ACC Loan Management Dac v Kellys Londis Supermarket Ltd
| Jurisdiction | Ireland |
| Judge | Ms. Justice Costello |
| Judgment Date | 25 September 2018 |
| Neutral Citation | [2018] IEHC 521 |
| Docket Number | [2017 No. 11496 P] |
| Court | High Court |
| Date | 25 September 2018 |
AND
AND
[2018] IEHC 521
[2017 No. 11496 P]
THE HIGH COURT
Property – Vacant possession – Surrender – Plaintiffs seeking an order requiring the first defendant to surrender vacant possession of a property – Whether the first defendant was in breach of its obligations under the lease
Facts: The plaintiffs, ACC Loan Management Dac and Mr Tennant, by notice of motion dated the 11th January, 2018, sought an order requiring the first defendant, Kellys Londis Supermarket Ltd, to surrender vacant possession of the property known as The Crescent, Bridge Street, Boyle, County Roscommon (the Secured Property) and an order prohibiting the first defendant and the second and third defendants, Mr and Ms Kennedy, from interfering with, impeding and/or obstructing the second plaintiff, his servants and/or agents in the conduct of the receivership and/or other efforts to take possession of and sell the Secured Property and various related reliefs.
Held by Costello J that this judgment was in respect of an interlocutory application and not of a plenary hearing. She made no final determination on the issues between the parties. However, she held that, on the affidavit evidence before the court, the plaintiffs had not made out a case that the first defendant was in breach of its obligations under the lease and in particular failed to pay the rent properly due so that the receiver was entitled to an immediate order for possession of the premises prior to a full plenary hearing of the case. Costello J held that the issue of whether the receiver was entitled to forfeit the lease and to recover possession of the premises were matters which required determination at a plenary hearing.
Costello J held that she would refuse the plaintiffs the reliefs sought in the notice of motion.
Reliefs refused.
By notice of motion dated the 11th January, 2018 the plaintiffs sought an order requiring the first named defendant to surrender vacant possession of the property known as The Crescent, Bridge Street, Boyle, County Roscommon (the ‘Secured Property’) and an order prohibiting the defendants from interfering with, impeding and/or obstructing the second named plaintiff, his servants and/or agents in the conduct of the receivership and/or other efforts to take possession of and sell the Secured Property and various related reliefs.
By a letter of loan sanction and agreement dated 16th September, 2002 ACC Bank Plc (‘the Bank’) offered the second and third named defendants a facility to purchase a 10,000 square feet retail premises at The Crescent, Boyle, County Roscommon. The facility was to be secured by a first legal mortgage and charge on the Secured Property. It was a special condition of the loan facility that no lettings or renewal of lettings in or of the Secured Property would be made without the Bank's prior consent in writing. The facility was subject to the general conditions for commercial loans with the Bank. Clause 18 provided that where security over the Secured Property has been created for the purpose of securing advances then the Secured Property or any part of it may not be assigned, leased, sublet, licensed, alienated or otherwise allowed out of the possession, ownership or control of the borrower without the prior consent in writing of the Bank while any sum due to the Bank remains outstanding. The second and third named defendants accepted the facility on the 20th September, 2002.
On the 4th October, 2002 the second and third named defendants granted the Bank a first legal mortgage over the Secured Property. At Clause 14 (h) of the mortgage deed the second and third named defendants covenanted with the Bank during the continuance of the mortgage that they would not assign, lease, sublet or part with possession of the mortgaged premises or any part thereof without the consent in writing of the Bank previously had and obtained. The mortgage was duly registered in the Registry of Deeds on the 8th July, 2003.
By letter of sanction dated the 3rd December, 2003 the Bank offered the second and third named defendants a term loan in the amount of €1,350,000 to finance an additional €400,000 to complete fit out of a new retail store in Boyle, County Roscommon. The security for the facility was an extension of the Bank's existing first legal mortgage and charge over the Secured Property. The second and third named defendants accepted the facility on the 5th and 6th December, 2003, respectively. The facility was subject to the Bank's general terms and conditions applicable to commercial credit facilities. Clause 4.11 provided:
‘In availing of a facility the borrower undertakes to the bank that so long as the facility is available for utilisation (whether or not subject to preconditions) or remains outstanding:
(a) The borrower will not, without the prior consent in writing of the bank, create or agree to create or permit to subsist any mortgage charge, pledge, lien or other encumbrance of any nature over any of the secured assets except for security in favour of the bank…’
The second and third named defendants leased the Secured Property to the first named defendant by an indenture of lease dated the 9th January, 2004 for a term of 35 years commencing on the 17th October, 2003 at a rent of €96,000 per annum for the first five years and thereafter to be reviewed every five years. Part III of the first schedule provided that the revised rent referred to in the lease
‘in respect of any of the periods therein mentioned may be agreed at any time between the landlord and the tenant or (in the absence of agreement) be determined …by an arbitrator …the revised rent so to be determined by the arbitrator shall be such as in his opinion represents at the review date the open market yearly rent for the premises let as a whole without fine or premium…’
The landlord had a right to re-enter the premises if the rent or any part thereof remained unpaid for 28 business days after becoming payable (whether formally demanded or not).
In June 2014 ACC Bank Plc reregistered as a private company, ACC Bank Ltd and then changed its name to ACC Loan Management Ltd. By special resolution dated 13th July, 2016 ACC Loan Management Ltd changed its name to ACC Loan Management Designated Activity Company.
The first named defendant carried on business from the Secured Property as a Londis supermarket and at all material times paid the rent due pursuant to the lease to the second and third named defendants. Mr. Neil Kennedy, director of the first named defendant, explained in an affidavit sworn on the 19th February, 2018 that, as a result of the general downturn in the economy and difficult trading conditions in County Roscommon, the parties to the lease entered into a side agreement dated 1st January, 2014 whereby it was agreed to vary the lease. The side agreement provided:
‘This agreement is supplemental to the deed of lease between the landlord and the tenant dated the 9th day of January, 2004 whereby the landlord let the property more particularly described therein to the tenant from the 17th day of October, 2003 for a term of 35 years at an annual rent of €96,000.00.
Now it is hereby agreed as follows:
The landlord and tenant have agreed to vary the rent payable under the terms of the said lease to €30,000 per annum. In all other respects the terms of the lease remain unchanged.’
Thereafter the first named defendant paid the reduced rent to the second and third named defendants.
The Bank employed Capita Assets Services (Ireland) Ltd (‘Capita’) to act as its agent in relation to the facilities granted to the second and third named defendants. By letter dated the 7th May, 2015 addressed to the solicitors for the second and third named defendants Mr. David Greally on behalf of Capita wrote as follows:
‘Please be advised that our client does not dispute the existence of the lease dated 9th January, 2004 made between your clients and Kelly's Londis Supermarket (‘the lease’) in the amount of €96,000 per annum which is in place over the supermarket premises at The Crescent, Boyle, County Roscommon. The said premises were provided as security by your clients as per deed of mortgage/charge dated 4th October, 2002 and registered accordingly with the registry of deeds on the 8th July, 2003 at Book 11 entry number 83.
As you are aware, it is a standard clause within a mortgage document that the letting or granting of a lease of any Secured Property requires the consent of the mortgagee. Therefore,...
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