that the liquidator has surrendered or disclaimed the lease by letter dated 24th March, 2009, and by returning the keys to Mr. Maher around that time. The landlord (Gowan) served the requisite written notices and schedule 5 provides that the new lease is to be on the same terms as the old lease, with certain savings which need not concern the Court. The term of such a new lease, however, is set out in para. 3(B): it is only for the residue of the term of the original sublease. From my analysis, already given, when called upon by the landlord, by letter dated 1st May, 2009, to execute a new lease under para. 3, the guarantor’s obligation could only be for the unexpired term of the lease, i.e. until the 31st May, 2010.
B. Bad Faith and Misrepresentation
59. The argument that the guarantees should be set aside because Gowan was guilty of “bad faith” and/or misrepresentation must now be examined. Before doing so, however, I must first examine the evidence on which the allegations are based. The narrative that follows is based largely on the evidence of Mr. Finbar Murphy, who it must be said impressed as a truthful witness, and from the affidavits sworn in the proceedings. In the main Mr. Murphy’s evidence on these issues was not disputed by witnesses called by Gowan.
60. In the first years of trading, between 2002 and 2004, new car sales by Westland were exceptionally good. Accordingly, when the opportunity to purchase the head lease arose, in June, 2003, Finbar Murphy said in evidence that it was decided to purchase it as “a pension” for the directors. It seemed a good idea when property prices were rising in a booming economy. The purchase, however, came as a surprise to Gowan when it eventually learned of it and it caused some friction between Westland (and Finbar Murphy) and Gowan at the time. The argument advanced on behalf of Gowan, that it changed the nature of the relationship between the parties, cannot be sustained as Gowan signed a new version of the dealership agreement in September of the same year.
61. The evidence is that even though sales of new cars continued to be strong up to 2006, Westland had other business problems during the early years of the decade. Gowan, which was in regular contact with Westland, pointed this out to Finbar Murphy and identified an adviser, Mr. Millstead of Health Check, who was an expert in the motor business. In his report (August, 2004), Mr. Millstead identified in particular an over reliance on new car sales, too many used cars in stock and a failure to take on successfully the Kerridge I.T. system which was being introduced by many of the Peugeot dealers in Ireland. Finbar Murphy said that he addressed some of the issues that were raised at the time, but it did not seem to turn the company’s fortunes around.
62. It became clear in 2005/2006 that business was not improving and by 2007, there was also a further sharp falloff in new car sales. To compound matters further Westland purchased additional premises at Cherry Orchard in August, 2005 for €1.6m plus V.A.T. This was financed by a commercial loan from A.I.B. The purchase of the Cherry Orchard premises was necessitated by congestion on the principal site at Liffey Valley Shopping Centre, and followed a decision by Finbar Murphy that the problem might be mitigated somewhat if the after sales services and parts departments were moved to another location. The increased overheads and the failure of the after sales department to pick up, however, continued to cause problems for Westland.
63. At this stage, Mr. Murphy came to the conclusion that the only way the difficulties of the company, acute by then, would be solved was if Westland took on a second brand. He made contact with Mazda in 2006. Gowan was not enthusiastic, but since the main dealership agreement was amended in 2003, it was not entitled to prevent Westland taking on an extra brand if it wished to do so. Gowan sought to persuade Westland that this was not the way to go and that taking on a new additional brand did not necessarily mean that Westland would return to profit. It also said that if Westland was going to take on the Mazda brand, Gowan would look for a substantial contribution in respect of its fit-out costs initially incurred on the main premises. It is significant to note that Finbar Murphy in his evidence to the Court said that Gowan did not directly refuse Westland permission to take on the second brand, but put up practical barriers that made it difficult for Westland to do so. (In the pleadings, Finbar Murphy alleged that there was “a refusal” by Gowan). In an effort to convince Westland not to take on a second brand, Gowan did two further things at this point: it made available additional advance rebates to Westland in the amount of €200,000 over a two year period; and it offered the services of Mr. Hayes, from its marketing sales department, to review Westland’s business in an effort to identify the problems and, hopefully, to recommend a solution to its financial difficulties. The rebate offer from Gowan, however, was on condition that Westland remained an exclusive Peugeot dealer. Westland accepted this offer and signed a letter to this effect. Over the period 2007/2008, Mr. Hayes met with Westland staff on several occasions and addressed the main areas in the after sales area, in particular where improvement in work practices and record keeping were recommended. In spite of Mr. Hayes’ assistance, however, Westland did not seem willing or able to implement the required changes.
64. The hope for the Mazda dealership eventually came to nothing when Mazda refused to appoint Westland as its dealer. Sometime later, in 2008, Westland also made a pitch for a Honda dealership. This time it did not approach Honda directly, but asked Mr. Tony Maher of Gowan to contact Honda directly on its behalf. Mr. Maher did so and indicated in evidence that he was told he would have a reply within two weeks. Time was of the essence of course at this stage as Westland by then was losing about €20,000 per week. In spite of further calls from Mr. Maher to the Honda contact, the final refusal did not come for another nine weeks, by which time Westland was no longer in a position to trade. Its credit line with G.E. Woodchester was cut at the end of January, 2009 and a liquidator was appointed shortly thereafter in February, 2009.
65. It is in these circumstances that Finbar Murphy alleges in the pleadings that its credit line with G.E. Woodchester was terminated, which in turn led to the collapse of Westland’s business in 2009. Against this background, I must now examine Westland’s claim that its financial difficulties were caused:
(i) by Gowan’s “refusal” (later modified in evidence to Gowan’s “hindrance”) in relation to securing the second brand for Westland; and
(ii) by misrepresentations made by Gowan to Westland of such a nature that the Court should not be willing to enforce the personal guarantees furnished by the Murphy brothers.
“Refusal”
66. As already noted, Finbar Murphy resiled from stating in evidence that Gowan explicitly refused permission for the second brand in spite of using this word in the pleadings. The “hindrances” it now alleges in evidence do not, in my opinion, amount to a refusal, as suggested. Gowan was entitled to seek some kind of clawback for its fit-out if a dealer from another brand was to come onto the premises. This was a proper matter for commercial negotiation. In pointing out that a second brand was not possibly the solution to Westland’s problem, Gowan was merely discussing the wisdom of Westland’s decision in the difficult circumstances that confronted it. Moreover, in voluntarily offering advance rebates in the amount of €200,000 to Westland, it is clear that Gowan was supporting Westland in its difficulties. This support was evidenced also by the assistance it offered and gave in sending Mr. Hayes into Westland (at no cost to Westland) to identify the business problems so that the real difficulties could be addressed in an effort to turn the business around. It must be noted also that it was not in Gowan’s interest that Westland should go into liquidation and in attempting to keep Westland afloat there may have been an element of self-interest involved on the part of Gowan. In these circumstances, I am not prepared to find that Gowan refused Westland permission to take on a second brand.
Misrepresentation
67. The misrepresentation that the Murphy guarantors rely on here are those put forward by Mr. Mark O’Connell of Gowan, in particular in 2006, when the Mazda issue was in play and when Mr. O’Connell is alleged to have said that new models being brought in by Peugeot in the following years would result in an increase in the sales of new Peugeot cars for Westland. This, of course, we know, was not what happened, unfortunately for Westland. But at its height these assurances cannot have been “misrepresentations of fact”, which is what is required by the law if they are to be relied on by an injured party who alleges reliance and damage in such cases. At most, what Mr. Mark O’Connell in particular said was that Gowan’s “expectations” and “hopes” were that the introduction of new models by Peugeot would result in big increases in sales. There was nothing inevitable in the forecast and in any event it was not a statement of fact. At its height it was the expression of an expectation as to the future.
68. I find, therefore, that there was no refusal by Gowan, such as is alleged by Mr. Murphy, and that such hindrances as were identified did not amount to a refusal which should have a bearing on my decision. Further, I do not find that there was any misrepresentation which would suggest that the Court should ignore the guarantees. There were no other credible instances or allegations that in my view support an allegation of bad faith.
69. Moreover, this line of argument is advanced on the assumption that the nature of the relationship established in schedule 5 of the sublease was a true guarantee in law. We have seen, however, that the Murphy guarantors are sued here on a covenant of primary liability and are not sued because Westland failed initially to meet its obligations. In truth, they are not sued under a guarantee in the true sense of the word and the law relating to guarantees does not apply to their case.
70. In any event, I am not convinced, even if there was a refusal and a misrepresentation in the sense advanced by Mr. Murphy, that such refusal and misrepresentation was connected with the collapse of Westland’s business to any significant extent. The true situation in relation to the demise of Westland was as follows.
71. The expert evidence given in court is that the profits in the motor dealership business are to be found under five headings, that is, profits from:
(i) new car sales;
(ii) used car sales;
(iii) commission on finance from financial companies;
(iv) after sales servicing and repairs; and
(v) sale of parts.
72. It is clear that from the beginning of 2003 onwards, Westland had serious difficulties with its after sales department and with its used car business. These weaknesses were identified earlier on, but were never successfully addressed. They continued to infect the company for many years. In addition, the increase in overheads, due to the purchase of the head lease and the Cherry Orchard property, stretched the capacity of Westland and burdened it with debt that dragged it down when the bad times came. As far back as August, 2004 Westland was in possession of the report of Mr. Millstead of Health Check. As already noted this report identified the problems and weaknesses in Westland’s business. It focussed in particular on the failure by Westland to embrace the Kerridge I.T. system.
73. This last item in the report related to the software in use by Westland. Mr. Millstead was highly critical of this area of Westland’s business. He indicated that if Westland was to expect a reasonable financial return, it would have to be able to provide financial information on a monthly basis. In his report he said:-
“The easiest way of doing so is using your DMS. The duplication of work is costing you money. If you do not want to use Kerridge then you should sell off your current system and invest in another (Kerridge REV 8, Microsoft, Avonbrook, Kalamazoo are worth considering).
If you as a management team are not into this then I suggest that in the longer term (less than five years) you will lose your franchise and that you should run the business with the sale clearly in mind.
This may sound like very blunt advice but is in my mind the best advice that I can give you if you fail to embrace computers and DMS systems. I do not see the business as a viable long term proposition without addressing the general IT and DMS issues as a matter of urgency.”
74. It is clear from this that as far back as August, 2004 Westland had serious problems on this front. The evidence was that this was never addressed. Mr. Millstead proved to be acutely prophetic in that regard.
75. The problems in Westland continued and in 2006 Gowan suggested that Mr. Mark Hayes from its marketing sales department would visit and observe Westland’s systems and administration, focussing on the service department in particular. He again emphasised the weaknesses in the service department and the failure to embrace the Kerridge I.T. system. Finbar Murphy accepted in evidence that the service department was a weak area in the organisation at that time.
76. By October/November, 2006 Finbar Murphy came to the view that the only thing that would save Westland was a second franchise from Mazda. The evidence recited above on this, however, does not, in my view, suggest bad faith on the part of Gowan. Furthermore, when Westland agreed to accept the advanced rebates in 2007, it made a business decision that it would remain an exclusive Peugeot dealer at that time.
77. The final throw of the dice was made by Westland in 2008 when Finbar Murphy asked Mr. Tony Maher of Gowan to place a call with Honda Importers requesting, on behalf of Westland, that Honda appoint Westland as a Honda dealer. Neither Mr. Maher nor Gowan had any direct legal relationship with Honda, but there appears to have been an overlapping of directors which facilitated contact. Mr. Maher was initially told that Honda would make a decision within a couple of weeks. This information was relayed to Finbar Murphy. Mr. Murphy himself made no direct contact with Honda. The couple of weeks, however, drifted and eventually Honda’s refusal was given some eleven weeks after the initial contact. Mr. Murphy complained that during this period, it continued to lose approximately €20,000 a week which could have been avoided had an earlier decision been made. Tony Maher from Gowan, however, was merely an intermediary in this action and he gave unchallenged evidence of making the initial call and a further call to Honda in an effort to expedite the decision. Mr. Maher, however, was not the decision maker in this and he could not determine Honda’s position at the end of the day. There was no evidence that Mr. Maher did anything positive to thwart the Honda dealership and, in these circumstances, I am not prepared to say that Gowan, through Mr. Maher, did anything wrong. In particular, there is no evidence of bad faith on Mr. Mather or Gowan’s part.
The Credit Line with G.E. Woodchester
78. Neither can I find that Gowan influenced G.E. Woodchester in its decision to end its credit line to Westland. There is no doubt that it was essential for Westland to have a strong credit line to facilitate its ability to purchase the cars and to provide it with liquidity until the cars were disposed of. While Gowan had a general relationship with G.E. Woodchester in respect of all its dealers, the legal obligation in respect of the provision and borrowing of money was a bilateral one between G.E. Woodchester and Westland. There had been a disagreement between G.E. Woodchester and Westland in December. 2007 when Westland apparently sold fourteen hybrid cars and did not repay G.E. Woodchester as it should have done immediately. Eventually, this dispute was resolved and Finbar Murphy arranged a stage pay-off of these monies. Nevertheless, G.E. Woodchester was upset. When it was put to Mr. Murphy that this contributed to G.E. Woodchester’s eventual decision to pull the credit line that was essential to the stocking plan, Mr. Murphy responded by saying “I imagine it did not help”.
79. When G.E. Woodchester eventually terminated the credit line in January, 2009 it was justified in so doing, because at that time Westland was losing €20,000 per week and it had failed to secure either the Mazda or the Honda franchise.
80. Finbar Murphy alleges that Gowan, had it wished to, could have intervened to prevent termination of the credit line. In the circumstances, I see no legal obligation on Gowan to intervene any further than it did at that time. It is clear from the evidence that there were many reasons why Westland failed in its business before the credit line was terminated. The inherent defects in the business have been referred to earlier and I need not repeat them. From the evidence, it is clear that G.E. Woodchester had many valid reasons for terminating the credit line at that time. There was no evidence that Gowan did anything to encourage G.E. Woodchester to pull the credit, and the most that Finbar Murphy alleges is that it failed to intervene on Westland’s behalf. The evidence, however, is that Gowan had acted to support the efforts of Westland to stay alive and indeed it was in its interest to do so.
81. In summary, to suggest that the failure to secure the second brand was the cause of Westland’s demise is over simplistic. No evidence of what might have happened had it secured the Mazda or Honda dealerships was before the Court. In these circumstances, it is no more than speculation or conjecture. In any event, as I have already determined, there was no evidence that Gowan refused or indeed effectively obstructed Westland in securing the second brand. The financial difficulties of Westland were well documented and it is clear that, although the problems were identified at an early stage, they were never effectively addressed. In my view, Gowan was supportive of Westland during its difficulties and showed no bad faith in its dealings with Westland prior to its ceasing to trade in 2009. Finally, there was no evidence of misrepresentation of fact by any of Gowan’s employees that could be relied on in law by the Murphy guarantors to avoid their commitments and obligations under the guarantee.
C. Extent of Guarantors’ Liability
82. The third issue for determination by the Court relates to the alleged cap or limit of three years on the liability of the Murphy brothers “as guarantors of the tenant’s obligation under the lease”, which they say was conceded to them by Mr. Maher in his letter dated 23rd March, 2001. The relevant paragraph of that letter reads as follows:-
“In consideration of you entering into personal Guarantees in respect of this Lease, we as Landlord hereby agree with you as follows:-
(1) Your maximum joint and several liability as Guarantors of the Tenant’s obligation under the Lease, shall not exceed a maximum sum equivalent to three years arrears of rent and service charge payments under the Lease…”
83. Gowan argues that this limit only applies to the guarantors’ liability for the tenant’s obligations under the lease, and that it does not place any limit on the guarantors’ personal liability under schedule 5 of the sublease. Needless to say, the Murphy guarantors reject this interpretation claiming that it also limits their liability.
84. Since it is common case, however, that the claim by Gowan for arrears of rent in Gowan v. Finbar Murphy et al is for less than three years rent, it does not fall to the Court to interpret this clause and I refrain from doing so for this reason.
85. The full extent of the Murphy guarantors’ liability is fully set out hereafter.
D. The Rights of Chris Giblin and Patrick Doyle
86. The outside investors, Mr. Giblin and Mr. Doyle, are not parties to the second set of proceedings, Gowan v. Finbar Murphy et al (sued as guarantors), not being guarantors themselves, and are unaffected by any orders made in that case. In the first set of proceedings, Finbar Murphy, Enda Murphy, Stephen Murphy, Ronan Murphy, Chris Giblin and Patrick Doyle v. Gowan, Mr. Giblin and Mr. Doyle are one sixth owners as tenants in common of the head lease, and accordingly they are each entitled to one sixth of the rent and services owed by Gowan as of the date of the judgment. No question of set-off can arise against them.
Conclusions and Orders
87. My conclusions in relation to the liability of the Murphy brothers (the guarantors in the sublease) in Gowan v. Finbar Murphy et al, is that the they are liable to pay the rents and services due under the sublease by Westland until the lease ended on the 30th May, 2010, and an additional sum in respect of the additional month’s notice required under clause 5.13(C) of the sublease. I so order.
88. With regard to the guarantor’s obligation to take up a new lease under para. 3 of schedule 5 of the dealership agreement, that obligation would only have extended until 31st May, 2010, or 30th June, 2010, at the latest. Because, however, I have found that the Murphy brothers, as guarantors, are obliged to pay the arrears of rent for the same period now, as already noted, and as that date has long since passed, it would be futile to order specific performance in that regard now.
89. The claim by the Murphy brothers and the outside investors against Gowan in the first set of proceedings is a straightforward claim by the landlord for rents and services due. This claim is not complicated by the existence of any guarantees and is not affected by the dealership agreement. The statement of claim is calculated up to 3rd July, 2010, for rent and up to 30th June, 2010, for services, and the total claim for arrears of rent and services, therefore, is €381,086. The Murphy brothers also claims arrears of rent and services up to the date of the judgment which is today’s date. I am satisfied to make an order for all arrears of rent and services (to be quantified by the parties) under the terms of the head lease up until today’s date, since the head lease continues to bind the parties.
90. Gowan can have no set-off against Mr. Giblin or Mr. Doyle in these proceedings. Gowan, however, is entitled to set-off the amount that the Murphy brothers owe as guarantors to Gowan against the amount it owes them for rents and services under the head lease.
O’Neill v Whelan
[1951] 85 I.L.T.R 111
Judge Connolly
Judge Connolly:
The applicant and the respondent had, for a period of years before the purchase of the premises in Little Green Street, the subject-matter of this application, carried on the business of potato factors as partners in the other premises mentioned in the evidence. One of the partners, Mr. Whelan, acquired the premises in Little Green Street by purchase as owner, and having so acquired them, the conduct of the partnership business was transferred to Little Green Street. The rent of the premises was fixed by agreement between the partners at £144 per annum; the landlord paying the rates. This rent was payable to Mr. Whelan as landlord by the said partners. The partnership therefore acquired a tenancy in the premises. If the partners were not able to discharge the trade debts of the partnership, the creditors would then be entitled to have the partnership wound up under an order of the Court, when all the partnership property would have had to be realized, including the interest of the partnership in the tenancy of the premises at Little Green Street. In this case, no necessity for that course arose. When *112 the partnership was dissolved, a letting was made by her former partner as landlord to Mrs. O’Neill, who acquired the goodwill of the partnership business and continued to carry on the business of potato factor on the premises. I have no evidence that any of the terms of the dissolution of partnership were expressed in writing. It is not necessary that the agreed terms should be reduced to writing. Mrs. O’Neill carried on the business formerly carried on by the partnership, and held the premises under a yearly tenancy, and was, in my opinion, the successor in title to the partnership.
Mr. Bell has put the respondent’s case very fairly he emphasizes the provision in paragraph (e) of section 2 of the Landlord and Tenant Act, 1931. “Such contract of tenancy is not a letting made for or dependent on the continuance of the tenant in any office, employment or appointment.” In my opinion, the tenancy in this case does not come within the provisions of this paragraph The paragraph referred to was meant to meet the case where the basis of the making and continuance of the letting is that the lessee is the person, or one of the persons, for the time being in a particular office, employment or appointment In my opinion, a partnership such as existed between the parties to this action does not come within the meaning of the paragraph. I am satisfied that the applicant brings herself within s. 19 (1) (a) of the Landlord and Tenant Act, 1931, and is entitled to a new tenancy.
The Board of Management of St.Patrick’s School -v- Eoghan O’Neachtain Ltd.
[2018] IEHC 128
05/03/2018
Hunt J.
1. The plaintiff is a body corporate established pursuant to the provisions of the Education Act 1998, and is responsible for the management of St. Patrick’s School, Lombard Street, Galway. The defendant is a limited liability company, having a registered office at Dublin Road, Oranmore, Galway.
2. For more than the last twenty years, the defendant or its predecessors have entered a series of written agreements with the plaintiff, permitting the defendant to carry on a car park business from the yard of the said school. There may have been some variations as between different agreements as to the precise hours at which this business might be carried on, but I am satisfied that these variations are not material. In essence, the defendant was entitled to run a commercial car parking operation from the school yard outside school hours during the week, at weekends and during the school holidays.
3. The plaintiff issued a plenary summons on 14th February, 2018, pleading that the defendant occupied the school yard for the aforesaid purposes pursuant to a licence agreement, which expired by efflux of time on 31st January, 2018. It is then pleaded, in effect, that the defendant has been a trespasser on the school premises since that date, and has not yielded up possession, despite lawful demand. The claim is for declarations that the previous agreements between the parties were in the nature of a licence, and for an injunction directing the defendant to vacate the yard in question. There are other reliefs claimed which are not material to the present application.
4. The plaintiff applied for an interim injunction on an ex parte basis on 15th February, 2018. Costello J. granted liberty to issue and serve a notice of motion seeking interlocutory relief on a short service basis. This notice of motion was issued and returnable to 21st February, 2018, and the matter was heard on that date. The plaintiff was represented by Mr. Micheál O’Connor, and the defendant by Mr. Conor Fahy.
5. Brother Niall Coll provided affidavit evidence on behalf of the plaintiff. Eoghan O’Neachtain, director, did likewise in respect of the defendant. It will be necessary to refer to certain aspects of those affidavits and exhibits. Mr. O’Connor very fairly conceded that, although the nature of the relief sought could be expressed in both positive and negative terms, he was essentially seeking injunctive relief of a mandatory nature against the defendant.
Interlocutory Injunctions
6. The principles which apply to the grant or refusal of an interlocutory injunction are well settled. The decision in Campus Oil v. Minister for Industry (No. 2) [1983] I.R. 88 outlines a number of relevant criteria. Firstly, the applicant must demonstrate a bona fide question to be tried. Secondly, damages must be demonstrated to be an adequate remedy in the event that the court ultimately finds against the party for whose benefit the injunction was granted. Thirdly, the granting of the injunction must lie within the balance of convenience. Finally, the court must consider the value of maintaining the status quo. In Allied Irish Banks v. Diamond [2012] 3 I.R. 549, Clarke J. noted that the Campus Oil test must be further informed by the underlying need to avoid the path that leads to the “greatest risk of injustice” (see pp. 570 – 571).
7. Where a mandatory interlocutory injunction is sought, the underlying principles require an applicant to achieve a higher standard than demonstrating a bona fide question to be tried. In such a case, the applicant must demonstrate that it has a “very strong case”. As Clarke J. noted in the Diamond case:-
“in order to minimise the overall risk of injustice the court requires a higher level of likelihood about the strength of the plaintiff’s case before being prepared to make such an order.”
8. It has been held that property rights, in particular, are subject to this higher standard. In Dublin Corporation v. Burke [2001] IESC 81, which concerned a landlord and tenant dispute, the Supreme Court rejected an approach that would have allowed Dublin Corporation to remove the defendant from premises by way of interlocutory injunction. Geoghegan J. noted, inter alia:-
“If the facts as set out in that letter prove correct it would seem likely that Mr. Burke would be held to have been a tenant from month to month of the unit which he occupied. If so, it is not suggested that that tenancy has ever been terminated. As long as it has not been terminated and assuming that the tenancy exists, Mr. Burke is entitled to occupy the unit in whatever form he wishes and irrespective of whether Landlord and Tenant Act rights would arise or not upon termination by notice to quit. But given the possibility of rights under the Landlord and Tenant Act, there can be no doubt, in my view, that if the position is to be viewed on the basis of balance of convenience, the balance of convenience can only be in favour of refusing an injunction in so far at least as it relates to the unit the subject matter of the alleged tenancy. It would be extremely speculative and difficult to assess damages and given that a solid property right might effectively be lost on foot of an interlocutory injunction I would not consider that damages could be an adequate remedy. But even before one comes to consider the balance of convenience, I am extremely doubtful that there would even be a prima facie case for an injunction where a defendant with some back-up evidence (if ultimately accepted) is alleging an actual tenancy in the premises and the plaintiff is for all practical purposes merely sceptical of the truth of the allegation.”
9. I believe that this passage is of particular assistance in the determination of the present issue. If the evidence suggests the possibility of a tenancy and/or consequent rights under the Landlord and Tenant legislation, then the plaintiff will not be entitled to any form of mandatory relief.
Factual background
10. I am satisfied that the affidavit evidence establishes the following facts in relation to this matter:-
(i) The arrangement whereby the school yard was used as a car park dates back to 1997. Mr. O’Neachtain’s late father, Martin O’Neachtain, operated the business until 2002, when Eoghan O’Neachtain took over. He incorporated the defendant company in 2009 for the purpose of running and operating the car park, and Mr. O’Neachtain had assisted his late father to that end for a number of years previously.
(ii) This arrangement was governed by written agreements from 2002 up to the 31st January, 2018. The plaintiff characterises the arrangement contemplated by these agreements as a licence, and the defendant is equally adamant that it is a tenancy.
(iii) The most recent written agreement, made between the parties on 23rd December, 2016, does not purport to nominate the nature of the relationship thereby created, and I assume that this is the position applicable to previous such agreements. I was not informed that there was any material difference in this respect.
11. As the expiry date of the agreement of 23rd December, 2016, approached, it appears that there was some informal contact between the parties culminating in a course of correspondence that commenced with a letter from Mr. O’Neachtain to Br. Coll dated 21st January, 2018. The operative part of that letter is as follows:-
“As you are aware I have leased St. Pat’s car park on an ongoing basis for upwards of fifteen years and previously the car park was leased by my father, Martin O’Neachtain between 1997 and 2002 when I took over the lease of the school car park. Based on the successive leases Eoghan O’Neachtain Limited has acquired a business equity in the premises.
The rolling successive leases run from February 1st every year to the 31st of January. Since early December I have tried to make contact on several occasions with the Principal of St. Pat’s, Ms. Marian Barrett, and today with your good self as Chairman of the Board of Management with a view to settling the terms of a continued lease which will commence on 1st February, 2018.
As you will appreciate the Car Park is a business and I as the proprietor and director of Eoghan O’Neachtain Ltd have a duty to my staff to have matters settled in relation to the lease prior to 1st February.
If I do not hear from you in advance of that date, Eoghan O’Neachtain Limited will continue to operate the car park on the same terms as that of the lease currently in place.”
12. On 31st January, 2018, the solicitors representing the plaintiff replied to this letter in the following terms:-
“It should be noted that your company enjoys a Licence and not a Lease as wrongfully stated and in the circumstances your wrongful assertion that your company has a business equity has no legal basis or foundation.
You are fully aware that your occupation and use of the school property as a car park on terms has always been on the basis of a Licence which can be terminated at will.
We note that the licence agreement ends on the 31st January, 2018.
Our client is prepared to issue your company a new licence agreement commencing on the 2nd February, 2018 on the following terms:-
Term: 2nd February, 2018 to 1st February, 2019
Licence Fee: €82,000 plus VAT
Please return this letter duly signed to this office no later than Thursday, 1st February, 2018.”
13. At the foot of that letter, there is a space provided for Mr. O’Neachtain to signify acceptance of that offer by signature and return of the letter. This offer was not accepted by him on behalf of the defendant, and solicitors on behalf of the defendant replied by reiterating the substance of Mr. O’Neachtain’s earlier letter and threatening injunctive proceedings in the event that the plaintiff intended to close the car park from that date and thereby prevent the defendant from operating the business as usual. Under cover of a separate letter on the same date, the solicitors on behalf of the defendant served a notice of intention to claim relief under s. 20 of the Landlord and Tenant Act 1980. This is in the standard prescribed form, and includes an intention to claim, in the alterative, €750,000 compensation for disturbance. The correspondence thereafter is not material to the present application.
Strength of the plaintiff’s case
14. Therefore, in line with the authorities referred to above, the first matter that the plaintiff must establish is that it has a vey strong case, sufficient to justify the grant of mandatory interlocutory relief. In this case, that involves establishing a very high probability that the relationship created by the contractual documents is that of licensor and licensee, as opposed to that of landlord and tenant. If this is established, the plaintiff must then proceed to demonstrate a further strong probability that such a tenancy could not continue by virtue of the defendant obtaining a new tenancy from the Galway Circuit Court on foot of the notice of intention to claim relief pursuant to the provisions of the 1980 Act.
15. As previously noted, the written agreements between the parties did not purport to nominate or characterise the legal nature of the relationship between the parties. The recent correspondence indicates a stark difference of opinion on this point. It is well established that the question of whether a tenancy exists in a given set of circumstances is essentially a matter of construction of the agreement of the parties. Where the agreement is in writing, the court can scrutinise its terms, but any label attached by the parties to the relationship, either in the agreement itself or in correspondence pertaining thereto, is not necessarily determinative of the matter. In construing such an agreement, a task of the court is to ascertain the true intention of the parties. In Gatien Motor Company Limited v. Continental Oil Company of Ireland Limited [1979] I.R. 406, Griffin J. held that:-
“To find whether it was intended to create a relationship of landlord and tenant, one must look at the transaction as a whole and at any indications that are to be found in the terms of the contract between the two parties…”
16. In the Gatien case, Kenny J. held that:-
“The existence of the relationship of landlord and tenant or some other relationship is determined by the law on a consideration of many factors and not by the label which the parties put on it.”
17. Therefore, in such cases, the courts will look beyond the express wording of agreements to determine the intention of the parties and, in so doing, look for objective indications consistent with a tenancy agreement including, for example, the existence of exclusive possession. In Irish Shell & BP Limited v. Costello Limited (No. 2) [1984] I.R. 511 at 517, Henchy J. held that:-
“In all cases it is a question of what the parties intended, and it is not permissible to apply an objective test which would impute to the parties an intention which they never had.”
18. Consequently it is necessary to determine what objective circumstances the parties intended to bring into existence in this case, regardless of how they elect to describe that relationship. In Street v. Mountford [1985] AC 809, Lord Templeman put the matter as follows:-
“The manufacture of a five pronged instrument for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”
Exclusive Possession
19. An important factor in this regard is the existence of exclusive possession as evidence of the existence of a tenancy, although this is not necessarily conclusive in itself. In the Gatien case, Kenny J. held that:-
“When determining whether a person in possession of land is to be regarded as a tenant or as being in some other category, exclusive possession by the person in possession is undoubtedly a most important consideration but it is not decisive. A person may be in exclusive possession of land but not be a tenant. The existence of the relationship of landlord and tenant or some other relationship is determined by the law on a consideration of many factors and not by the label which the parties put on it. Even if the documents disclose an intention to confer exclusive possession on the person in possession, it does not necessarily follow that he is a tenant. All the terms of the document and the circumstances in which it was entered into have to be considered.”
20. In this respect, it is necessary to distinguish between the occupation of land by way of possession, as opposed to occupation by way of some alternative capacity. Some forms of occupation of the latter type are also exclusive, without conferring a right to possession of the premises, such as the occupation of a hotel room by a paying guest. The essential distinction between the two categories of occupant lies in the degree of control that permits the occupier to “call the place his own”, and in the extent to which the occupier would be entitled to restrain or terminate a trespass on the lands or premises in question. Broadly speaking, a tenant is a person or entity who has the ability to exclude the landlord from possession of the premises for the duration of the arrangement between the parties.
21. In this case, I believe that the nature of the arrangement between the parties strongly favours the view that the occupation of the school yard by the defendant fell well short of constituting possession of the premises to the total exclusion of the plaintiff. The right of the defendant to occupy the school yard was firmly limited to times when it is not required for use in connection with the primary educational purposes of the school property as a whole. Furthermore, the agreement specifically provided at Clause 4 that the days of opening were subject to alteration from time to time to accommodate the wishes of the plaintiff Board for school purposes. Clause 12 also provided that should the plaintiff Board have required the car park for development or some other purpose, it was at liberty to terminate the agreement by the giving one month’s written notice to the defendant, without obligation to pay compensation in that event. Therefore, I do not consider that defendant ever acquired the right to call the yard its own, or to enjoy possession thereof to the total exclusion of the plaintiff.
22. I am satisfied that these clauses strongly support the view that even though the defendant was permitted to use the school yard in a specified and particular manner at certain limited times, the reality was that the plaintiff Board continued to operate and exercise dominion over the school yard, and that it had not parted with its overall estate, possession or occupation of that yard. The terms of the agreement when read as a whole strongly signal an intention on the part of the plaintiff to retain overall possession and control of the yard, and are inconsistent with the provisions found in a true tenancy agreement. In determining the nature of the arrangement effected by the agreement between the parties, I believe that I am also entitled to take account of the nature of the entire premises of which the school yard forms an integral part, and the general legal position of the plaintiff as the grantor of the right of occupation in question.
23. It is clear to me that the primary purpose of this agreement was to enable the Board of Management of the school to maximise the revenue generating potential of the school premises for which it bore a wider statutory responsibility, but always without prejudice to the proper discharge of the proper discharge by the plaintiff of the primary purpose of the school buildings, to which this yard is subsidiary and ancillary, and to retain the defendant to this end, to the mutual advantage of the parties. I can find nothing in this document, or in the circumstances in which it came into being, to suggest that it was ever the intention of the plaintiff to tie its hands for the future by ceding possession and control of the school yard to the defendant on a permanent or long-term basis.
24. Such an arrangement would be entirely inconsistent with the statutory legal obligations of the plaintiff in relation to the proper management of the school property, or with the primary educational purpose and use of the school buildings and ancillary property. In my opinion, the terms of the document and the surrounding circumstances strongly suggest that the opposite is the case, and in the absence of clear facts or words evincing a contrary intention, the limited right to occupation of the yard conferred by the agreement fell significantly short of a grant of exclusive possession. I am also satisfied that if there was a trespass by a third party on the school yard, given the limited temporal rights of the defendant’s occupation, it would have fallen to the plaintiff as owner to restrict any such incursion.
25. Consequently, I am satisfied that the plaintiff has established a very strong case to the effect that the defendant has occupied the car park as an licensee at all material times. In essence, the intent of the agreement was to provide a stream of revenue to the plaintiff from use of the school buildings during fallow periods, and this intent was achieved by permitting the defendant to access the yard at times when it was not required for school purposes to operate an intermittent car parking business. To that end, the defendant paid a fee to the plaintiff. I am satisfied that the most accurate characterisation of this fee was that it was in consideration of limited access to the premises, rather than a rent for occupation of the yard to the exclusion of the plaintiff Board. In return for this access payment, the defendant obtained the right to retain as profit all parking charges collected in excess of the access fee. I do not believe that it is at all likely that the plaintiff intended to part with possession of the school yard, or to create a tenancy in favour of the defendant, in order to facilitate this mutually beneficial commercial arrangement.
26. Even if I am incorrect in this conclusion, that would not be the end of the matter. If there was a tenancy between the parties up to the 31st of January of this year, the right of the defendant to continue in occupation of the premises thereafter depends on the that tenancy qualifying for the relief claimed in the notice served by the defendant on the plaintiff seeking a new tenancy pursuant to the provisions of the 1980 Act. Clearly, the defendant has the benefit of more than the period of three years business user required for such a new tenancy. However, entitlement to such relief also requires that the applicant be a tenant in occupation of premises constituting a “tenement”, as that concept is defined by the Act of 1980.
Tenement
27. In the first instance, the premises in respect of which a new tenancy is claimed must consist either of land covered wholly or partly by buildings, or of a defined portion of a building. In this case, the only structure on the property in question that might constitute a “building” is the wheeled hut depicted in the photographs exhibited in the affidavit evidence. The hut is fixed to the property by means of power cables. Buildings do not need to be permanent in order to come within the definition of “tenement”. Buildings of a ramshackle nature may suffice for this purpose: see the description by O’Hanlon J. in Terry v. Stokes [1993] 1 I.R. 204 at 208. Consequently, I am satisfied that the defendant has established an arguable case that there is a “building” partly covering the land in question.
28. However, where premises claimed to be a “tenement” are land covered only partly by buildings, the unbuilt portion of the land must be “subsidiary and ancillary” to the buildings. On this part of the definition, I am satisfied on the basis of the affidavit evidence that the plaintiff has a very strong case that even if there is a tenancy, these premises cannot constitute a “tenement” for the purposes of obtaining the relief claimed by the defendant pursuant to the provisions of Part 2 of the 1980 Act. It is clear that there is a very strong argument that the relationship between the land and the building in this case is the wrong way round for the purposes of the defendant’s application for relief under the 1980 Act. In effect, to obtain relief in this case, the defendant will need to demonstrate to the Circuit Court that the whole of the unbuilt land (the yard) is subsidiary and ancillary to the building (the hut). In my view, this argument is very tenuous and weak on the facts disclosed by the affidavit evidence.
29. On that evidence, it appears far more likely that even if the wheeled hut is regarded as a building, it is clearly subsidiary and ancillary to the use of the unbuilt land as a car park. Previous High Court authority supports this proposition. If the buildings are simply a convenience to the business conducted on the premises, and the relevant activity can be carried on without them on the unbuilt land, the business activity is unlikely to be subsidiary and ancillary to the buildings: see the judgment of Morris J. in Dursley v. Watters [1993] 1 I.R. 224 at 229 – 230. Significantly, in Kenny Homes & Company Limited v. Leonard (unreported, 11th December, 1997), a car park hut and kiosk were held by the High Court to be subsidiary and ancillary to the surrounding unbuilt land. In the same vein, it has been held by this Court that a clubhouse is far more likely to be regarded as ancillary to tennis courts and a car park than the reverse: see Fitzgerald v. Corcoran [1991] ILRM 545 at 546. In Terry v. Stokes, a tenement was found to exist because use of the land was held to be subsidiary and ancillary to use of the building on the land. In that case, a business of repairing car parts was carried on in the building, while the adjacent unbuilt yard was used for parking the cars from which parts had been removed prior to the carrying out of repair work on those parts in the building.
30. In this case, I am satisfied that the most likely conclusion will be that the business user of parking cars was carried out on the unbuilt yard area, and that the wheeled hut was used as a convenience to the business of parking cars. Tickets could be issued and payment received for parking on the yard without the necessity of having the convenience of this hut. The situation would be quite different if a building had been erected to house the parked cars, as is the case with purpose-built multi-storey car parks. It is also different to the case of Terry v. Stokes, in that the business in question in that case was carried on inside the building, with the use of the yard for parking being ancillary to that business. In this case, parking was the sole business carried on under the contractual arrangement, not an activity carried on as an adjunct to some other activity involving motor vehicles.
31. Therefore, I am satisfied that the plaintiff has established that the defendant has extremely limited prospects of establishing any statutory right to remain on in occupation of the premises after the expiry of the previous agreement between the parties on 31st January, 2018. The facts of this case are also very different to those of Dublin Corporation v. Burke, where the documentary evidence expressly favoured an interpretation that a tenancy existed between the parties, and where a statutory right to renewal would have attached to that tenancy on termination thereof. In this case, neither of these ingredients is likely to be found. The plaintiff has therefore established the requisite very strong case for the purposes of deciding whether it is entitled to mandatory interlocutory relief.
Adequacy of damages
32. I will now consider the question of the adequacy of damages, in the event that a mandatory interlocutory injunction is granted to the plaintiff, should it ultimately transpire that the defendant is entitled to the relief that it claims pursuant to the provisions of Part 2 of the 1980 Act on the basis of a business equity in a “tenement” held under a contract of tenancy. In my view, in the particular circumstances of this case, damages would be an adequate remedy in the unlikely event that the defendant is able to establish such rights. It would not be the position that any such rights could not be made effective because the defendant could never be restored to possession of the premises should a new tenancy be granted by the Circuit Court.
33. I infer from the plaintiff’s affidavits that it has no intention of granting a tenancy such as that claimed by the defendant in the future. Consequently, if the defendant is excluded from the premises by an injunction, and even if the plaintiff then admits a third party to the premises to replace the defendant, the plaintiff will almost certainly do so by the offer of the same type of licence as that refused by the defendant earlier this month. Such a licence arrangement would be likely to be capable of termination for any purpose and by the giving of a short period of reasonable notice.
34. Consequently, in the unlikely event that the defendant establishes a case for relief in the proposed Circuit Court landlord and tenant application, I do not envisage that there would be any difficulty in the plaintiff returning the defendant to limited occupation of the school yard. Thereafter, any loss of profits, goodwill or salary to the defendant’s employees would be readily calculable and recoverable on foot of the plaintiff’s undertaking as to damages. Therefore, the inadequacy of damages in the event that interlocutory relief is wrongly granted is not a basis for refusal of relief in this case. To resolve any doubt on this point, if an injunction is granted in this case, I will require in addition to the undertaking as to damages from the plaintiff a further undertaking not to create a tenancy in favour of any future occupant of the car park until all proceedings between the plaintiff and the defendant arising out of their previous relationship have been concluded.
Balance of convenience
35. Finally, I must consider the balance of convenience and the value to be attached to maintenance of the status quo. As Clarke J. noted in Allied Irish Banks v. Diamond at p.571, this is the test factor most closely related to the issue of risk of injustice. I consider that on the evidence available on this application, and with due regard to the considerable disparity in the strength of the respective cases of the parties, injustice is far more likely to result from the refusal of the injunction sought by the plaintiff than from the grant thereof.
36. On the other hand, with the benefit of the additional undertaking from the plaintiff identified above, I am also satisfied that damages would be an adequate remedy for either party in the event that the injunction issue is wrongly decided either way. Consequently, I am satisfied that the balance of convenience lies in favour of the grant of an injunction, in the sense that greater inconvenience and injustice is likely to flow from refusal than from the grant of an injunction.
37. This view is not affected by pleas made on the basis that the defendant has eight employees engaged in this business. Unfortunately, the harsh fact is that their future employment prospects are always contingent on the underlying viability of the business of the defendant, which in turn depends on the ability of their employer to continue in occupation of the school yard during permitted periods, whether by agreement or pursuant to statutory right as declared by the local Circuit Court. Their employer has made the judgment that occupation of the yard for the purposes of the business must proceed on the basis of a tenancy and not a licence, and has therefore refused the offer of a licence that would have permitted both business and employment to continue. That is the judgment call made by the employer, for better or for worse. I regret that the employees have become enmeshed in the dispute between the plaintiff and the defendant, but I cannot deny an injunction to the plaintiff solely on the basis of their interests, where the plaintiff’s case for an injunction appears to be particularly strong. Of course, I will consider their position and interests in terms of any stay that may be requested if an injunction issues.
Preservation of the status quo
38. In this case, I am satisfied that the status quo is not the position that pertained prior to 31st of January 2018, but rather the position that has obtained from then to the date of this judgment. This position is that the defendant’s right to occupy the premises by agreement has expired, and any continuing or future right to operate on the plaintiff’s property is contingent on the establishment by the defendant that the previous agreement with the plaintiff created a tenancy, which said tenancy will in turn fulfil the criteria for renewal pursuant to the provisions of Part 2 of the 1980 Act. Given my view as to limited prospects of the defendant establishing either of these propositions on the basis of the available evidence, I am clearly of the opinion that a high value attaches to the preservation of the status quo arising on the expiry of the previous agreement by efflux of time on 31st January, 2018.
39. Therefore, I am satisfied that the plaintiff has established entitlement to an order in terms of paragraph 1 of the notice of motion, and I will hear counsel further as to any further or additional order that may be required, the provision of undertakings, and as to the question of costs.
M’Kay v Keefe
[1876] 10 I.L.T.R 8
Ejectment on the title for a house situate in New-castle West. On the hearing, at the Quarter Sessions for the County Limerick (Newcastle Division), plaintiff contended that the tenancy had been created by verbal contract, and had been duly determined by notice to quit. The defendant produced a document, which he contended was an agreement in writing, containing the terms of the tenancy, and that as such it was necessary for the plaintiff to produce it, to show the nature of the tenancy; that the document, being only stamped with a penny receipt stamp, could not be tendered in evidence, and that the plaintiff could not recover without showing the nature of the tenancy by means of this document; and that the ejectment must, in consequence, fail. The document was as follows:— “Received from Daniel Keefe £3 15s., being a half year’s rent for a house in South-quay. To be left as a deposit till the last half year of the tenancy. Tenancy to commence 29th of September, 1869; yearly rent, £7 10s., to be paid 25th of March and *8 29th of September. The house to be surrendered on the 29th of September.” This was signed by the plaintiff. The defendant deposed that he required it to be drawn up on taking the premises, and before lodging the deposit in the hands of the landlord.
The Chairman
That document having been required to be signed before the tenancy commenced, to show its nature, is, in my opinion, an agreement requiring a stamp as such, and the plaintiff must pay the penalty required by the Act if he wishes to proceed with this ejectment.
The penalty of £10 was then paid, the document was admitted in evidence, and the Chairman granted a decree.
Malone and Others v Manton
1 January 1879
[1879] 13 I.L.T.R 144
Morris C.J., Lawson J.
Motion, that defendant’s statement of defence and counter-claim be set aside as sham, embarrassing, and contradictory; and, as it appeared that defendant had no defence to the action, that plaintiffs have judgment for the sum of £275 one half-year’s rent due November 1st, 1878, and for possession of the lands and premises of Sonna.
The statement of claim was as follows:—1. By indenture of lease dated 13th day of June, 1878, and made between the plaintiffs, of the first part, Ellen Tuite, of the second part, and the defendant of the third part, the plaintiffs, with the consent of the said Ellen Tuite, demised to defendant all that and those the house and demesne of Sonna, containing, &c., to hold the same unto the defendant his heirs, &c., from the 1st day of May then last, for the term of 14 years, provided the said Joseph Tuite and Henry Morris Tuite, or the survivor of them, should so long live; yielding and paying during the demise unto the plaintiffs the yearly rent of £550, the first half-yearly payment to be made at or immediately before the execution of the said lease, and the second half-yearly payment *144 to be made on the 1st November then next, and then by equal half-yearly payments in advance; and the defendant thereby covenanted with the plaintiffs that he would pay the said rent without demand at the times and in the manner aforesaid, clear of deductions, except as therein mentioned; and it was thereby provided, and the said indenture was upon the express condition, that in case the said rent should be in arrear, whether legally demanded or not, the plaintiffs might, at any time thereafter, re-enter upon the demised premises, or any part thereof, and repossess the same as of their former estate, as if the said demise had not been made, but without prejudice to remedies for recovery of rent and arrears of rent. 2. The defendant, upon the execution of the said lease, entered into possession of the said demised premises, under said lease, and is now in possession thereof. 3. The defendant has not paid the half-year’s rent due the 1st November, 1878, or any part thereof. He has been required to pay and has omitted to do so, and refuses to give up possession to the plaintiffs. The plaintiffs claim: 1. Possession of the said premises; 2. £275 for rent; 3. £50 for mesne rates for occupation from November 1st up to the date of recovering possession.
The statement of defence and counter-claim was as follows:—1. The defendant admits the statements in the 1st paragraph of the statement of claim, but for greater certainty craves leave to refer to the indenture of lease therein mentioned when the same is produced. 2. The defendant says that prior to the execution of the said lease—namely, on the 20th day of May, 1878—Henry Frederick Martley, one of the plaintiffs, as and being solicitor for and agent of and for the plaintiffs in that behalf, and with the knowledge, consent, sanction, and authority of his co-plaintiffs, wrote and sent to the defendant a letter in the words and figures following, that is to say:—“24, Westland-row, Dublin, 20th May, 1878. Dear Sir—Subject to agreeing as to the terms of the lease, Mrs. Tuite is inclined to let Sonna to you and your brother, from the 1st May, you to carry out the grazing agreements made by her, and to take the money payable for the grazing. Possession of the house cannot be given up for two months after the lease is completed, as the present tenant is entitled to that much notice. Also, you will have to pay the tenant something for compensation for the garden, which, I believe, she has stocked with vegetables, which, of course, will go to you or your brother, but this will be something very small. The rent to be £550, payable in advance, as agreed upon—first payment to be made upon execution of lease; second payment 1st November next. I wish you to understand that I am depending upon the rent being paid in advance as security, and I shall expect it to be paid within three months after it comes due each half-year. So do not expect any greater allowance of time than that. I shall get a draft of the lease prepared and send it to you. It will be a strict agricultural lease, with special covenants, and with it a counter-part for landlord is to be made and executed at your expense.—Yours faithfully, Henry F. Martley. Mr. D. Manton.” 3. The defendant says that he was by and from the said letter led to believe, and he did, in fact, bona fide believe, and (as the defendant charges) he was intended to be induced to believe that, notwithstanding that the rent to be by said intended lease reserved, and on the face thereof made payable in advance on the respective half-yearly gale days therein mentioned, yet that the defendant should have and be allowed a period of three months from each of said respective gale days for the payment thereof, and that any payment of such rent made during such period of three months should and would be deemed a payment in advance within the true intent and meaning of the said lease; and that the lessors therein named would not seek to avail themselves of any breach of the covenants, clauses, conditions, or agreements in said lease contained, with respect to the payment of the said rent or any part thereof unless and until the said rent or any part thereof was in arrear for a period of more than said period of three months; and the defendant says that it was on the faith of the said letter and the representation therein hereinbefore mentioned, and in the belief aforesaid, that he executed the said lease of the 13th June, and entered into possession of the lands which were then given up to them, and paid the rent of same from preceding 1st May. 4. The defendant shows that at the time action was commenced he had paid six months’ rent for the premises, but had possession of the lands only from the 13th day of June, 1878, and of the house only from the day of August, 1878. 5. The defendant is and has always been ready and willing to pay the said rent within the period of three months in the said letter of the 20th May mentioned, and says that the said period will not expire until the 1st day of February, 1878. 6. The defendant does not admit the statements in the 3rd paragraph of the statement of claim or any of them. 7. The defendant submits that, under the circumstances hereinbefore mentioned, it is unjust and inequitable, and a fraud on the defendant, for the plaintiffs to seek to avail themselves of the condition for re-entry contained in said lease before the expiration of the said period of three months; and that the plaintiffs are not entitled to avail themselves of said condition. 8. The defendant further submits that on the true construction of the said lease the plaintiffs are not entitled to both rent and mesne rates from November 1st, 1878; and that it is unjust and inequitable for plaintiffs to proceed for same. 9. And by way of counter-claim, the defendant claims that in case the court should be of opinion, notwithstanding the said letter and the facts herein mentioned, that the defendant should pay the rent on the gale days in the said lease mentioned, to be relieved from the condition of forfeiture in said lease contained, on condition of his paying, and he hereby offers and undertakes to pay, the said rent, and, also, if the court thinks the plaintiffs are entitled thereto, the plaintiffs’ costs of suit.
J. G. Gibson, in support of the motion.—The defence is sham. The defendant cannot rely on a correspondence which culminates in a deed executed by himself, and try to set aside the deed where there is no fraud. The counter-claim, instead of showing a new cause of action, is merely a submission to the order of the court, if the defence were held bad.
Byrne, Q.C. (with him E. P. S. Counsel ), for the defendant, contra.—The lease does not carry out the intentions of the parties. It was understood that defendant should be allowed three months time to pay the rent.
Morris, C.J.
[If there is any objection to the deed, would not the practice in chancery be to file a cross-bill to reform it?]
Yes; if there be fraud, or reasonable evidence to show that it did not express the intentions of the parties. In Mostyn v. West Mostyn Iron Coal Company, 1 C. P. D. 145, it was decided that the Common Law Division of the High Court of Justice may give effect to any equities so far as incidental to relief sought. There not being a year’s rent due, this case does not come within the Statutes regulating ejectment for non-pay *145 ment of rent. The court should now grant such relief as the Court of Chancery would have given formerly, before the passing of these Statutes. If the defence be bad, the counter-claim entitles us to the relief sought. They also cited King v. King-Harman, I. R. 7 Eq. 446.
Morris, C.J.—We shall make an order in the terms of the notice of motion.
Levingston v. Somers.
[1941] IR 183
Hanna J.
Supreme Court.
I have read the judgment which will be delivered by Murnaghan J. and I entirely concur in it.
MURNAGHAN J. :
A summary summons, dated the 31st March, 1937, was issued on behalf of the plaintiff claiming £129 11s. 2d., of which £120 was claimed as rent due under a lease for one and a half years’ rent up to the May 1st, 1935, and £9 11s. 2d. was claimed as further rent up to the 30th May, 1935, when possession was taken by the Sheriff on foot of an order made in the High Court, dated the 15th March, 1935. Judgment was given for the plaintiff by Mr. Justice Hanna on the 2nd July, 1937, but on appeal to this Court an order was made setting aside this judgment on the 12th October, 1937, and the action was adjourned for plenary hearing with liberty to the plaintiff to amend his summons, and liberty was given to the defendant to file a defence and counterclaim. An amended indorsement of claim was delivered on 28th October, 1937, in which £120 was claimed as rent and £9 11s. 2d. as mense profits, together with the following allegation:”The defendant went into possession of said plot under the said lease and remained in possession thereof until possession of the same was delivered by the Sheriff of the County of Dublin to the plaintiff on the 30th May, 1935.” A defence was filed on behalf of the defendant on the 1st December, 1937, which, besides traverses of the plaintiff’s allegations of fact, sought in a number of ways to dispute the validity of the lease, or the lessor’s power to make a valid lease. The counterclaim of the defendant, who is a builder, was based partly on the allegation that the land demised as building ground was not suitable for building, and partly on an alleged warranty that the plaintiff had power and title to make a demise of the lands.
At the trial before Hanna J. the claim for mense profits was not persisted in, but Hanna J. held that the defendant was estopped from disputing his liability to pay rent, and he was also of opinion that the lease was valid. Hanna J. also dismissed the defendant’s counterclaim. The defendant was represented by counsel at the trial but has appeared in person to argue in support of his appeal. He, however, confessed himself to be unable to argue the technical points of law involved, and the Court has not therefore had the assistance of counsel to argue in support of the defendant’s case.
It is clearly proved that the defendant went into possession under a lease dated 17th February, 1934, made for the term of 500 years, and he was in possession for the whole of the period in respect of which rent is now claimed. The first question of law which arises is whether the defendant is estopped from denying his lessor’s title.
By an ancient rule of common law a man who had been let into possession of land by another was not permitted to allege that his lessor had no title. This rule was eminently a reasonable one in general, but was given anunreasonable extension, and it was held that if a man took a lease of his own land he was estopped from proving the true state of affairs. Coke Litt. 47 b says:”If a man take a lease for years of his own land by deed indented, the estoppel doth not continue after the term ended. For by the making of the lease, the estoppel doth grow, and consequently by the end of the lease, the estoppel determines.” It was some consolation for a man who took a lease of his own land to know that the estoppel would come to an end with the lease if the lease was for a short period. But what about a lease for 999 years? In the case of Bayley v. Bradley (1) Wilde C.J. during the argument quotes this passage, and says:”The only qualification I am aware of, that has been engrafted upon that rule, is, that, if the tenant came into possession under the lessor, he must restore the possession before he disputes the title.” The modern rule therefore is, that a man who takes a lease of his own land can restore the possession, after which he is no longer bound by estoppel from disputing his lessor’s title.
It has frequently happened that a man who has a lease for a term makes a sub-lease for a longer period. The sub-lessee is not estopped during the whole term granted by the sub-lease but may show either that he has been evicted by title paramount or that his lessor’s title has come to an end. If a lessee seeks to make the case that his lessor’s title has come to an end the better opinion seems to be that he must first deliver up possession to his lessor: Doe d. Knight v. Lady Smythe (2); Doe d. Johnsonv. Baytup (3). In Wogan v. Doyle (4) Palles C.B. recognises that a lessee may show that the estate which the lessor had at the date of the letting has expired. It seems to me that the reason for this is that once the lessor’s own title has expired, the lessee becomes liable in trespass to the true owner, and it would be unjust while he is in fact so liable to bind him by estoppel to pay rent to his lessor as well.
It is not easy to find a precise authority on the point whether the lessee having gone out of possession can set up the want of title in his landlord as a defence in an action brought against him for rent. Munroe v. Lord Kerry (5)was an action for rent. The case as reported proceeded upon the principle “this being an action of covenant upon a deed or indenture, under the hand and seal of the plaintiff, and the title of the land not being in question, he was estopped from saying the lease was not a good lease.”
Newsome v. Graham and Another (1) seems to me to have a bearing on the facts in the present appeal. Newsome had been tenant to Graham and another for over 8 years and duly paid rent. He was ejected by the true owner, and had again to pay six years’ rent as mense profits. Newsome thereupon sued for and recovered this amount from Graham and his co-trustee. If, in the present case, the true owners (assuming the lease is bad) sue and recover from Somers in an action for trespass, will Somers be able again to recover this amount from the plaintiff in face of a judgment which so far stands against him?
In the case of Mountnoy v. Collier (2) where the action was one for rent under a lease, the Court of King’s Bench held that the lessee in possession during the term granted could nevertheless defend upon the ground that his lessor’s title had expired, and this without giving up possession. Coleridge J. based his view upon the facts supporting a new arrangement with the true owner, for he says at p. 638:”I do not think it is necessary, for the purpose of constituting such a defence, that the sub-tenant should actually have given up possession, or that the head landlord should actually have evicted him, if there has been a claim and a new arrangement equivalent to an eviction and fresh taking.” Erle J. at p. 640 bases his view upon a wider ground for he says:”But there are numerous authorities to show that a tenant is not estopped from showing that his landlord’s title has expired. And justice requires that he should be permitted to do so for a tenant is liable to the person who has the real title, and may be forced to pay him, either in an action for use and occupation, if there has been a fresh demise or an arrangement equivalent to one, or in trespass for the mense profits. It would be unjust if, being so liable, he could not show that as a defence; but there are abundant authorities that a tenant may show that his landlord’s title has expired.”
In his judgment in support of the estoppel Hanna J. relies upon Lyon v. Reed (3), Cuthbertson v. Irving (4) and In re Stringer’s Estate ; Shaw v. Jones-Ford (5). In Lyonv. Reed (6) at p. 309 Parke B., in the passage quoted by Hanna J., deals in a general way with acts in pais which create an estoppel, and gives, as an illustration, acceptance of an estate. I do not think this citation involves that a person who goes out of possession is bound by estoppel arising from “acceptance of an estate.” Cuthbertson v. Irving (1)was an action for breach of covenant to repair and to deliver up possession against a lessee who had remained in possession during the full term of the lease. The lease had been made by an equitable mortgagor in possession, who, however, had no legal estate out of which to grant a lease: it was admitted that the lease was good by estoppel as between lessor and lessee but it was sought to be argued that it was not good by estoppel in favour of an assignee of the lessor. Martin B. in his judgment quotes the note of Mr. Sergeant Williams to Walton v. Waterhouse (2) and from it deduces three propositions of which the third is:”so long as the lessee continues in possession under the lease the law will not permit him to set up any defence founded upon the fact that the lessor nil habuit in tenementis.”
Cuthbertson v. Irving (3) was relied upon in the argument upon the appeal but two distinctions of importance exist in that case:1, the lessee had remained in possession for the full term of the lease, and 2, the lessor, although not capable at the time of granting a valid lease, was equitable mortgagor in possession, and there was no one who could sue the lessee in trespass. In re Stringer’s Estate; Shaw v.Jones-Ford (4) was the case of a devise for life with remainders over where the testator had no title. The devisee for life, having no title except under the devise, could not set up a title contrary to the terms of the devise. I do not think that this case bears upon the point in issue.
This Court some years ago in Commissioners for Public Works v. Mackay (5) held that, in ejectment by a landlord, the tenant in possession was estopped from denying the lessor’s title. When the tenant is out of possession it seems to me, having regard to the cases to which I have referred, that the real reason for the estoppel disappears, and that the lessee is not estopped from showing, if he can do so, that the lessor had no title to make the lease.
This view of the law imposes upon me the obligation of forming an opinion whether the lease was good or not. The lease on its face purports to be made by Hugh S. Levingston, the plaintiff, as lessor, but it is not disputed that Mr. Levingston had himself no title to the premises. The lands in question with other lands were held in fee
by Michael Norton, but were subject to a mortgage to the Royal Bank of Ireland. The nature of this mortgage is not disclosed but was assumed to have been an equitable mortgage by deposit of deeds. On the 8th October, 1928, Michael Norton, by a deed to which the Bank was a party, appointed George K. McElnay his receiver, manager, agent and attorney. The deed contained an authority for McElnay “from time to time in his own name but as agent for Michael Norton to grant such leases of the mortgaged premises for such terms of years,” etc., “as the receiver, with the consent of the Bank, should think proper.”This deed was entered into in the interest of the bank so as to devise means by which the principal sum due to the bank should be paid off, and contained many clauses and provisions. By clause 5 Michael Norton appointed the receiver his true and lawful attorney to let and make building leases of any parts of the said lands, premises and hereditaments for such terms and at such rent or rents as the receiver with the consent of the bank might think proper.
By an indenture, dated the 9th September, 1929, Hugh G. Levingston, the plaintiff, was appointed in lieu of George R. McElnay but all the provisions of the earlier indenture were made applicable in his case. On the 19th April, 1933, Mr. Erskine, on behalf of Mr. Somers, made a written offer for a lease of 500 years to the plaintiff, but Mr. Michael Norton had died on the 9th April, 1932, and on the 12th May, 1933, Mr. Levingston wrote stating:”As the result of the death of the late Mr. Michael Norton leases can now be granted for terms not exceeding 150 years only. I trust that this will suit your client.” The meaning of this is that it was assumed that Mr. Norton had made his widow tenant for life and that her statutory power was limited to leases for 150 years. On the 30th May, 1933, the plaintiff wrote a formal letter accepting Mr. Somers’ offer. It explicitly stated the term would be for 150 years. On the 13th June, 1933, Mr. Purefoy, solicitor, wrote saying:”I regret that I am unable to furnish you with the draft lease at the moment as a fresh power of attorney has to be executed by Mr. Norton’s executors to confirm Mr. Levingston’s right to execute the lease.” On 12th July, 1933, a draft lease for 150 years was sent to Mr. Erskine with a letter which said:”At the moment Mr. Levingston is not in a position to grant this lease, but I hope to have his right to make leases confirmed in the near future.”
On the 6th October, 1933, Jane Norton executed a deed reciting that she was tenant for life under her husband’s will, whereby she irrevocably appointed the plaintiff to be her attorney for her and in her name to do certain acts and “in particular to exercise the powers of making building leases conferred upon me by statute or otherwise.”
On the 10th November, 1933, Mr. Erskine, amongst other matters, wrote requiring the term of the lease to be for 500 years. On the 16th November, 1933, the plaintiff replied:”I informed Mr. Erskine on the 12th May, 1933, that, owing to Mr. Norton’s death, leases could not now be granted for more than 150 years. I am willing to grant 500 years as in the previous lettings if this is possible.”On the 17th November, Mr. Purefoy wrote:”As to the term, Mr. Levingstone is not satisfied that he has power to execute leases for a term longer than 150 years. This is now the regular term in the estate, and I submit that it is ample for any building lease. Mr. Levingston is willing to execute a lease to your client for 500 years but whether it would be good for a term greater than 150 years I personally would not like to say.” Subsequent to receipt of this letter it appears that Mr. Erskine altered the draft to 500 years, and the lease was executed in this form by the plaintiff. By letter, dated the 17th February, 1934, Mr. Purefoy wrote to Mr. Erskine:”At your client’s request and at your client’s risk he is executing to him this lease for 500 years. It must clearly be understood, however, that Mr. Levingston accepts no responsibility for the term beyond the 150 years which he is satisfied he can grant. I would suggest that your client should bear this point in mind if he comes to grant sub-leases of the property.”
At this point it seems clear that no abstract of title had been furnished, or any regard paid to searches. On the 20th February, 1934, Mr. Erskine wrote a letter from which it would appear that he thought Mr. Norton was alive and was only tenant for life and could grant a term of only 150 years. How this misconception could arise it is not easy to see, but Mr. Purefoy replied in a letter, dated the 22nd February, 1934, which stated the position very fully. After recapitulating the sequence of events which were based on the view that Mr. Levingston was acting as attorney for Mrs. Jane Norton and was limited to a maximum term of 150 years, and apparently after the execution of the lease on the 17th February, 1934, which was executed subject to the attempted limitation in the letter of that date already referred to, Mr. Purefoy, in his letter of the 22nd February, 1934, takes up entirely fresh ground. He wrote:”For my own part I think that Mr. Levingston’s powers are effective to grant your client a lease for 500 years or longer. The position is as follows:Michael Norton, being absolutely entitled to the property, executed a receiver deed, of which I send a copy, appointing Mr. McElnay to be receiver. Subsequently Mr. McElnay was removed and Mr. Levingston appointed receiver in his stead. I send you a copy of this deed, dated the 9th September, 1929. Mr. Norton died on the 9th April, 1932, having by his last will bequeathed his property to Jane Norton for her life with remainders over. A question was raised by a prospective lessee as to whether Mr. Levingston’s power to grant leases under the receivership deed lapsed on the death of Mr. Norton. The point was not free from doubt and accordingly I got a fresh power of attorney executed by Mrs. Norton on the 6th October, 1933. I enclose a copy of this also. My own opinion is that the execution of this document is unnecessary. There is no doubt that if the lease is considered to be executed under this document alone Mr. Levingston cannot grant a term longer than 150 years. If, however, Mr. Levingston’s leasing powers under the original receiver deed are still effective, he has power to grant a lease for any term, as Mr. Norton held for ever.”
The parties then turned their attention to other matters, and it was left in dubio in what capacity Mr. Levingston executed the lease. At the hearing of the appeal it was not sought to support the lease as valid for 150 years by Mr. Levingston as attorney for Mrs. Jane Norton. I need not trouble to discover the reason for this attitude. When the will of Michael Norton is looked at it appears probable that at the date of the lease Jane Norton does not come within the statutory definition of tenant for life at all. By reason of the course taken by the experienced counsel for the plaintiff we have to consider only one question, viz., whether, notwithstanding Michael Norton’s death, the lease for 500 years can be supported under the first receiver deed.
The real and true answer to this question seems to me to be that when the deed was executed neither party considered it as anything but a lease made by Mr. Levingston as agent for Mrs. Jane Norton as tenant for life. I need not again recapitulate the correspondence between the parties, including the final letter, bearing the same date as the lease, in which Mr. Levingston guarded himself as making a lease for more than 150 yearsthe statutory periodon the assumption that Mrs. Jane Norton was tenant for life.
On behalf of the plaintiff, however, a full argument was addressed to the Court to prove that Mr. Levingston did have power to make a lease for 500 years notwithstanding the death of Michael Norton. It is said that the receiver deed was contemplated as an additional security to the bank and was intended to have effect after the borrower’s death. Clause 1 appoints the receiver in the name of the borrower, his heirs, personal representatives and assigns to demand and receive rents, and whatever the effect of these words may be, the power to grant leases in clause 1 is as agent for the borrower. Also in the effective power in clause 5 the borrower appoints the receiver his true and lawful attorney to make building leases. I do not think that these powers can be extended by implication. Further, I do not see how Michael Norton can by his will pass his property and estate to trustees and at the same time have this property under the control of an attorney dealing with the property as if the will were not in existence. There are also in the receiver deed indications which suggest to me that it was not to operate after the borrower’s death,e.g., by clause 7 (2) any future receiver was to be appointed by the borrower, and the receiver was to be deemed the agent of the borrower.
In re Hale; Lilley v. Foad (1) was much relied upon on behalf of the plaintiff. In that case a power given to a mortgagee to appoint a receiver, who was to be agent of the mortgagor, was held to be exercisable by the mortgagee after the mortgagor’s death. In the present case, in my opinion, the receiver deed did not contemplate that the receiver should have power of making leases for the owner after the owner’s death.
In my opinion, therefore, the lease was invalid. During the period covered by this action the trustees of Mr. Norton’s will were entitled to the lands, and if not barred by the Statute of Limitations can recover from the defendant in respect of his occupation. In my opinion the judgment for £120 against the defendant for rent should be set aside and judgment in the action entered for the defendant.
Mr. Somers explained at considerable length his contention that the lands were not suitable for building, and I shall deal with the counterclaim although it is somewhat inconsistent with the point on which, in my opinion, he should succeed, viz., that there was no lease at all.
At first it was contemplated that a road should be made through the plot demised and that the drainage should be carried alongside this road. Mr. Somers does not contend that a drain in this position was impossible, but he says the expense arising from making such a drain was such that the land could not in a reasonable sense be said to be building land. The evidence which was called on his behalf does not, however, support his argument. In reality, before the lease was signed with the full cognisance of Mr. Somers, the Dublin Corporation approved of a different lay-out of the drains, bringing them at right angles from the contemplated road. This new lay-out was more convenient and less expensive and was ultimately adopted. While Mr. Somers was in possession he raised contentions that the lessor had no legal right to have the drain carried in the altered mode, but I am satisfied that Mr. Somers was in error as to his objections. He showed no willingness to carry out a plan which was eminently reasonable, and it is open to observation that he was not really in earnest.
In my opinion there is no ground to support any counterclaim, and the appeal against the finding of Hanna J. on the counterclaim should be dismissed.
MEREDITH J. :
This is a case of very considerable importance, for it will decide what is henceforth the law in Ireland on the question of whether a party who has agreed to hold land from or under another in consideration of a rent, and who has actually taken possession of the land under the agreement and obtained and enjoyed all that he bargained for, can resist a claim for the rent due under the agreement, on the ground that the other party to the agreement has not a good title, for which, moreover, he did not contract.
I am clearly of opinion that, in Ireland, at all events since the Landlord and Tenant (Ir.) Act, 1860, the answer is in the negative, and that there has never been the least doubt or difference of opinion on the question.
I have the misfortune to differ from the majority of my colleagues, whose judgments, already read or about to be read, I have had an opportunity of reading, and I shall state, as I consider I am bound to do, the reason why I do not regard the fact that the tenant, being no longer in possession, is not estopped from disputing the title of the landlord, is not material to the question at issue. I shall then state, as explicitly as I can, the grounds upon which I have based my decision.
I raised the main point at the hearing and no answer was attempted, and I am still completely mystified as to which of the propositions on which I rely are controverted, and, if controverted, on what grounds. On p. 6 of Messrs. Cherry and Wakely’s standard work the learned writers say:”It is not necessary that a landlord should have a good title to lands in order that he could create a tenancy in them”: In re O’Rourke’s Estate (1). I am quite in the dark as to whether that proposition is now being disputed, or whether it is accepted subject to the rider:”but a tenant, who accepts possession under an agreement from a landlord who has not a good title, may nevertheless refuse to pay the rent.”
This case has one peculiar feature which it is necessary to bear in mind, and, as the result of which, the defendant has got himself into a most unfortunate position in reference to a building lease that he took from the plaintiff. Despite uncertainty as to whether the plaintiff could make a lease for more than 150 years, he insisted that the lease should, at his own risk, be for 500 years. The plaintiff, as lessor, had then to make sure that he would incur no liability on an implied covenant for title or against disturbance by anyone other than himself or those claiming under him. Accordingly a restricted covenant for quiet enjoyment was inserted into the lease, and that done, this had the desired effect of excluding any implied covenant for title: Leonard v. Taylor (2), and see also Mostyn v.West Mostyn Coal and Iron Co. (3), Clayton v. Leech (4).The defendant accepted a lease in this form without appreciating the awkward position in which he would find himself in the uncontemplated event of the lessor having no title at all.
The defendant, who is a speculative builder, entered, by agreement, into possession of the land pending the investigation of title, and, on the execution of the lease, his possession was referrable to the lease. Subsequently, and apparently before he learned that the plaintiff had no title to the lands, he became dissatisfied with his bargain as the land did not appear to be as suitable for the execution of the building scheme as he had anticipated, and he took the course of allowing himself to be ejected for non-payment of rent.
After the ejectment the plaintiff brought this action to recover the rent due prior to the ejectment and while the defendant was still in possession under the lease. The defendant, no doubt believing that he had the benefit of an implied covenant for title, relied on the plaintiff’s want of title both as a defence to the plaintiff’s claim for rent and as the basis of a counterclaim.
At the hearing, the argument on the plaintiff’s claim for rent turned entirely on a question of estoppel. It was assumed that, as the lessor had in fact no title at all, the defendant was merely his tenant by estoppel. It was not disputed that the estoppel ceased when the lease was determined by the ejectment, and the question argued was whether or not the cesser of the estoppel was subject to the saving clause:”Save as to claims that arose while the defendant was in possession under the lease.” See the footnote in the report of Bayley v. Bradley (1). The plea of estoppel, however, is only material in reference to a relevant allegation that a party makes in his pleading and which another is precludedthat is “estopped” from denying. It is not necessary to resort to estoppel to prevent a party from denying what another party need not allege.
The essential question, therefore, is whether a lessor, claiming in contract against a tenant for rent due under a lease, is under any obligation to show that he himself had any estate in, or title to, the lands. The answer is that under the provisions of Deasy’s Act (23 & 24 Vict. c. 154) he is under no such obligation. Accordingly no question of estoppel arises.
The provisions of the Act are perfectly clear. By virtue of s. 3 of the Act wherever one party agrees to hold land from or under another the relation of landlord and tenant is created between them, and the relation is “deemed” that is to say, whatever be the position at common law to be founded on the contract of the parties. The original lessee of a lessor who has no title is not a tenant by estoppel; he is tenant by virtue of s. 3 of the Act.
Sect. 42 inserts into every lease of lands or tenements made after the commencement of the Act a covenant with the landlord thereof that the tenant shall pay, when due, the rent reserved. The rent claimed in this action is unquestionably dueit was for non-payment of that rent that the defendant was ejectedand any question of the title of the landlord, the lessor and the plaintiff, is, wholly irrelevant. The position in Ireland is now by statute the same as what Lord Coke thought it was at common law.
The position of an original lessee of lands is in Ireland just the same as it is under the common law where, pending completion by a contract for sale, an intending purchaser, as here, is allowed to go into possession at an occupation rent. If, as the result of a full investigation, it is discovered that the vendor has no title and the sale goes off, the agreed rent has to be paid notwithstanding. There is a distinction between liability to pay rent simply on the reservation of rent in a lease, and liability on an express covenant: Wadham v. Marlow (1). The plaintiff’s claim in this action is based on privity of contract, not on privity of estate. Where in leases there was no express covenant, the covenant at common law “arose from the use of the word ‘demise,’ and there could be no covenant where nothing passed under that word,” per Palles C.B. in Canavan v. Burton (2). Under Deasy’s Act, s. 42 implies the covenant. “A lease may not give a good title, but every valid lease binds the parties by contract,” perGibson J. (3). Accordingly the defendant’s defence to the claim for rent is no defence, and no question of estoppel arises.
As to the defendant’s counterclaim, the claim, so far as based on any covenant in the lease, is answered at once by the fact that there is no express covenant for title, and, as already explained, no covenant is to be read in under the statute.
So far as the claim is based on an alleged warranty that the plaintiff had power and title to make the lease, there is no evidence of any collateral or subsidiary contract for good title.
Such cases as Engell v. Fitch (4) and Day v. Singleton (5)referred to in argument have no application. They deal with cases where a sale goes off owing to the vendor’s want of title, and have nothing to do with a claim after the contract of sale goes through and is completed.
The defendant also bases a claim on an alleged warranty that the site was suitable for building. He alleges that he was shown a plan and told that it had been approved by the Corporation. The plan in question only showed the general lay-out and did not purport to show the elevations or the drainage scheme. It was not proved, as alleged by the defendant, that the original scheme contemplated by the parties was impracticable, but only that an alternative scheme, suggested in the defendant’s favour, would be more advantageous to his. The matters relied on by the defendant are only relevant to the question of the degree of suitability. As to this, the defendant relied on his own judgment, and the advuntages and disadvantages were taken into account when fixing the rent. They are not relevant to the question whether the plot was a building site or suitable for building at all. As to the description in the advertisements, which described the premises as “a building site” and “suitable for building,” they do not seem to me to point to a collateral contract of warranty, but to be part of the description of the property to be sold.
For these reasons I am of opinion that the appeal should be dismissed.
GEOGHEGAN J. :
I concur in the judgment that has just been given by Meredith J. In my opinion the appeals on the claim and counterclaim ought to be dismissed.
JOHNSTON J. :
In the whole armoury of the law there is no weapon that is oftener resorted to by litigants than the principle that a tenant cannot be allowed to dispute the title of the landlord under whom he holds. The position of a tenant of land under such circumstances is an illustration of the familiar rule of law that one cannot approbate and reprobate at one and the same momenthe cannot seek to have the advantage of the possession and use of the land and at the same time strive to show that the person who has admitted him as tenant has no title to the land when the latter brings proceedings against him in the assertion of his rights as landlord.
In the well-known case of Attorney-General v. Hotham (1)Turner M.R. said:”With respect to the principle, it is the first maxim for every tenant to understand, that so long as he retains possession he cannot dispute the title of the person who gave him that possession”; and that decision was upheld on appeal by Lord Eldon (2). That principle is applicable in every class of case by which a landlord may be seeking to maintain his rights against his tenant in possession. The most usual of such cases is, of course, an action of ejectment; but it has been held to be applicable also in actions of trespass: Delaney v. Fox (3);in an action for use and occupation: Rennie v. Robinson (4);and in an action for rent: Parker v. Manning (5) and Rawson v. Grogan (6).
In Parker’s Case (5) it was held, in an action for rent, that the lessee (who had not been evicted, but was yet in possession) could not plead that the lessor nil habuit in tenementis. In the course of his judgment in the case of Clark v. Adie (No. 2) (1) Lord Blackburn at p. 435 said:”So long as the lease remains in force, and the tenant has not been evicted from the land, he is estopped from denying that his lessor had a title to that land.”
Now, the essential facts in this case are quite simple. Levingston gave a lease to Somers for a term of 500 years from November 1st, 1933, at a rent of £60 for the first year, £120 for the second year, £180 for the third, and £240 thereafter. Somers being a building contractor, covenanted to pay a further rent and to build and complete thirty houses within four years from November 1st, 1933. Various difficulties arose, and Somers made very little progress in the building of the houses. On January 15th, 1935, Levingston proceeded to eject the tenant for nonpayment of rent (namely, £60, being the first year’s rent which became due on November 1st, 1934). Judgment in this action was given by the High Court on March 15th, 1935, for possession and costs; and possession on foot of this judgment was delivered to the plaintiff by the sheriff on May 30th, 1935. Somers thereupon lost possession of the premises, and has remained out of possession since that time.
The present action was instituted on March 31st, 1937, claiming a sum of £129 11s. 2d., for rent under the said lease, being £30 for the half-year ending on May 1st, 1934, £30 on November 1st, 1934, and £60 on May 1st, 1935. The balance of £9 11s. 2d. is claimed in respect of the broken period from May 1st, 1935, to May 30th. It appears in the evidence that this property belonged to a man named Michael Norton, who on September 9th, 1929, with the consent of the Royal Bank of Ireland as mortgagees, appointed Mr. Hugh G. Levingston, the plaintiff herein, as receiver over the property, with extensive powers, as set out in the receiver deed. Norton died on April 9th, 1932, leaving a will by which he bequeathed this property (inter alia) to his wife, Jane Norton, for her life; and she on October 6th, 1933, executed a supplemental receivership deed by which she, as life tenant, appointed or reappointed, with the consent of the Bank, Levingston as receiver. None of these facts are referred to or set out in the lease to Somers, the lessor being described merely as “Estate Agent.” I adopt the reasoning of Mr. Justice Murnaghan as to the non-validity of the lease, and I do not think that I can add anything to what he has said. Somers has been evicted from the premises by his former landlord and he was out of possession of the lands for nearly two years before the present proceedings were taken. He now relies upon these facts and upon Levingston’s want of title. I am of opinion that he is entitled to do so, and that Levingston cannot now rely upon the lease for any purpose whatsoever. When the proceedings in ejectment were brought Somers, being in possession and claiming to remain in possession, could not, by reason of the principle of estoppel to which I have referred, have sought to dispute the title of the person under whom he was holding, but the position of affairs is different now.
I think that the claim in the action should be dismissed; and, as Somers has shown no ground for his counterclaim, it, in my opinion, should be dismissed also.
The Supreme Court unanimously dismissed both appeals. The late Chief Justice Kennedy had not revised his judgment before his death. The judgments of FitzGibbon J. and Murnaghan J. are as follows:
FITZGIBBON J.:
The arguments of the appellant’s counsel in the course of this appeal have ranged from the Constitution of the Irish Free State to the Grand Coustumier, and from the Shannon to the Sargasso Sea, but they have only postponed the inductabile tempus when we must consider the simple point upon which Hanna J. based his decision, and which the appellants studiously avoided until almost the end of their reply.
The discussion may not be wholly unprofitable if it leads the legal advisers of the Commissioners of Public Works, the Minister for Finance, and the Minister for Lands and Fisheries, to consider the whole question of letting the property of the State, and, in particular, the great possessions which have been placed under the control of the Commissioners of Public Works, or other State Departments, and making regulations and provisions in accordance with Art. 11 of the Constitution for their control and administration, which will obviate the difficulties suggested by the appellant’s counsel during the hearing of this appeal, but which the facts of this case enable us to circumvent.
Upon August 24th, 1905, the Commissioners of Public Works in Ireland, in whom had been vested all the property, rights and powers of the Shannon Navigation Commissioners, and who had been constituted a corporation by 32 & 33 Vict. c. 74, demised to the defendant, Anthony Mackey, the eel fisheries and tenements for recovery of which this action was brought, for a term of twenty-one years from the first day of February, 1905, at the annual rent of £1,800.
When the term created by that lease was about to expire, negotiations for a new letting were entered into between the Commissioners and the defendant, but the condition and future of the fisheries were so uncertain on account of the works in progress and contemplation in connection with the Shannon Electricity Scheme, that the Commissioners decided not to make any letting for a longer period than one year, or from year to year, until the effect of the Shannon Electricity Scheme upon the fisheries had been ascertained.
The defendant agreed to accept from the Commissioners of Public Works a tenancy from year to year in the lands and tenements set out in the statement of claim at the annual rent of £1,800.
It has been contended that the Commissioners of Public Works had no power to make any such letting, that they had no estate in the lands which would support it, that the property “belonged to” or was vested in “the Irish Free State,” or in the Executive Council, or in the Minister for Finance, or possibly in the Minister for Lands and Fisheries, and that there is in the Saorstát at the present time, or was at the date of the letting in question, no authority other than the Oireachtas, which could make a valid letting of the eel fisheries on the Shannon.
It is unnecessary to decide any of these questions, which are undoubtedly of immense constitutional importance, for it is settled law that the defendant, at any rate, is not entitled to put them in issue.
A tenant who has accepted possession under a lease, and has paid rent to the landlord who gave possession to him, cannot dispute the title of that landlord to recover possession at the expiration of the tenancy. Ward v.Ryan (1), a unanimous decision of a strong Court of Exchequer Chamber in this country, affirming a direction of Palles C.B. at the trial of an ejectment, is conclusive against the defendant. In that case one, David Ryan, a mere agent with no title, let lands to the defendant by parol. He then by deed assigned the lands to the plaintiff, who demanded possession from the defendant, and brought an action of ejectment, founded upon the demand. The defendant relied upon the absence of any title in the plaintiff, who contended in answer that the defendant was estopped from questioning the title of the landlord from whom he had accepted possession and to whom he had paid rent. Whiteside C.J., giving the unanimous judgment of a Court which included Palles C.B. and FitzGerald and Deasy BB., with others, quotes Cockburn C.J. in Delaney v. Fox (1):”‘Looking at it upon principle, I see no distinction in this respect between ejectment and trespass. The common law principle that one who derives possession of land under another shall not be permitted to question his right to give him possession, must prevail.’ Williams J. observes, ‘It has been firmly established by a long series of cases, that a tenant cannot be permitted to dispute the title of his landlord so long as that title continues’ . . . The defendant, having been put in by Daniel Ryan, was estopped from denying that the man who put him in had any estate in the lands. The defendant cannot set up any right to possession against Daniel Ryan, or the plaintiff, his assignee by deed, without giving up possession. If the possession of the defendant was determined, he is thenceforward either a wrongdoer or a trespasser.”
The decision is almost directly in point as regards its facts as well as its law. Daniel Ryan, the lessor, was only a manager or agent, with no title in the lands, and his assignee, the plaintiff, was not even an agent of the true owner. It has been urged here as an objection to the title of the Commissioners of Public Works, that since the passing of the Constitution Act they are only a Department of State under the Minister for Finance, entrusted only with the management of the Shannon, and with no estate in or title to, and therefore without authority to make lettings of, the property in their charge. Even if that be so, their authority and their title to recover are certainly not less than those of the plaintiff in Ryan v. Ward (2),and the ratio decidendi of that case, which was only an affirmance of what had been unquestioned law for centuries, applies with even greater force to a letting by a statutory Corporation, a Department of the State, which is seeking to recover public property from a trespasser.
The only attempt at questioning this law, was the citation of a passage from Halsbury’s Laws of England, Vol. 13, “Estoppel,” p. 403, note (g), that “the doctrine of estoppel does not apply to Crown Leases,” for which a case of Magdalen Hospital (President and Governors of) v.Knotts (1) was vouched as an authority by Mr. Dickie. Upon examination, that case does not appear to have decided anything of the kind. What it did decide was that a tenant who had entered under a lease void ab initio, and who had remained in possession during a period of over eighty years without paying any rent or giving any acknowledgment of title to his lessor, was entitled to the benefit of the Statute of Limitations. But all the Lords, Cairns L.C., Selborne and Gordon, intimated that their decision might have been different, notwithstanding the illegality of the original letting, if there had been any payment of rent under it, or any acknowledgment of the title of the lessor.
There is plenty of authority (e.g., Knight v. Clarke (2),and the cases therein referred to) in support of the proposition that a tenant cannot even show that his landlord’s title has expired without first giving up possession, after doing which, he may, if the facts support him, bring a cross-ejectment.
In my opinion the law is clear, that the defendant, having accepted possession under a tenancy from year to year from the plaintiffs, and having paid rent under it, is estopped from questioning the plaintiffs’ right to determine the tenancy by a notice to quit, or demand of possession, if the tenancy was really one at will, and to recover possession from him.
As to the contention that the form of the notice to quit, in so far as that document purported to have been served by the Commissioners of Public Works “as agents for and on behalf of Saorstat Eireann ,” precluded the Commissioners from suing as plaintiffs in the action to recover possession of the lands to which the notice related, I am of opinion that it is based upon a complete misconception of the effect of Art. 11 of the Constitution. In my opinion that Article is not a conveyancing disposition of property at all. It is a simple statement or provision that all the property of the Crown within the territory of the Free State, whether vested in the Crown, or in any Department of State, or held for the public use or benefit, shall in future be appropriated to the Free State. In other words, that “public use or benefit” which theretofore included all citizens of the United Kingdom, is now limited to the use or benefit of the citizens of the newly constituted Free State; but there is no divesting of the property theretofore vested in the departments who were the legal owners empowered to administer it for the public benefit. The Commissioners of Public Works continued to be the Department in whom the administration of the Shannon Navigation was vested, they could maintain actions for trespass by virtue of the rights of property or possession vested in them, and could, in my opinion, sue for the recovery of possession of lands wrongfully withheld from them. It is not inconsistent with those powers that the power, formerly possessed by them, of making leases of the lands in their possession as agents of the State, should be taken away, as in my opinion it was, by the concluding provisions of Art. 11.
I think the form of the notice to quit was correct, and that the Commissioners of Public Works were properly named as plaintiffs in the action. They were not “agents for the Saorstát,” in the sense that a land agent, who has no interest in the lands, is agent for the legal owner.
The decision of Hanna J. was correct and the appeal by the defendant should be dismissed.
In the second case the Commissioners of Public Works sued the defendant, Anthony Mackey, to recover mesne rates for the period during which he remained in possession of the eel fisheries and property demised to him after his tenancy had been determined by a notice to quit.
The plaintiffs claimed £1,800, the rent payable under the previous tenancy from year to year. The defendant alleged that the completion of the works connected with the Shannon Electricity Scheme had practically destroyed his fisheries, and that they were worth no more than £500.
Hanna J., after hearing the evidence of a Mr. Ebrill for the plaintiffs, and of the defendant, assessed the mesne rates at £1,200.
The plaintiffs have appealed against this judgment, on the question of amount only, which they say should have been the sum claimed, the defendant has not appealed.
I can see no ground for interfering with the assessment of the learned Judge. There was the admitted fact that one at least of the weirs fished by the defendant had been completely submerged by the operations of the Electricity Scheme and was unworkable, there was plenty of evidence that considerable quantities of elvers proceeding up the Shannon from the sea were prevented from reaching their destination, and therefore could not descend again in due course as fully grown eels to be captured in the defendant’s traps, there was also plenty of evidence that numbers of fully grown eels were diverted into the turbines on their way to the sea, and so avoided the eel traps. Leaving out, as unreliable, the defendant’s own valuation of the fishery, there remained abundant material to justify a substantial reduction of the rent.
On the other hand, the learned Judge did not accept the defendant’s evidence of the depreciation in the value of the fisheries, and assessed the mesne rates at more than double the amount sworn to by the defendant, whose conduct, in failing to produce the documentary evidence, which he admitted was in his possession, of the quantity of eels actually captured by him and the price received therefor, during the period in question, fully justified the assessment against him.
As the defendant has not appealed, it is unnecessary to consider whether the Commissioners of Public Works were the proper plaintiffs to maintain the action, but the principles upon which the action of ejectment has been held to be maintainable, and the decisions in Doe v.Wright (1) and Pearse v. Coaker (2) are sufficient to establish the plaintiffs’ right to retain the judgment for £1,200 which they obtained from Hanna J.
I think the appeal of the Commissioners of Public Works in the second action, that for mense rates, should be dismissed.
MURNAGHAN J.:
I agree with the other members of the Court that these two appeals should be dismissed, and I am of opinion that the action for ejectment can be determined by the rules of law dealing with estoppel between landlord and tenant.
I think it right, however, to say that I do not accept Mr. Dickie’s contention that the Provisional Government (Transfer of Functions Order), dated 1st April, 1922, put an end to the corporate existence of the Commissioners of Public Worksall the more as I find this body recognised as a Department of the Ministry of Finance by the Ministers and Secretaries Act, 1924.
As Mr. Justice Hanna has expressed the view that the regulations and provisions from time to time to be approved by legislation, referred to in Art. 11 of the Constitution, would include existing statutory provisions as to leasing, which he held continued to be in force under Art. 73. I find myself unable to share this opinion. It seems to me that the only leasing power under the Constitution of lands dealt with by Art. 11 is to be found in the State Land Acts, 1924, or in similar legislation.
Holding, then, that the Commissioners of Public Works had no power since the coming into operation of the Constitution to make a letting under the powers formerly given by the Shannon Navigation Acts, what is the legal result?
If a defendant who enters under a void lease is a trespasser or at most a tenant at will, he has no answer to the ejectment. I am of opinion, however, that it is in accordance with legal principle to hold that a person who enters under a void lease and pays a yearly rent becomes a tenant by estoppel, and that he holds as tenant from year to year. This principle will be found in the reasoning of the Law Lords in Magdalen College v. Shaw (1), and it is also recognised by the Exchequer Chamber in Ireland in Ward v. Ryan (2). Mr. Dickie strenuously contended that the established rule of law, by which a person who takes possession of land as tenant to another is not permitted to dispute the title of the person who gave him possession, does not apply in case a person is put into possession by a Corporation under a lease which is void orultra vires the power of the Corporation. No support for such a view can be extracted from the case cited in support of it, i.e., Canterbury Corporation v. Cooper (3). There, the defendant held under a long lease expiring in 1899. Before the close of the term the defendant obtained a lease for life free of rent. The defendant repudiated this lease as being void, and the Court treated the lease for life as a nullity. The result was that the defendant was in the year 1908 in possession without title, but the Court held that if the new lease was a nullity there was no surrender of the old lease, which continued until 1899, and the defendant was thus unable to claim a title under the Statutes of Limitation.
I am accordingly of opinion that by the payment of rent a tenancy from year to year was created, and that this tenancy was terminated unless it can be established that the notice to quit which was served was a bad notice to quit. The notice to quit, after reciting the expiration of the lease of the 1st February, 1905, and reciting that
a tenancy from year to year was then created, recited:”And whereas the said hereditaments and premises are now vested in Saorstat Eireann but we remain in the management and control thereof as agents for and on behalf of Saorstat Eireann ,” and continued:”Now we, as agents for and on behalf of Saorstat Eireann , hereby give you notice to quit and deliver up to us on the 1st day of February, 1930, possession of all that and those,” etc.
It is objected that the notice to quit is given by an agent, and that an agent cannot sue to recover possession in ejectment. The terms of the notice to quit are not very happily chosen, but it is clear that “agent” is not used in the sense in which it is distinguished from the principal. The Commissioners for Public Works, who are the legal owners, describe themselves as agents in the same way as trustees in whom the legal estate is vested might describe themselves as agents for their trust. In my opinion the notice to quit was sufficient to determine the yearly tenancy and the judgment in ejectment was correct.
No grounds have been shown for increasing the amount allowed by Mr. Justice Hanna for mesne rates, and this appeal of the Commissioners for Public Works must be dismissed.
Square Management Ltd v Dunnes Stores Dublin Co
[2017] IEHC 146
JUDGMENT of Mr Justice Max Barrett delivered on 2nd March, 2017.
I. Overview
1. A few steps from the County Library building in Tallaght is the terminus of the Luas Red Line. Across from the terminus is a wide expanse of tree-dotted car park that runs up to the red-brick wall of the well-known shopping centre ‘The Square’.[1] This car park sits on the north-side of the Centre and on the far side of the car-park from the library is the northern entrance to the Centre. The car park appears generally to be busy during the Centre’s opening-hours, but visitors looking for other parking can avail of an abundance of surface spaces, principally on the western and southern sides of the Centre, as well as in a multi-storey car park that sits at the north-eastern edge of the Centre.
[1] The court was provided at hearing with a laminated map entitled ‘TOWN CENTRE, TALLAGHT’ and labelled ‘Plaintiffs’ Map’. The court understands this map to replace the map that was annexed to the plenary summons. In this judgment (i) the shopping centre complex ringed in deep blue and stated on that map to mark the ‘Outline of the Centre lands’ is referred to as ‘the Centre’ or ‘the Square’, (i) the balance of the lands ringed in green on that map and surrounding the Centre is referred as ‘the Lands’, and (iii) the proposed area of development, including the proposed multi-storey car park, marked in hatched blue on that map is referred to in this judgment as ‘the Northern Car Park Area’.
2. The Square has enjoyed something of a fresh lease of life in recent years. Its owners now have grand plans to extend the shopping centre into the Northern Car Park Area. Their objective is, inter alia, to bring the centre physically closer to the heart of Tallaght[2] and to transform a still-popular but perhaps somewhat jaded shopping centre that is now close on 30 years old into a more modern and exciting commercial venue that is better placed to compete with what was referred to in court as the ‘necklace’ of high quality shopping centres that straggle the M50 motorway loop around Dublin City. Moving from south to west to north these are Dundrum Town Centre, Liffey Valley Shopping Centre, Blanchardstown Shopping Centre and the Pavilions in Swords. The Square sits roughly between Dundrum and Liffey Valley Shopping Centres, and it seems that its principal competitor, at least in its revamped form, would be Liffey Valley Shopping Centre.
3. Planning permission has been obtained for the proposed re-development and, while the diggers are not quite lined up on-site, the roll-out of the project seems largely ready to commence. Indeed, it has been suggested by the plaintiffs that there is now some urgency to starting into the development works in order that the Centre can maintain and enhance its competitiveness in a manner that is to the economic benefit of the owners and also, it is claimed, the existing tenants at the Centre whose commercial interests will be advanced by the increased visitor footfall that the planned refurbishments are expected to bring.
4. Of the existing tenants at the Centre, Dunnes is the largest. It is a so-called ‘anchor tenant’ operating a supermarket (which competes with an on-site Tesco supermarket) and a general merchandise store in a 116,000 square foot space that is spread over two floors. Dunnes maintains that the proposed development will breach its existing rights under certain lease and licence arrangements, not least, though not only, in the building over of the Northern Car Park Area.
II. The Parties
5. The Square Management Limited (SML) is a limited liability company incorporated in Ireland. It is the management company for the Square. SML is also the freehold owner of the retail units located within the Square which it holds subject to and with the benefit of various leases pertaining to those retail units.
6. National Asset Property Management Limited is a limited liability company incorporated in Ireland. It is the freehold owner of certain lands, including lands used for car parking that surround the retail units located within the Square.
7. Indego is a company with unlimited liability incorporated in Ireland. It is the holder of a grant of planning permission for the redevelopment of the Square (the ‘Planning Permission’) issued pursuant to a decision of An Bord Pleanála dated 23rd September, 2014.
8. Dunnes Stores Dublin Company (‘Dunnes’) is a company with unlimited liability incorporated in Ireland. It is the largest tenant and an ‘anchor tenant’ at the Square.
III. Key Documentation
9. The key documentation at issue in the within proceedings is the following:
(1) the 1988 Indenture
10. By lease dated 8th September, 1988 made between Dublin Corporation of the first part, Dublin County Council of the second part and L&C Properties Limited (‘L&C’) of the third part, the Corporation and the Council demised the Centre to L&C for a term of 10,000 years from the date of the lease.
(2) the 1988 Licence
11. In the 1988 Indenture, in addition to the demise of the Centre, the Corporation and the Council granted L&C a number of licences over the Lands, including a licence to lay out a car park on them and park vehicles there.
(3) the Guardian Indenture
12. By Indenture of Assignment and Transfer dated 1st August, 1989, made between L&C of the first part, the Corporation of the second part, the Council of the third part and Guardian Assurance plc of the fourth part: (i) L&C assigned its interests in the Centre under the 1988 Indenture to Guardian Assurance for the residue of the term under that Deed; (ii) the Corporation and the Council granted to Guardian Assurance the licences set out in the schedule to the 1988 Indenture, including the 1988 Licence.
(4) the 1989 Indenture
13. By Indenture of Lease of 1st August, 1989, made between Guardian of the first part and L&C of the second part: (i) Guardian sub-let the Centre back to L&C for 9,990 years from that date; (ii) Guardian granted to L&C, with the consent of the Corporation and the Council, “for the term of this Lease the benefit of” licences over the Lands in identical terms to those contained in the 1988 Indenture. National Asset Property Management Limited is the successor in title to the Corporation and Council, each as licensor, their respective interests having subsequently vested in South Dublin County Council from whom National Asset Property Management Limited acquired the Lands on foot of a transfer of 24th October, 2014.
(5) the E&G Lease
14. Dunnes acquired units E and G in the Centre by way of lease dated 11th June, 1990, made between L&C of the first part, Ansbacher and Company Limited of the second part, and Dunnes of the third part, for the term of 9,980 years from 1st March, 1990. Included in the provisions of the Third Part of the First Schedule to the E&G Lease is para. 6 which provides as follows:
“Subject to the conditions for reinstatement herein contained full and free right and liberty to alter and/or redevelop (by way of improvement, development, renovation, refurbishment or otherwise) or carry out modifications or extensions or additions to or at the Centre including the Common Areas and to authorise any present or future owner or occupier of nearby or adjoining premises (within or outside the Centre) to demolish, build or rebuild, alter or develop the building or buildings thereon or use the same in any manner notwithstanding that any such demolition, building, rebuilding, alteration, development or user as aforesaid may affect or interfere with or diminish the light coming to the Demised Premises or may temporarily interfere with the occupation, use or amenity or engagement of the Demised Premises.”
15. The just-quoted text forms the central plinth on which the plaintiffs have constructed the within proceedings. The plaintiffs maintain that the proposed development is entirely consistent with, and contemplated by, cl. 6 of the E&G Lease. The court returns to this aspect of matters later below. In passing, the court notes that the plaintiffs have placed some weight on the fact that in para. 10(B)(g) of the Third Amended Defence and Counterclaim it is “acknowledged [by Dunnes] that the extension of the Centre is contemplated in clause 6 of the Third Part of the First Schedule to the E&G Lease and the F Lease [considered below]”. It might have been preferable if “the extension” had read ‘extension’, thus perhaps precluding the suggestion that “the extension” being referred to in para. 10(B)(g) is the now-proposed development in respect of which planning permission has been obtained. However, the court is satisfied that para. 10(B)(g) seeks merely to reflect what cl. 6 provides and, to the extent that any (if any) ambiguity arises, in what Dunnes is pleading in this regard, such ambiguity is entirely resolved when one has regard to the next succeeding sentence of the Defence and Counterclaim which states that “[I]t is denied that the development as proposed was within such contemplation”.
(6) the Common Parts Transfer
16. By Common Parts Transfer and Assignment dated 19th October, 1990, made between Guardian of the first part, L&C of the second part, Ansbacher and Company Limited of the third part and SML of the fourth part, Guardian and L&C, as beneficial and registered owners respectively, granted, assigned and transferred to SML: (i) the common areas of the Centre and the reversions of the units in the Centre for the unexpired terms of the 1988 Indenture and the 1989 Indenture; (ii) the Licences specified in the First, Second and Third Parts of the 1988 Indenture and the 1989 Indenture respectively.
(7) The 1991 Indenture
17. By Indenture of 1st August, 1991, between SML of the one part, L&C of the second part and Dunnes Stores Dublin Company of the third part it was expressed that SML and L&C assigned to Dunnes the benefit of the licences specified in the 1989 Indenture to the intent that the licences would inure for the term of 9,980 years from 15th March, 1990.
(8) F Lease
18. By Indenture of Lease made on 21st August, 1992 (the ‘F Lease’) between SML of the first part, L&C of the second part and Denis Guiney Limited of the third part, L&C demised unto Denis Guiney Limited a lease for the term of 35 years of Store F, Level 3, as described in the First Part of the First Schedule. (Dunnes has since supplanted Denis Guiney Limited as tenant). The definition of “Common Areas” in the F Lease provides, inter alia, “that if the Landlord shall cause or permit any alterations in the buildings, built or erected or hereafter to be built or erected on the Centre or shall in any way alter the area or location of the Common Areas or any part thereof then the definition of ‘Common Areas’ shall as and where necessary be modified accordingly.” The Third Part to the First Schedule provides in para. 6 for the right of the Landlord and Freeholder to alter and/or redevelop the Centre, including the Common Areas. The Fourth Part bears the heading “Licence” and provides as follows: “Subject to the provisions of the Third Part of this Schedule the right of the Tenant, its permitted successors, Assigns, Licensees and Invitees to use the car parking spaces as designated for such use by the Freeholder during the term hereby granted.”
(9) Revocation of Rights
19. By letter of 6th February, 2015, SML notified Dunnes as follows regarding the provision of car parking during the proposed redevelopment of the Square:
“In due course, you will be provided with details of the arrangements for the phased redevelopment works. However, in the meantime, the purpose of this letter is to formally serve notice upon you that the Common Areas, including the car parks in the Centre, will be altered and redeveloped within the meaning of clause 6 of the Third Part of the First Schedule of your Lease. For the avoidance of doubt, the car parking spaces designated for use by The Square Management Limited will be relocated from time to time from January 2016 onwards, in order to facilitate the phased redevelopment works once they commence.”
20. Dunnes replied by letter of 6th March, 2015, stating, inter alia, that “Your purported notice has no legal effect or standing and we are under no obligation to reply or comply with any timelines you may wish to impose”, that “you are and have at all times…been aware of our claim in respect of property rights at the Centre”, and that “We are not in agreement with the contents or proposals set out in your letter, and we fully reserve our rights to challenge all or part of them”. By letter dated 23rd March, 2015, SML sought clarification from Dunnes as regards the alleged “property rights” referred to in the letter of the 6th March. No reply was received to this letter of the 23rd March. So by letter of 29th October, 2015, the plaintiffs’ solicitors informed Dunnes, inter alia, as follows:
“If and insofar as it is asserted that you have any right to use lands at the Centre (whether for car parking or otherwise) beyond the rights expressly provided for in your lease dated 11 June 1990 (which assertion is not admitted), for the avoidance of doubt any such purported rights are hereby revoked with effect from 1 July 2016 and this letter should be treated as notice of such revocation.”
IV. Claims, Counterclaim and Motivation
21. The plaintiffs maintain that the proposed development is entirely consistent with, and contemplated by, cl. 6 of the E&G Lease. The plaintiffs further claim that (i) the E&G Lease and the F Lease involve a specific grant of licence and a reservation of rights to develop nearby or adjoining lands; (ii) Dunnes has not acquired any new or additional rights to the lands; (iii) the proposed development will enhance Dunnes’ commercial interests; (iv) the plaintiffs have terminated any licence by service of notice and offered to provide an increased number of parking spaces in a multi-storey car park at the same location; (v) Dunnes cannot have acquired any right by prescription because it has an express licence to use the Lands. The plaintiffs now seek, inter alia, a declaration that Dunnes has no proprietary or other rights in respect of the Lands beyond those rights that Dunnes enjoys pursuant to the E&G Lease and the F Lease.
22. Dunnes’ defence and counterclaim can be summarised as follows. First, the proposed development is in breach of Dunnes’ rights under the 1989 Licence, the benefit of which was transferred to it under the 1991 Indenture. Second, by way of alternative, if (a) the 1989 Licence is subject to the terms of E&G Lease and the F Lease or (b) Dunnes does not have the benefit of the 1989 Licence but merely has a licence to park under the said leases, then the proposed development is outside what is permitted by the reservation contained in cl. 6 of the E&G Lease and the F Lease. Third, again in the alternative but on a related note, the proposed development is impermissible as it would constitute a derogation from the grant of the E&G Lease and the F Lease to Dunnes. Fourth, again in the alternative, but not it seemed to the court a ground of claim on which especial reliance was placed, at least at hearing, if Dunnes does not have any licence to park cars on the lands, then it has acquired by prescription an easement to use the lands for car parking, which right would be affected adversely by the development of the Lands.
23. There has been some suggestion by the plaintiffs that the purpose and/or effect of Dunnes’ assertion of the rights aforesaid represents an effort by Dunnes, without lawful cause or justification, to impede and/or frustrate the redevelopment of the Square in circumstances where Dunnes has already challenged the planning permission in judicial review proceedings. It is perhaps to be regretted, but this is no fault of Dunnes, that there is not a more efficient means of addressing all the issues arising from Dunnes’ concerns in a single set of proceedings; however, the court sees nothing in Dunnes’ actions or contentions in the within proceedings but a legitimate effort by Dunnes to protect the rights that it considers to arise under the applicable lease and licence documentation.
V. Reliefs Sought
24. The court understands that the reliefs being sought of it now are (a), subject to (b), the declaratory reliefs referred to in the second amended statement of claim and the third amended defence and counterclaim, (b) of those reliefs only the declaratory reliefs that do not relate to ownership of the Centre and the lands, an agreed map as to ownership of the Centre and Lands having been agreed between the parties during the course of the hearing of the within application (those agreed lands being referred to hereafter as ‘the Agreed Lands’), (c) such further or other orders as are deemed necessary by the court, and (d) the costs of the within proceedings.
25. The relevant declaratory reliefs sought in the second amended statement of claim are as follows:
(1) a declaration that Dunnes has no right to use the Agreed Lands or any part thereof (whether for car parking or otherwise) beyond the rights expressly provided for in the E&G Lease;
(2) a declaration that Dunnes has no right by way of easement, by prescription or any other entitlement to use the Agreed Lands or any part thereof (whether for car parking or otherwise) arising from the F Lease or by any assignment of the F Lease to Dunnes;
(3) a declaration that the purported assignment of licences contained in the 1991 Indenture is null and void and of no effect;
(4) a declaration that if the 1991 Indenture is valid it operates as a sub-licence of the rights purported to be granted thereby;
(5) further or in the alternative, the plaintiffs claim a declaration that the benefit of the licences claimed by Dunnes, whether acquired by assignment or by sub-licence, take effect as a licence coupled with an interest being the E&G Lease and the F Lease and take effect subject to the terms of those leases and in particular clause 6 of the Third Schedule thereof;
(6) without prejudice to (2), a declaration that any right of Dunnes to use the Agreed Lands or any part thereof (whether for car parking or otherwise) beyond the rights expressly provided for in the E&G Lease is determinable on the giving of notice and the period of notice contained in the letter from the Plaintiff’s solicitors dated 29 October 2015 was valid and sufficient.
26. The relevant declaratory reliefs sought in the third amended defence and counterclaim are as follows:
(i) a declaration that Dunnes and its permitted successors, assigns, licensees, tenants, under-tenants, servants, agents, customers and invitees, have the benefit of a licence, pursuant to Part III of the Third Schedule to the 1989 Indenture to have access to and egress from the Centre over the Agreed Lands as currently laid out and to park vehicles on the Agreed Lands;
(ii) a declaration that the said Licence is irrevocable save in the circumstances provided for in clause 2(a) of that Part;
(iii) a declaration that the letter from the plaintiffs’ solicitors dated the 29th October, 2015, did not have the effect of revoking the licence;
(iv) in the alternative, a declaration that Dunnes and its permitted successors, assigns, licensees, tenants, under-tenants, servants, agents, customers and invitees, have an easement to use the Agreed Lands as currently laid out as a means of access to and egress from Units, E, F and G in the Centre and to park vehicles on the Lands;
(v) if necessary, a declaration under s.35(2) of the Land and Conveyancing Law Reform Act 2009 declaring the existence of such easement; and
(vi) a declaration that the erection of buildings on the Agreed Lands would constitute a significant and permanent interference with Dunnes’ rights over the Lands.
VI. Key Questions Arising
27. At its heart, this is a case of contractual interpretation which, the plaintiffs contend, and the court accepts, to turn on four key questions.
28. First, does the E&G Lease entitle the landlord to carry out development on the Northern Car Park Area, being nearby or adjoining premises within the meaning of that lease?
29. Second, does the 1991 Indenture have the effect that Dunnes enjoys an irrevocable right for its customers to park on the Northern Car Park Area?
30. Third, if the plaintiffs have the right to carry out development on the Northern Car Park Area, does the proposed development interfere with Dunnes’ rights such as to amount to a derogation from grant?
31. Fourth, does Dunnes have an easement of right of way and parking by prescription over the Northern Car Park Area?
VII. Principles of Contractual Interpretation
32. There does not appear to be any dispute between the parties as to the general principles of contractual interpretation applicable in the within proceedings. Even so, it may be helpful for the court to mention briefly various applicable principles of contractual interpretation as identified in four prominent cases, viz. Analog Devices B.V. v. Zurich Insurance Company [2005] 1 IR 274, BNY Trust Company (Ireland) Limited and Anor v. Treasury Holdings [2007] IEHC 271, Rainy Sky SA v. Kookmin Bank [2011] 1 WLR 2900 and ICDL v. European Computer Driving Licence Foundation Ltd. [2012] 3 I.R. 327.
33. Analog Devices was a case concerned with the interpretation of an exclusion clause in an insurance contract. In the course of his judgment for the Supreme Court, Geoghegan J., at 280-281, quoted with approval the following principles of contractual interpretation, as identified by Lord Hoffmann in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896, 912:
“(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be next mentioned, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and of their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammar; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meaning of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax; see Mannai Ltd v. Eagle Star Assurance Co. Ltd [1997] AC 749.
(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania S.A. v. Salen A.B. [1985] A.C. 191, 201:
‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.’”
34. In ICDL, a case concerned with the proper interpretation of a limitation of liability clause in a commercial licence agreement, the Supreme Court also adopted Lord Hoffmann’s summary of principle in ICS. In BNY Trust Company (Ireland) Limited v. Treasury Holdings [2007] IEHC 271, a case concerned with the proper interpretation of a co-ownership agreement, Clarke J. referred with approval to the above-quoted passage of Lord Diplock in Antaios Compania Naviera, and the observations of Lord Steyn in Mannai Investment Co. Ltd v. Eagle Star Assurance Company [1997] 3 All ER 352 which emphasised the need for a commercially sensitive construction of a commercial contract.
35. One last decision of note when it comes to the general principles of contractual interpretation is the decision of the United Kingdom Supreme Court in Rainy Sky, a case concerned with whether or not a bank pay-out was due under certain performance bonds. There it was held that if there are two possible constructions of a contractual provision a court is entitled to prefer the construction which is consistent with business common-sense. Per Lord Clarke, at 2908:
“The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”
36. Armed with the above general principles of contractual interpretation the court turns now to consider the various issues presenting in the within proceedings.
VIII. The 1988 Indenture and 1989 Indenture Considered
37. By lease dated 8th September, 1988 made between Dublin Corporation of the first part, Dublin County Council of the second part and L&C of the third part, the Corporation and the Council demised the Centre to L&C for a term of 10,000 years from the date of the lease. Clause B of that lease reads as follows:
“B. NOW THIS INDENTURE WITNESSETH AS FOLLOWS:-
1. In consideration of the rents and the increases thereof hereinafter provided the covenants and conditions hereinafter reserved and contained and on the part of the Lessee to be paid, performed and observed, the Corporation hereby demises unto the Lessee ALL THAT AND THOSE the Lands and premises described in Part I of the First Schedule hereto (hereinafter called ‘the demised lands’)[1] EXCEPTING AND RESERVING as provided for in Part II of the First Schedule hereto TO HOLD the same unto the Lessee its successors and assigns for the term of ten thousand years from the date hereof YIELDING AND PAYING THE RENT (and the increases thereof) as specified and provided for in the First and Second Parts of the Second Schedule hereto on the dates therein specified to the Corporation at or in the office for the receipts and payments to be made to or by the Finance Officer and Treasurer of the Corporation for the time being.”
[1] Part 1 of the First Schedule defines the demised Lands as “ALL THAT AND THOSE that part of the lands at Tallaght in the County of Dublin containing 10 acres statute measure or thereabouts statute measure as more particularly described and delineated on Map Index No. 10489/13 annexed hereto and thereon edged red”. That is the area of the building that now constitutes the Centre.
38. Clause B then continues:
“2. In consideration of the Lessee undertaking and covenanting to construct and complete the covenanted works pursuant to the covenant in that behalf hereinafter contained at clause D hereof in accordance with the terms and provisions of the Fourth Schedule hereto and in consideration also of the covenants and conditions on the part of the Lessee therein contained the Corporation and the Council as to their respective rights titles and interests in the licensed lands hereby grant to the Lessee as appurtenant to the demised lands the licenses in accordance with the provisions contained in the First, Second and Third Parts of the Third Schedule hereto upon the terms and conditions therein contained.” [Emphasis added].
39. As will be seen later below the emphasised text has assumed some importance in the within proceedings.
40. The 1988 Indenture was followed just under a year later by the 1989 Indenture, being an Indenture of Lease of 1st August, 1989, made between Guardian of the first part and L&C of the second part whereby (i) Guardian sub-let the Centre back to L&C for 9,990 years from that date; (ii) Guardian granted to L&C, with the consent of the Corporation and the Council, “for the term of this Lease the benefit of” licences over the Lands in identical terms to those contained in the 1988 Indenture. As mentioned above, National Asset Property Management Limited is the successor in title to the Corporation and Council. Clause B.2 of the 1989 Indenture is worded very similarly to its counterpart in the 1988 Indenture, providing as follows:
“2. In consideration of the Lessee undertaking and covenanting to construct and complete the Covenanted Works pursuant to the covenant in that behalf hereinafter contained at Clause D hereof in accordance with the terms and provisions of the Fourth Schedule hereto and in consideration also of the covenants and conditions on the part of the Lessee therein contained the Lessor with the consent and by the direction of the Corporation and the Council as to its estate, right, title and interest in the Licensed Lands and the Corporation and the Council respectively as to all their estates, rights, titles and interests in the Licensed Lands hereby grant to the Lessee as appurtenant to the demised lands for the term of this Lease the benefit of the licences in accordance with the provisions contained in the First, Second and Third Parts of the Third Schedule hereto upon the terms and conditions therein contained.” [Emphasis added].
41. As will be seen later below the emphasised text has assumed some importance in the within proceedings.
42. Of the three parts of the Third Schedule mentioned in the just-quoted text, Part III is the particular focus of the within proceedings. The introductory text to the Third Schedule and Part III provide as follows:
“THIRD SCHEDULE
For the term of this Leases [sic] the Lessor with the consent of the Corporation and the Council respectively as to its estate, right, title and interest in the Licensed Lands and the Corporation and the Council respectively as to all their estate, right, title and interest in the Licensed Lands hereby grant the Licences (hereinafter more particularly described[)]…
PART III
1. The Lessor, with the consent of the Corporation and the Council as to its estate, right, title and interest and the Corporation and the Council as to their respective estates, rights, titles and interests hereby licence the Lessee to enter upon the lands hatched yellow [on a defined map]…annexed hereto for the purposes of constructing, maintaining and servicing the car parking facilities, service roads, pedestrian malls, footpaths, kerbs, lighting, adequate landscaping and necessary drainage facilities and all other works as provided for in the Fourth Schedule hereto to be constructed at the Lessee’s expense and for no other purpose without the prior written consent of the Lessor, the Corporation or the Council as the case may be. Any car parking provided in the area hereby licensed shall be available for use by the Corporation its successors, assigns licensees and invitees and in particular foe the users of all buildings constructed on the lands shown outlined and hatched and cross hatched [on a defined map]….
2. In relation to the area agreed to be licensed under this Agreement, the following general provisions shall apply:-
(a) This Licence shall be irrevocable subject only to the proviso that it may be revoked in whole or in part by the Lessor, the Corporation or the Council as the case may be by notice or notices in writing to the Lessee at any time in the event of the Lessee breaching or suffering or permitting a breach of the terms hereof and such breach remains unremedied for a period of 1 month after the Lessor, the Corporation or the Council (as the case may be) notify the Lessee of same.
(b) The Lessee shall insure, or cause to be insured against public liability and such other risks as may be reasonably required by the Lessor, the Corporation or the Council in the joint names of the Lessee, the Lessor and the Corporation or the Council as the case may be the said areas so to be licensed and shall produce to the Lessor, the Corporation and to the Council on demand all policies of insurance reasonably required by the Lessor, the Corporation and by the Council in that regard and shall indemnify and keep the Lessor, the Corporation and the Council effectually indemnified from and against all motions proceedings costs damages expenses claims and demands by virtue of the use of the areas so licensed to the Lessee or by virtue of the carrying out of any works on the said areas by or on behalf of the Lessee.
(c) Nothing in this Agreement or in the Licence hereby granted shall constitute or be deemed to constitute a Tenancy in favour of the Lessee or otherwise.
(d) The Licence hereby agreed to be granted is personal only to the Lessee.
(e) In the event of this Licence being determined by the Lessor or by the Corporation or by the Council as the case may be the Lessee shall if required by the Lessor, the Corporation and/or the Council make good and restore the said lands to their former state and condition. Failure by the Lessee to remove all structures, debris and spoil and to make good the said lands as may be required by the Corporation or the Council as the case may be on serving the said Notice shall be deemed to be an express authority for the Lessor, the Corporation or the Council as the case may be to remove or restore the said lands to the former state at the cost of the Lessee and without any compensation whatsoever to the Lessee….
(f) This Licence shall not be deemed to confer exclusive possession on the Lessee and the Lessee hereby acknowledges that so long as this Licence subsists in relation to the lands or any part thereof hereby licensed, the Lessor, the Corporation and the Council as the case may be shall be entitled to share the possession of the said lands together with all others so authorised by the Corporation or the Council as the case may be provided such use shall be consistent with the use thereof by the Lessee.
(g) The Corporation hereby undertakes not to develop the site marked ‘B’ on [a defined plan]…as a fast food restaurant for a period of five years from the 1st day of June 1988.” [Emphasis added].
IX. “…as appurtenant to the demised lands…”
43. The court has highlighted the use of the phrase “as appurtenant to the demised lands” in the 1988 Indenture and the 1989 Indenture. What is the meaning and purport of this phrase? It seems to the court that the most natural and also the most commercially sensible reading of the phrase is that it means that the licences granted in the said indentures are what is known as licences coupled with an interest, i.e. they exist solely for the benefit of the property interest with which they are connected, being here “the demised lands”. In terms of learned commentary and precedents of relevance, both Megarry and Wade in The Law of Real Property (8th ed.) and Wylie in Irish Land Law (5th ed.), as well as Fennelly J., for the Supreme Court in Honiball v. McGrath [2002] IESC 26, make various observations of interest.
44. Per Megarry and Wade, at para. 34.005:
“3. Licence coupled with an interest. The one form of licence which caused no problems at common law was a licence coupled with a recognised interest in property. A right to enter another man’s land to hunt and take away the deer killed, or to enter and cut down a tree and take it away, involves two things, namely, a licence to enter the land and the grant of an interest (a profit à prendre) in the deer or tree. At common law such a licence is both irrevocable and assignable, but only as an adjunct of the interest with which it is coupled. It therefore has no independent existence merely as a licence. It may be reinforced by the principle that a person may not derogate from his grant, which is explained further above. In any case, such a licence is not only irrevocable but is enforceable by and against successors in title of the grantee and grantor respectively, as part and parcel of the interest granted.
The interest to which the licence is ‘coupled’, must, of course, have been validly created. Similarly, the licence is only effective against a third party if the interest to which it is attached is enforceable against the third party under the normal rules of registered and unregistered conveyancing….”.
45. Wylie, at para. 22.04, under the heading “Licences Coupled with an Interest” observes as follows:
“Often a licence is included in a grant of a proprietary interest in land, and in this sense, it may acquire the characteristics of an interest in land. Thus such a licence is irrevocable by the licensor so long as the proprietary interest lasts and may be assigned to a third party along with the interest in land. A common example of such a case is where a profit à prendre is granted, eg, shooting or fishing rights. Such rights in respect of the land cannot be enjoyed unless accompanied by a licence to go on to the land to exercise them. The profit can be passed as an interest in land to successors in title of the grantee and it binds successors in title of the grantor, as does the licence necessarily attached to the profit.”.
46. Turning then to Honiball, this was a case in which a claim to enter the main house in a retirement village was rejected as the licence claimed was not necessary to the enjoyment of the demised properties (retirement bungalows). As a case it is therefore distinguishable from the within proceedings in that here the licence at issue is essential to the enjoyment of the demised premises when it comes to access and car parking. Notwithstanding this key distinction, the following observations of Fennelly J., at 17, are of interest:
“I also reject the submission that the lease conferred on each lessee an implied right of access to Clonmannon House. Such an implication would have to follow necessarily and obviously from the terms of the deed. It is said that the covenants entered into by Home Affairs make no sense if there is no right of access. In one sense, that is so. A party does not normally undertake an obligation to another person to repair a property if that other has no interest in having that repair carried out. However, the implication of the grant of a property right would require more. It would have to be demonstrated that the term effecting such a grant would as a matter of compelling necessity have to be implied to give what is usually called business efficacy to the terms of what is expressly agreed. If, for example, the deed, as distinct from the care contract had contained the obligation to provide services at Clonmannon House, it would have been impossible for the beneficiary to enjoy them without a corresponding right to enter the house. Home Affairs can perfectly well perform its repair obligations at Clonmannon House without conferring any right of access on the bungalow lessees. Such a right would have to be considered by reference to the care contract. To the extent that it provides for services to be rendered at Clonmannon House, the law will imply a right of access if that is clearly necessary in order to receive the services. It does not follow, however, that a proprietary right has to be granted. For essentially similar reasons, I reject the contention that there is here a license coupled with an interest. In truth the appellants’ argument begs the question. Sometimes a right in land cannot be effectively enjoyed unless accompanied by the grant of a license to enter….The appellants cannot point to any such antecedent interest in land. Rather their case is the converse, namely that the interest in land is required if they are to enjoy the benefit they claim to have been conferred by the care contract.”
47. What conclusions can be drawn from the foregoing extracts from commentary and case-law? The court will return to this aspect of matters following its consideration of the 1991 Indenture later below. Suffice it for now to note that it is clear from the foregoing that the consequence of a licence being coupled with an interest is that such licence cannot be conveyed independently but must remain coupled caboose-like to the relevant interest.
X. The E&G Lease Considered
48. Dunnes acquired units E and G in the Centre for a premium of £500k by way of the E&G Lease for the term of 9,980 years from 1st March, 1990. The habendum clause, at cl. 2.2, being the clause that defines the type of interest rights to be enjoyed by the grantee/tenant, states, inter alia, that “for the consideration aforesaid the Landlord with the Consent of the Bank hereby grants unto the Tenant the Licence specified in the Fourth Part of the First Schedule hereto”. That Part provides that “Subject to the provisions of the third part of this Schedule the right of the Tenant, its permitted Successors, Assigns, Licensees and invitees to use the car-parking spaces as designated for such use by the Landlord during the term hereby granted”. And turning back to the said third part, one finds the following, at para. 6:
“Subject to the conditions for reinstatement herein contained full and free rights and liberty to alter and/or redevelop (by way of improvement, development, renovation, refurbishment or otherwise) or carry out modifications or extensions or additions to or at the Centre including the Common Areas and to authorise any present or future owner or occupier of nearby or adjoining premises (within or outside the Centre) to demolish, build or rebuild, alter or develop the building or buildings thereon or use the same in any manner notwithstanding that any such demolition, building, rebuilding, alteration, development or user as aforesaid may affect or interfere with or diminish the light coming to the Demised Premises or may temporarily interfere with the occupation, use or amenity or engagement of the Demised Premises.” [Emphasis added].
49. In short, the habendum clause says that the licence in Schedule 1, Part 4 is to be granted. Schedule 1, Part 4 provides a licence to use such car-parking spaces as are designated by the Landlord. But that licence comes subject to the just-quoted para. 6 which, in effect, overrides all.
50. Is the Northern Car Park Area “nearby or adjoining premises”? Patently so, and this was confirmed by the plans and maps produced in the evidence of Mr Gallagher, a practising architect, of Lafferty Architects and Project Managers.
51. Does the “notwithstanding that…may temporarily interfere” text have the effect that demolition, building, etc. that permanently interferes with the occupation, use, etc. of the Demised Premises is not allowed? To answer that question it helps to recall what one is looking at. A licence to use certain car parking space has been granted, and the landlord is in effect reserving a right to authorise certain demolition, etc. work thereon and also use thereof “notwithstanding that [same]…may temporarily interfere” with the occupation, use, etc. of the “Demised Premises”, those Demised Premises being Stores E and G. Allowing for a moment that the building works to be done as part of the proposed redevelopment “may temporarily interfere with the occupation, use or amenity or engagement of the Demised Premises”, does the fact that the now-proposed development will occupy what is presently the Northern Car Parking Area, present an issue as regards para. 6? To the court’s mind it does not. Because, at the latest, once the development works are complete, the occupation, etc. of the Demised Premises, being Stores E and G, will continue without interference. In passing, the court notes that Dunnes, in its written submissions, when elaborating on the terms “occupation”, “use” and “amenity” in para. 6, consistently seeks to emphasise the importance to it of surface car-parking, stating, inter alia, as follows:
“66. Dunnes submits that a key feature of its ‘occupation’ of its supermarket unit is the availability of the large (289) spaces, adjacent, easily-accessible, same-level parking in the North Car Park.
67. …It is submitted that the typical ‘use’ of a supermarket includes availing of convenient car parking close to the store which can be easily and quickly accessed with a heavy shopping trolley or shopping bag….
68. The online Oxford Dictionary defines ‘amenity’ as ‘a desirable or useful feature or facility of a building or place’. It is submitted that a close, easily accessible car park, at the same level as the store is a desirable and useful feature of a supermarket….
69. The ‘engagement’ by customers with Dunnes’ units also clearly includes the use of a car park and, in particular, the journey from shop to car.
70. Dunnes submits that such occupation, use, amenity and engagement will be drastically and irreversibly interfered with by the proposed extension, specifically by reference to the relationship between the supermarket unit and the North Car Park.”
52. The court cannot but note that Dunnes has adduced no factual evidence of detriment that will be occasioned to it as a consequence of the proposed development. Its only witness as to fact, Mr Druker, a retired estate agent whose half-century of experience involved his advising clients primarily in the areas of property agency and development, was quite frank in this regard (Day 4, p.50). Asked as to the facts on which he based his suggestion that the proposed development will affect Dunnes’ business, Mr Druker stated that he was offering an opinion. When counsel for the plaintiffs suggested that this was not based on any fact, Mr Druker indicated that this was so. Pressed still further by counsel, who stated “I want to know on what facts you say that [the proposed development] will adversely affect Dunnes Stores”, Mr Druker answered “I can’t give you the facts because it hasn’t, it hasn’t occurred.” Likewise, Mr Markey, a chartered surveyor and former director of Lisney, called by Dunnes as an expert witness, indicated (Day 5, p.40) that he had not adduced any empirical evidence to support the conclusions in his expert report.
53. Leaving aside this weakness in the factual evidence provided by Dunnes, the truth is that following the completion of the proposed development Dunnes’ customers will continue to have an abundance of surface parking available to them. Indeed, there may even be a surfeit of surface parking: Mr Markey indicated in the course of his oral testimony (Day 5, p.19) that the ideal scenario at the Square is surface car-parking of 600 spaces. And following the proposed development, the unchallenged evidence in the case is that there will be more than 1,000 such spaces. (And that is leaving aside the enhanced multi-storey car parking that will be available – and which is planned to be developed as a priority). Moreover, the court is entirely persuaded by the evidence that this parking will be quickly and easily accessible. Just to take the southern car park by way of example, Mr Millward, a retail consultant and managing director of Millward Associates Limited, indicated as follows in his oral testimony (Day 3, p.6):
“There’s Level 2 North which is the focus of Dunnes’ concerns, the pace distance was 155 paces, taking 94 seconds. The distance to the south was 224 paces, taking 135 seconds. However, I think this is opportune as a moment to reiterate…that my evidence from the Pavilions in which the typical Dunnes visitor is visiting 2.9 other shops and purchasing at 2.6 other shops, we’re not talking about engaging with Dunnes in isolation, the consumer is engaging with the totality of the retail food and beverage and services mix in the shopping centre. And so, those journeys may originate in Dunnes but we know that those consumers will very likely be availing themselves of other experiences. So it is not a journey that is made in isolation. It is very likely that people making the journey both to the north and the south, indeed the Level 3 West and the Level 1 East car parks will be doing other shopping or eating or drinking activity. But the journey to the south involves 224 paces and 135 seconds.”
54. As to the suggestion by Dunnes that there might be congestion in the lift area that will feed from the to-be-constructed multi-storey car park, there is no empirical evidence before the court to support this contention and the evidence of Mr Hamill (a director of SML and Indego) and Mr Gallagher (a practising architect of Lafferty, Architects and Project Managers, who was called on behalf of the plaintiffs) indicates in this regard that the lift arrangements, and the flexibility for alternative lift arrangements if required, has been well thought through so as to avoid any congestion issues presenting or being allowed to continue. Per Mr Hamill (Day 1, p.98):
“The lifts, the intent of the lifts is that they are airport-style lifts. So those very large lifts that you see in Terminal 2 in Dublin Airport. And every level of the car park will exit only onto Level 2 which will push all the shoppers who park in this car park into that Level 2, which is the premier level in the shopping centre, out through a three-metre wide retail-focused corridor into a ten-metre wide mall which leads directly into the current North Mall in a seamless way, although the buildings are not connected.”
55. Per Mr Gallagher (Day 2, p.12):
“The lifts, lift sizes are generous 21 persons lifts….[What has been done thus far] is known as a scheme design. There is a detailed design phase to go through where we do a thorough analysis and we would get in experts. The experts we’ve used in the past on shopping centres is a UK firm called Dunbar & Boardman and they’re recognised specialists. What we get them to do is….[a] lift vehicle management study….So if there is a requirement for these lifts to go greater…the Centre owners are about the success of the shopping centre, [and] we’ll absolutely adopt that.”
XI. The Common Parts Transfer and Assignment Considered
56. By Common Parts Transfer and Assignment dated 19th October, 1990, Guardian Assurance and L&C, as beneficial and registered owners respectively, granted, assigned and transferred to SML: (i) the common areas of the Centre and the reversions of the units in the Centre for the unexpired terms of the 1988 Indenture and the 1989 Indenture; (ii) the Licences specified in the First, Second and Third Parts of the 1988 Indenture and the 1989 Indenture respectively. Notably, neither Dublin Corporation nor Dublin County Council were party to the Common Parts Transfer and Assignment, a point to which the court returns later below.
57. Clause 2.1 of the Common Parts Transfer and Assignment provides as follows:
“NOW THIS INDENTURE WITNESSETH that in consideration of the reciprocal rights granted and covenants, conditions and stipulations to be performed and observed by the Landlord with GA and L&C, GA & L&C as beneficial and as registered owners respectively hereby GRANT AND ASSIGN AND TRANSFER and the Bank at the request of L&C and as the owner of the Charge…hereby GRANTS ASSIGNS DISCHARGES AND CONFIRMS unto the Landlord:-
(a) ALL THAT the Assigned Premises as more particularly described in Section I hereof and as described for the identification of location in the First Part of the First Schedule;
(b) the reversions expectant upon determination of the leases of the Sold Owner/Occupier Units as set forth in the Sixth Schedule hereto…
hereto together with the easements and rights specified in the Second Part of the said First Schedule EXCEPTING AND RESERVING unto GA and L&C respectively and their respective Assignees, Lessees, Servants and Licensees the rights and easements specified in the Third Part of the said First Schedule.”
58. The 1988 Indenture and the 1989 Indenture have been considered previously above and there is not a great deal to note about the Common Parts Transfer and Assignment beyond, as recited above, what it achieves and provides, as well as the absence of Dublin Corporation and Dublin County Council as parties thereto, an aspect of matters to which the court now turns.
XII. The 1991 and 1992 Deeds of Confirmation Considered
59. It appears that after the Common Parts Transfer and Assignment was executed some doubt arose as to whether the licensed lands had been transferred properly to SML. The particular clause that gave rise to concern was the habendum clause, cl. 2.2, which provides, inter alia, as follows:
“[that] for the consideration aforesaid GA and L&C hereby GRANTS AND ASSIGNS AND TRANSFERS to the Landlord and the Bank as registered owners of the Charge aforesaid HEERBY GRANTS ASSIGNS DISCHARGES AND CONFIRMS to the Landlord the Licenses specified in the First, Second and Third Parts of the Third Schedule of the Superior Lease and Licence and the Sub-Lease and Licence respectively with respect to all of the lands the subject of the said Licences as shown on the Plans annexed to the Superior Lease and Licence and the Sub-Lease and Licence respectively.”
60. As can be seen, there is no mention of the Corporation and the Council, the original grantors of the licences, an omission which meant that it might conceivably be contended, at some future stage, that one or other or both of them had not in fact consented to the assignment of the licences (which, it will be recalled, were personal in nature). It was sought to ‘close out’ this concern by having the Corporation and Council respectively execute Deeds of Confirmation that confirmed the transfer of licences; that is their intended purpose and effect. Thus by Deed of Confirmation of 22nd January 1991 between Dublin County Council of the first part, Guardian Assurance of the second part, L&C of the third part, and SML of the fourth part, it was agreed, inter alia, that “the benefit of the…Licences may be freely assigned by GA and L&C to Management (and confirm retrospectively their consent to any such assignment already made at the date hereof [the fact of such assignment must, of course, have been known] and acknowledge that such assignment had effect to vest said Licences in Management”. A like confirmation features in the separate Deed of Confirmation executed on 12th March, 1992, between Dublin Corporation of the first part, and Guardian Assurance, L&C and SML of the second, third and fourth parts respectively.
XIII. The 1991 Indenture Considered
61. By Indenture of 1st August, 1991, between SML of the one part, L&C of the second part and Dunnes Stores Dublin Company of the third part it was expressed that SML and L&C assigned to Dunnes the benefit of the licences specified in the 1989 Indenture to the intent that the licences would inure for the term of 9,980 years from 15th March, 1990. The Indenture, though relatively short, is not untroublesome in what it provides, and it is worth quoting the recitals and principal text of same in full so as to get a proper understanding of what the 1991 Indenture sought to achieve and what it does achieve. Dunnes has contended, by reference to Woodfall’s Law of Landlord and Tenant, Vol. 1, para. 5.015, that it is established law that recitals are only used as an interpretative tool when there is some ambiguity in the operative part of the deed; however, even the text that Dunnes relies upon in support of this contention does not go so far; it asserts the general primacy of the operative text but does not suggest that a court is ever excluded from having regard to the recitals, and this must be so a fortiori where, as here, it seems that text is missing from the operative clause, and where too there is a complete divergence between the parties before the court as to the effect and effectiveness of the 1991 Indenture. Thus, per Woodfall:
“The function of recitals is to narrate the history leading up to the making of the lease,[1] or to make a broad statement about its overall objective or purpose.[2] Since any document must be construed as a whole, recitals may be taken into account in the construction of a lease, although recitals will not normally be given the same weight as the operative parts of the deed.[3] There are three rules applicable to the construction of an instrument containing recitals. If the recitals are clear and the operative part is ambiguous, the recitals govern the construction. If the recitals are ambiguous and the operative part is clear, the operative part must prevail. If both the recitals and the operative part are clear, but they are inconsistent with each other, the operative part is to be preferred[4]….
In some circumstances a recital may take effect as an obligation…[5].
A recital will normally estop the parties to the deed, and their successors, from denying the truth of any facts which are recited,[6] unless it is intended to be the statement of only one party.[7]”
[1] IRC v. Raphael [1935] AC 96.
[2] Mackenzie v. Duke of Devonshire [1896] AC 400.
[3] Orr v. Mitchell [1893] AC 238.
[4] Re Moon, ex parte Dawes (1886) LR 17 Q.B.D. 275; Walsh v. Tevanion (1850) 15 Q.B. 733; Mackenzie v. Duke of Devonshire [1896] AC 400; Leggott v. Barrett (1880) LR 15 Ch.D. 306.
[5] Easterby v. Sampson (1830) 9 B&C 505.
[6] Greer v. Kettle [1938] AC 156.
[7] Stronghill v. Buck (1850) 14 QB 781.
62. For the reasons stated above, and consistent with applicable principle, the court turns to consider the recitals and operative text of the 1991 Indenture. These read as follows:
“WHEREAS:
(1) By [the 1989] Indenture…Dublin County Council and Dublin Corporation did thereby grant, inter alia, Licenses in respect of certain lands as more particularly described in the…[1989] Indenture…upon the terms and conditions therein appearing for the benefit of the hereditaments and premises known as the Square, Towncentre, Tallaght in the County of Dublin.
(2) L&C and [SML]…is entitled to the benefit of the Licenses granted by Dublin Corporation and Dublin County Council more particularly specified in the…[1989] Indenture…
(3) [SML]…is entitled to be registered as owner of the hereditaments and premises known as the Square, Towncentre, Tallaght in the County of Dublin but not comprising Lettable Premises in the standard form of 35 year Lease and 9980 year Lease used in disposing of Units in the Square, Towncentre, Tallaght in the County of Dublin.
(4) [Dunnes]…has agreed to acquire part of the Lettable Premises in the Square, Towncentre, Tallaght in the County of Dublin, more particularly described as Stores E and G, Levels 2 and 3, the Square, Towncentre, Tallaght in the County of Dublin (hereinafter called ‘the Unit’) from L&C.
(5) For the purpose of giving effect to the purchase of the Unit by [Dunnes]…from L&C, [Dunnes]…has requested L&C and [SML]…to assign the benefit of the Licences more particularly described in the…[1989] Indenture…to [Dunnes], its Successors and Assigns, Licensees, Tenants, Under-Tenants and Invitees and all other persons authorised by [Dunnes]…which L&C and [SML]…have agreed to do.
NOW THIS INDENTURE WITNESSETH that in pursuance of the said Agreement and in consideration of Dunnes…acquiring the Unit fom L&C, L&C and [SML]…hereby assign the benefit of the Licence more particularly specified in the…[1989] Indenture, [to Dunnes its Successors and][1] Assigns, Licensees, Tenants, Under-Tenants, Invitees and all other persons authorised by the Tenant TO THE INTENT that the said Licences shall enure for the term of 9980 years from the 15th day of March, 1990.”
[1] There seems to be text inadvertently missing from the 1991 Indenture. The square-bracketed text inserted by the court at the above juncture appears to it to meet what Recital (5) contemplates.
63. There are a number of features to note about the 1991 Indenture:
– first, the 9,980 year period does not accord with the 9,990 year period in the 1989 Indenture;
– second, the duration of the Licence is 9,980 years from 15th March, 1990 whereas the duration of the E&G Lease is 9,980 years from 1st March, 1990.
Flowing from these two points, a question perhaps arises whether the 1991 Indenture is effective in what it seeks to achieve, given that it seeks to assign something different from what was granted. However, the court does not consider it necessary to address this aspect of matters because of the third point below.
– third, and this, it seems to the court, is where the 1991 Indenture flounders, the 1991 Indenture seeks to effect a bare assignment of the licences whereas, as has been touched upon by the court previously above, what one is treating with when one comes to the licences at issue in these proceedings is, in each case, a licence coupled with an interest and, to borrow from the above-quoted segment of Megarry and Wade, “At common law such a licence is both irrevocable and assignable, but only as an adjunct of the interest with which it is coupled. It therefore has no independent existence merely as a licence.” In purporting to assign otherwise (and it does) the 1991 Indenture must be and is therefore null and void and of no legal effect. (Without prejudice to the foregoing, the court notes that it does not accept the alternative possibility proffered by the plaintiffs that the 1991 Indenture operates as the grant of a sub-licence coupled with, subject to and for the term of the E&G Lease. To reach such a conclusion it would be necessary to do considerable violence to the text of the 1991 Indenture. Moreover, the court has seen no authority to support the proposition that the terms of a licence coupled with an interest are overridden by any terms attaching to the interest to which it is coupled. The only other plausible alternative is that the 1991 Indenture operates as a grant of the lease simpliciter; and for the reasons stated the court prefers the view that it has taken of matters as being correct).
64. In passing, the court notes Dunnes’ contention that by open letters dated 3rd October, 1990, and the 1991 and 1992 Deeds of Confirmation, Dublin City Council and Dublin Corporation agreed that the benefit of the licences could be freely assigned to SML for the use by SML, its successors and assigns in common with all others so authorised by SML, its successors and assigns provided such use was for the purposes specified in the 1989 Indenture. The purpose and effect of the 1991 and 1992 Deeds of Confirmation has already been considered above; they sought to ‘close out’, on a historical and continuing basis, an issue as to consent that was then perceived to arise in and under the Common Parts Transfer and Assignment. So far as the letters of 3rd October, 1990, are concerned, they commence respectively with text which embeds the consents they contain in the overall context of the 1988 Indenture and the 1989 Indenture and then expressly state as follows, in sub-para. (b) of each letter:
“The benefit of the [1988 Indenture and 1989 Indenture] may be freely assigned by Guardian Assurance…and L&C…respectively to…[SML] for the use by…[SML], its Successors and Assigns in common with all others so authorised by…[SML], its Successors and Assigns provided that such use is for the purposes as specified in the said Indentures for the benefit of the Square Towncentre, Tallaght, County Dublin.” [Emphasis added].
65. What are the purposes to which the above-quoted text refers? It seems to the court that those purposes must be the building and setting of shop units by way of lease, including the E&G Lease of 11th June, 1990, and the F Lease of 21st August, 1992. The Deeds and the letter do nothing to detract from the express content of those leases, nor, when it comes to the 1991 Indenture, do those Deeds or letters cure the central deficiency presenting in the 1991 Indenture, being that it seeks to effect a bare assignment of licences that each come coupled with an interest, even though at common law such a licence is assignable only as an adjunct of the interest with which it is coupled.
XIV. Non-Derogation from Grant
(i) Contention Made
66. Dunnes has invoked non-derogation from grant, in particular by reference to what it maintains is an obligation, implicit in the grant of the leases not to extend the Centre in a manner which causes permanent interference to the use and enjoyment of Dunnes’ units (the permanent/temporary aspect of matters has already been touched upon by the court previously above).
(ii) Legal Principles.
67. Wylie’s Irish Land Law (5th ed., 2013), at 382, in a passage relied upon by Laffoy J. in Conneran v. Corbett & Sons [2004] IEHC 389 (considered below), describes the principle of non-derogation from grant in the following terms:
“As regards the rule that a man may not derogate from his grant, the philosophy here is that, when a man transfers his land to another person, knowing that it is going to be used for a particular purpose, he may not do anything which is going to defeat that purpose and thereby frustrate the intention of both parties when the transfer is made. Usually application of this principle creates property rights in favour of the grantee which take the form of restrictions enforceable against the grantor’s land.”
68. In Birmingham, Dudley & District Banking Co. v. Ross (1888) 38 Ch.D. 295, Bowen L.J., at 313, succinctly states the essence of the principle to be that “that a grantor having given a thing with one hand is not to take away the means of enjoying it with the other”.
69. In Conneran, the plaintiffs held leases in Corbett Court shopping mall in the City of Galway and claimed rights in the nature of easements to bring deliveries of stock through a car-park and loading area. Laffoy J. noted that each of the leases gave an express right to use car-park delivery doors and the internal common parts for receiving deliveries, and even required that these be used. Laffoy J. found that there had been a total obstruction of the car-park delivery doors and that limited access to the rear of the mall a particular laneway via the passage that had formerly been part of the car-parking area was, per Laffoy J., at 19, “totally unsuitable and impractical for effecting deliveries to and from the plaintiff’s retail units”. In the circumstances, Laffoy J. expressed herself, again at 19, to be satisfied that there had been “a real and substantial interference with the express and implied rights acquired by the Plaintiffs under the leases” (emphasis added) and that it was no answer to say that there were other routes available, in circumstances where the plaintiffs had been deprived of “not only of the most convenient route but of the only suitable route for efficient bulk deliveries of merchandise.”
70. In Platt v. London Underground Ltd [2001] 2 E.G.L.R. 121, a decision of the English High Court, Mr Platt had taken a lease of a kiosk in a London Underground passageway. Subsequently, London Underground closed off access to that passageway for a large portion of the day, depriving Mr Platt of all passing trade during the hours of closure. In finding that there had been a derogation from grant, Neuberger J. made the following observations, at 122, under the heading “Derogation from grant: principles”:
“1. It is well established that a landlord, like any grantor, cannot derogate from his grant. To put in more normal language, as has been said in a number of cases, a landlord cannot take away with one hand that which he has given with the other….
2. In order to determine whether a specific act or omission on the part of the landlord constitutes derogation from grant, it is self-evidently necessary to establish the nature and extent of the grant….
3. “The exercise of determining the extent of the implied obligation not to derogate from grant] involves identifying what obligations, if any, on the part of the grantor can fairly be regarded as necessarily implicit, having regard to the particular purpose of the transaction when considered in the light of the circumstances subsisting at the time the transaction was entered into” per Sir Donald Nicholls V.C in Johnston & Sons Ltd v. Holland [1988] 1 EGLR 264 at 268A.
4. There is a close connection, indeed a very substantial degree of overlap, between the obligation not to derogate from grant, the covenant for quiet enjoyment and a normal implied term in a contract….
5. The terms of the lease will inevitably impinge upon the extent of the obligation not to derogate. Express terms will obviously play a part, possibly a decisive part, in determining whether a particular act or omission constitutes a derogation. An express term should, if possible, be construed so as to be consistent with what Hart J. called ‘the irreducible minimum’ implicit in the grant itself. However, as he went on to say, a covenant relied on by the landlord ‘if construed as ousting the doctrine in its entirety is repugnant…and should itself be rejected in its entirety’: see Petra Investments Ltd v. Jeffrey Rogers plc [2000] L&TR 451 at 471.
6. When considering a claim based upon derogation from grant, one has to take into account not only the terms of the lease, but also the surrounding circumstances at the date of the grant as known to the parties….
7. One test which is often helpful to apply where the act complained of is the landlord’s act or omission on adjoining land is whether the act or omission has caused the demised premises to become unfit or substantially less fit than the purpose for which they were let….
8. However, even that formulation, though helpful, may in many cases be too generous to the tenant. Thus permitting a competing business to be run from a next-door property was held not to be derogation from grant, see Port v. Griffith [1938] 4 All ER 295, but compare Oceanic Village Ltd v. Shirayama Shokusan Co Ltd [[2001] EGCS 20]….
9. The circumstances as they were at the date of the grant of the lease are very important…..
10. However, given that a lease is essentially prospective in operation, the central issue, where the complaint is of activities on the neighbouring premises owned by the landlord, is not merely ‘the use to which the adjoining premises are put at the date of the tenancy’, but also ‘the use to which they may reasonably be expected to be put in the future’, per Lord Millet at 468J in Southwark [London Borough Council v. Mills [1999] 4 All ER 449]….
11. When assessing what the parties to a contract actually or must have contemplated, one should focus upon facts known to both parties and statements and communications between them. A fact that could only have been known to one party could not, save in very unusual circumstances, be a legitimate part of the factual matrix. A thought locked away in the mind of the parties, or even perhaps of both parties, cannot normally be a relevant factor when assessing the parties’ understanding. In English law, at any rate, contract is concerned with communication as well as mutuality”. [Emphasis added].
71. Between them Conneran and Platt offer abundant guidance to the court in seeking to determine whether there has been a derogation from grant in the context of the within proceedings. Conneran points the court in the direction of looking for “a real and substantial interference with the express and implied rights acquired by the Plaintiffs under the leases”. Likewise Platt, among the various principles it identifies (which point in the main to factual considerations that will differ from case to case) mentions, as a helpful test for identifying derogation, “whether the act or omission has caused the demised premises to become unfit or substantially less fit than the purpose for which they were let…”. In essence, it seems to the court that what one is looking for when testing for derogation from grant is actual or likely deprivation of a grantee’s reasonable enjoyment of its existing rights as grantee.
72. Before turning to a consideration of the facts at hand to see whether such circumstances present in the within proceedings as to constitute a derogation from grant, the court pauses briefly to consider one further decision of passing interest to which the court was referred, in a case that bears some factual resemblance to the circumstances now before this Court. Thus in Dunnes Stores (Bangor) Limited v. New River Trustee 11 Limited and Anor [2015] NICh 7, the plaintiff sought from the High Court of Northern Ireland injunctive relief restraining the landlord from carrying out development on adjoining property, pleading, inter alia, that the said development in its entirety would amount to a derogation from grant by the defendants. Refusing the interlocutory injunction sought, Deeny J. referring, at 16, to the factors that informed his discretion in this regard stated that one factor, though “of lesser importance” was the fact that “any unquantifiable loss to the plaintiff is mitigated by their newly acquired right to have direct access from and egress to the car park”, a point which might be contended to be consistent with the ‘rising tide carries all boats’ logic which was aired at the hearing of the within application.
(iii) Factual Evidence
73. As mentioned above, the evidence of Dunnes’ witnesses as to any detriment that Dunnes allegedly will suffer by virtue of the proposed development was strikingly weak. In fact Dunnes has adduced no factual evidence of detriment that will be occasioned to it as a consequence of the proposed development. It will be recalled that Dunnes’ only witness as to fact, Mr Druker, was quite frank in this regard (Day 4, p.50), stating that he was only offering an opinion when asked as to the facts on which he based his suggestion that the proposed development will affect Dunnes’ business, later stating that “I can’t give you the facts because it hasn’t, it hasn’t occurred.” Likewise, Mr Markey indicated (Day 5, p.40) that he had not adduced any empirical evidence to support the conclusions in his expert report. The essence, indeed the height, of Dunnes’ case when it comes to derogation from grant is that during the roughly 14-month period that it will take to construct the new multi-storey car park which is a part of the proposed development, Dunnes’ customers will not enjoy the surface car-parking in the Northern Car Park Area. There is un-contradicted evidence before the court that customers will instead avail of the South, West and East surface car-parks, as well as the existing multi-storey car park. Mr Druker was questioned on this aspect of matters (Day 4, p.37):
“Counsel – …That means that even after the removal of the 289 spaces
there are still going to be a very, very substantial number of surface car park spaces in the centre, isn’t that correct?
Mr Druker – Yes.
…
Counsel – So whilst some of the northern spaces, surface spaces will be gone, they will be replaced with a very substantial number in the multi-storey and with plenty of surface car parking available, isn’t that correct?
Mr Druker – That is correct.”
74. This evidence does not show that Dunnes’ use of the demised premises will be affected in such a manner as to constitute a derogation from grant. And the evidence adduced by the plaintiffs points to anything but a derogation from grant arising or likely to arise. The court turns now to that evidence.
75. Existing car parking arrangements. There is no direct access from Dunnes demised premises into the Northern Car Park Area. Persons arriving in the Northern Car Park Area may, however, fetch trolleys from the Northern Car Park Area and tread through the Centre, past other shops, into Dunnes. There is also a facility whereby trolleys left in the car park by Dunnes’ customers are returned by a third-party contractor to a trolley-line inside the Centre by way of a dedicated door; this access-point will be preserved. In his oral testimony, Mr Hamill suggested (Day 1, p.66) that the Northern Car Park Area “is not really fit for purpose at all”, adding “I’m not sure why huge reliance is placed on 289 spaces [in the Northern Car Park Area]….There are two thousand at least other spaces in the shopping centre, 400 of which are in the current multi-storey car park, and there’s absolutely loads of surface car parking to facilitate every shopper and every unit in the shopping centre.” Mr Millward indicates in his expert report, at p.8, that only 31 per cent of all trolleys exiting the Centre exit into the Northern Car Park Area, and some 85 per cent of vehicles parked in the Northern Car Park Area are not engaged in a shopping trip that entails the use of a shopping trolley. In his oral evidence, Mr Millward indicated (Day 2, p.146) that a mere 1 in 6 cars in the Northern Car Park attracts a trolley. When it comes to whether shoppers at Dunnes’ grocery store have a preference for the northern or southern car parks, Mr Millward, as mentioned previously above, indicated as follows in his oral testimony (Day 3, p.6):
“There’s Level 2 North which is the focus of Dunnes’ concerns, the pace distance was 155 paces, taking 94 seconds. The distance to the south was 224 paces, taking 135 seconds. However, I think this is opportune as a moment to reiterate…that my evidence from the Pavilions in which the typical Dunnes visitor is visiting 2.9 other shops and purchasing at 2.6 other shops, we’re not talking about engaging with Dunnes in isolation, the consumer is engaging with the totality of the retail food and beverage and services mix in the shopping centre. And so, those journeys may originate in Dunnes but we know that those consumers will very likely be availing themselves of other experiences. So it is not a journey that is made in isolation. It is very likely that people making the journey both to the north and the south, indeed the Level 3 West and the Level 1 East car parks will be doing other shopping or eating or drinking activity. But the journey to the south involves 224 paces and 135 seconds.”
76. Construction phase parking arrangements. During the entirety of the proposed development the plaintiffs plan to have a pedestrian entrance at all times to the northern entrance. Moreover, it is their intent to complete the multi-storey car park first, in about 14 months, so that it can be opened to facilitate people who wish to park in that area. Mr Millward, in his oral testimony (Day 4, p.6), confirmed that there would be a significant number of parking spaces – in the region of 26,000 hourly parking slots per day – otherwise available to Centre-users even while the Northern Car Park Area is closed.
77. Post-development parking arrangements. As mentioned previously above, Mr Markey, in the course of his oral testimony, indicated (Day 5, p.19) that the ideal scenario at the Square is surface car-parking of 600 spaces. Following the proposed development, the unchallenged evidence in the case is that there will be more than 1,000 such spaces. There was some suggestion by Dunnes that there might be congestion in the lift area that will feed from the to-be-constructed multi-storey car park. There is no empirical evidence before the court to support this contention and the evidence of Mr Hamill and Mr Gallagher in this regard indicates that the lift arrangements, and the flexibility for alternative lift arrangements if required, has been well thought through so as to avoid any congestion issues presenting or being allowed to continue. Per Mr Hamill (Day 1, p.98):
“The lifts, the intent of the lifts is that they are airport-style lifts. So those very large lifts that you see in Terminal 2 in Dublin Airport. And every level of the car park will exit only onto Level 2 which will push all the shoppers who park in this car park into that Level 2, which is the premier level in the shopping centre, out through a three-metre wide retail-focused corridor into a ten-metre wide mall which leads directly into the current North Mall in a seamless way, although the buildings are not connected.”
78. Per Mr Gallagher (Day 2, p.12):
“The lifts, lift sizes are generous 21 persons lifts….[What has been done thus far] is known as a scheme design. There is a detailed design phase to go through where we do a thorough analysis and we would get in experts. The experts we’ve used in the past on shopping centres is a UK firm called Dunbar & Boardman and they’re recognised specialists. What we get them to do is….[a] lift vehicle management study….So if there is a requirement for these lifts to go greater…the Centre owners are about the success of the shopping centre, [and] we’ll absolutely adopt that. That comes on at detailed design stage, not a scheme design stage….[F]rom our design knowledge to date…we believe this [the current proposed plan] is adequate, but if it’s proven through analysis that it’s required to be more, and a lot of this analysis will take part in discussions with the anchor stores”.
79. Asked if a variation in lift size would require fresh planning permission, Mr Gallagher indicated that it was an immaterial, internal change that would not disadvantage a third party and so would not require fresh permission.
80. Commercial benefits of development. In his expert report, Mr Millward concludes, inter alia, at 9:
“As a result of my analysis and in the context of my experience as a retail consultant I conclude…
a. That there will be no material detriment to Dunnes trading arising from the increased distance that trolley exits from Level 2 North will have to navigate to reach the new multi-storey car park
b. That on the contrary, there will be a very considerable detriment to Dunnes trade and to the trade of every other tenant of The Square in the event that the Landlords’ proposed development cannot proceed
c. That far from causing a detriment to customer experience as claimed by Dunnes, the new improved shopping centre will create a considerable enhancement of that experience”.
81. Mr Hamill indicated in his oral testimony (Day 1, p.104) that Dunnes will not lose business following the development. And Mr Markey indicated (Day 5, p.27) that his contrary view that the development would have a ‘knock-on’ effect was “not an expert opinion”. Moreover, though he suggests in his expert report that Dunnes’ customers might go to the nearest Aldi if deprived of the Northern Car Park Area, Mr Markey accepted in his oral testimony (Day 5, pp.42-44) that the nearest Aldi has underground parking only and no surface car-park. And, when asked a few questions by the court (Day 5, pp.68-69), Mr Markey indicated that the proposed improvements should rebound to the benefit of all tenants. Mr Hamill (Day 1, p.58) indicated that while the Centre “as it currently stands is doing okay”, it needs to be “future-proofed”, stating: “It sits along the M50 access, or [as it] is commonly called, the necklace of shopping centres which stretch from North Dublin, The Pavilions, to South Dublin, Dundrum. It competes on various levels with each one of…Liffey Valley, Blanchardstown, The Pavilions and Dundrum but cannot be future-proofed without having the ability to attract branded MSU-type traders and by having another generous-sized anchor store for comparison shopping.”
(iv) Conclusion as to derogation from grant.
82. Having regard to the above-mentioned legal principles and to the factual evidence presented at trial, the court does not accept that there may or will be any derogation from grant if the proposed development proceeds as now planned.
XV. The Revocation Notice
83. It will be recalled that a revocation notice in respect of the licence was served on Dunnes on 29th October, 2015. In its counterclaim, Dunnes contends that this notice is ineffective. The court has already concluded that the purported assignment of the licences by way of the 1991 Indenture is ineffective and thus it does not need to consider whether the purported revocation of what was never assigned was in fact effective. Had the court been required to consider whether the notice of revocation was effective, it would have found that it was not effective. This is because cl.2(a) of the licence provides that the licence is irrevocable, subject to a proviso that it may be revoked in instances of breach which the court understands not to arise. The court has been referred by the plaintiffs in this regard to the decision of the House of Lords in Winter Garden Productions Limited v. Millennium Theatre [1948] A.C. 173. However, the court does not see that Winter Garden assists the plaintiffs in converting the irrevocable into the revocable. In Winter Garden, there was no provision in the relevant licence that it was terminable and a declaration was sought that, inter alia, it was not therefore revocable. The House of Lords found that the licence was revocable. A licence that is quiet as to its revocability is the complete opposite of a licence which, as here, states itself expressly to be irrevocable save in defined circumstances which do not present.
XVI. Easement by Prescription
84. In 2016, Dunnes claimed for the first time that it has acquired a right of parking in the Northern Car Park Area as an easement by prescription. The old forms of prescription under common law or lost modern grant were abolished by s.34 of the Land and Conveyancing Reform Act 2009; however, Dunnes claims its easement under s.38(b) of the Act of 2009 which preserves the right to claim a prescriptive period under the previous legal regime for a period of up to 12 years from 2009.
85. Gale on Easements (19th ed.) defines prescription, at para. 4-01, as “a title acquired by use or enjoyment had during the time and in the manner prescribed by law”. Fundamentally, prescription arises from acquiescence. As Lindley L.J. noted in Dalton v. Angus (1881) 6 App Cas 740, 773, a case concerned with the acquisition of a right to lateral support from adjoining land, “[T]he whole law of prescription and the whole law which governs the presumption of inference of a grant or covenant rests upon acquiescence….It becomes then of the highest importance to consider of what ingredients acquiescence consists”. The critical ingredient is user as of right, a concept elaborated upon by Parke B. almost two centuries ago in Bright v. Walker (1834) 1 Cr M&R 211, a case concerned with a claim to a right of way over land in the possession of a lessee, and re-visited more recently by the High Court in Zopitar Limited v. Jacob [2015] IEHC 790, another case concerned with an unsuccessfully contended for right of way, where Gilligan J. stated, at paras. 81-82:
“81.…‘User as of right’ means without force, secrecy, and without oral or written consent of the servient owner, or, as it is often put, nec vi, nec clam, nec precario.
82. The important question is whether the use would suggest to a reasonably careful and prudent owner of the land that a casual use only of the land was being made dependant for its continuance upon the tolerance and good nature of such servient owner, or would it put such servient owner on notice that an actual right of way was being asserted. It cannot therefore be secret, clandestine or surreptitious. The use also cannot be forced upon the servient owner, for prescription theory demands acquiescence in order for a right to be established. Finally, for the Court to be satisfied that there has been acquiescence to the establishment of a right, the necessary use cannot be referable to a consent, permission or licence. It cannot be precatory, in the sense of being precarious, that is, subject to the will of the servient owner and capable of being interrupted. The determination as to whether a case falls on either side of the acquiescence/toleration divide depends on its particular facts.”
86. Among the other cases to which the court has been referred in this regard are The Leopardstown Club Limited v. Templeville Developments Limited [2013] IEHC 526, Walsh v. Sligo County Council [2013] IESC 48, two recent decisions of the English Superior Courts in Lynn Shellfish Limited v. Loose [2016] UKSC 14 and Winterburn v. Bennett [2016] EWCA 482, and the long-ago decision of the House of Lords in Gardner v. Hodgson’s Kingstown Brewery [1903] AC 229.
87. In Leopardstown Club, a case which involved a variety of issues, including alleged breaches of rights of way and to adverse possession of certain land, Charleton J. observed as follows, at 20, under the heading “Rights of way”:
“Consent is completely incompatible with prescriptive rights unless that consent has been given so far in the past as to be rendered irrelevant….Assertion of rights based on permission is untenable….What is clear is that the essential quality of prescriptive rights must arise by reference to right and not by reference to permission. A user giving right to prescriptive rights must be without force, without deception and cannot be based on permission from the owner of the land, or as early Norman French puts it nec vi, nec clam, nec precario”.
88. This Court respectfully inclines to the view that a known consent even if given in the long-distant past does remain relevant. Even so, and without prejudice to the foregoing, a consent given in 1989 or 1990 is clearly not in any event “given so far in the past as to be rendered irrelevant”. But the critical limb of Charleton J.’s observations clearly holds true: “[T]he essential quality of prescriptive rights must arise by reference to right and not by reference to permission.
89. In Walsh, the well-known case concerning alleged public rights of way affecting the avenues of the recently restored Lissadell Estate, the Supreme Court, at para. 93, made clear that once a licence is given to use land no claim to prescriptive rights can arise:
“User by permission of the owner is not user as of right. At the same time, user without express permission is not necessarily user as of right. Whether particular acts of user are to be described as being as of right requires account to be taken of all the circumstances. Acts may be tolerated or indulged by a landowner vis-à-vis his neighbours without being considered to be the exercise of a right.”
90. In Lynn Shellfish, which featured a dispute concerning the proper extent of a private shellfish fishery, Lord Neuberger, at para. 37 of his judgment, re-affirms that the quality of use required to establish a prescriptive right to a profit or use “is embodied in the expressions, which have been held to be synonymous in their meaning and effect, namely ‘as of right’ and nec vi, nec clam, nec precario (i.e. not secretly, not by force, and not with permission).” Lord Neuberger also refers favourably to the helpful dictum of Lord Walker in R (Lewis) v. Redcar and Cleveland Borough Council (No 2) [2010] 2 AC 70, para. 30, that persons claiming to have acquired a right by prescription “must by their conduct bring home to the landowner that a right is being asserted against him, so that the landowner has to choose between warning the trespassers off, or eventually finding that they have established the asserted right against him.”
91. In Winterburn v. Bennett [2016] EWCA 482, a case that has no little resonance in the context of the within proceedings where the plaintiffs maintain the car-parks, including the provision of signage and lighting in return for an annual service charge paid by Dunnes, the Court of Appeal of England and Wales, confronted with a case of unauthorised parking, held that the owner’s continued objection to the unauthorised parking sufficed to defeat a claim of parking as of right. In Gardner, the payment of a service charge (and such a charge is payable and paid by Dunnes here) was held fatal to the prescriptive right claimed there. Per Lord Halsbury, at 231:
“[W]hat is conclusive, to my mind, against the appellant is that during the whole period during which this convenient access was used a sum of 15s a year was regularly paid in respect of the user of the way.
One of the most common modes of preventing such a user growing into a right is to insist upon a small periodical payment, and if such evidence as we have here were permitted to be evidence of a right, not only to the user upon terms of payment, but of a right to make the payment and continue the user in perpetuity, it would be a very formidable innovation indeed.”
92. Under the E&G Lease and the F Lease Dunnes has an express licence (permission) the effect of which is that its customers can park in the Northern Car Park Area. So no question of user without permission can arise that would yield an easement by prescription. As Bland on Easements (3rd ed.) notes, at para. 1-87, “[P]ermission is fatal to a claim of prescription”. As Lord Lindley noted in Gardner, at 240 “The common law doctrine is that all prescription presupposes a grant. But if the grant is proved and its terms are known, prescription has no place.” Applying Lord Walker’s test in Lewis, what conduct has been brought home by Dunnes to the plaintiffs that a right is being asserted against them, so that the plaintiffs have had to choose between asserting their rights, or finding that those rights have been established against them? There has been no such conduct. Dunnes’ claim to easement by prescription must and does fail.
XVII. Conclusion
93. As mentioned above, this case turns on four key questions. These are stated and answered below by reference to the foregoing analysis:
– first, does the E&G Lease entitle the landlord to carry out development on the Northern Car Park Area, being nearby or adjoining premises within the meaning of that lease?
The court’s answer to this question is ‘yes’.
– second, does the 1991 Indenture have the effect that Dunnes enjoy an irrevocable right for its customers to park on the Northern Car Park Area?
The court’s answer to this question is ‘no’.
– third, if the plaintiffs have the right to carry out development on the Northern Car Park Area, does the proposed development interfere with Dunnes’ rights such as to amount to a derogation from grant?
The court’s answer to this question is ‘no’.
– fourth, does Dunnes have an easement of right of way and parking by prescription over the Northern Car Park Area?
The court’s answer to this question is ‘no’.
94. Having regard to the answers to the questions just posed and to all of the foregoing analysis, the court respectfully declines to grant Dunnes any of the declaratory reliefs that it seeks at this time. Of the declaratory reliefs sought of it at this time by the plaintiffs, the court recites below the declaratory reliefs sought and whether it will grant them:
(1) A declaration that Dunnes has no right to use the Agreed Lands or any part thereof (whether for car parking or otherwise) beyond the rights expressly provided for in the E&G Lease.
The court will grant a declaration that Dunnes has no right to use, whether by way of easement or prescription or otherwise, the Agreed Lands or any part thereof (whether for car parking or otherwise) beyond the rights expressly provided for in the E&G Lease and the F Lease.
(2) A declaration that Dunnes has no right by way of easement, by prescription or any other entitlement to use the Agreed Lands or any part thereof (whether for car parking or otherwise) arising from the F Lease or by any assignment of the F Lease to Dunnes.
The court declines to grant this declaration given the form of declaration that it has indicated at (1) that it is satisfied to grant.
(3) A declaration that the purported assignment of licences contained in the 1991 Indenture is null and void and of no effect.
The court will grant this declaration.
(4) A declaration that if the 1991 Indenture is valid it operates as a sub-licence of the rights purported to be granted thereby.
This form of declaration is redundant in light of the declaration to be granted under (3).
(5) Further or in the alternative, the plaintiffs claim a declaration that the benefit of the licences claimed by Dunnes, whether acquired by assignment or by sub-licence, take effect as a licence coupled with an interest being the E&G Lease and the F Lease and take effect subject to the terms of those leases and in particular clause 6 of the Third Schedule thereof.
This form of declaration is redundant in light of the declaration to be granted under (3).
(6) Without prejudice to (2), a declaration that any right of Dunnes to use the Agreed Lands or any part thereof (whether for car parking or otherwise) beyond the rights expressly provided for in the E&G Lease is determinable on the giving of notice and the period of notice contained in the letter from the Plaintiff’s solicitors dated 29 October 2015 was valid and sufficient.
This declaration is declined.