ACE Autobody Ltd v Motorpark Ltd and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 15 January 2024
• Neutral Citation: [2024] IECA 6
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2022/245

Between/

ACE Autobody Limited

Appellant

and

Motorpark Limited, Brecol Limited and JDM Automotive Limited

Respondents

[2024] IECA 6

Whelan J.

Noonan J.

Pilkington J.

Appeal Number: 2022/245

THE COURT OF APPEAL

UNAPPROVED

JUDGMENT ofMs. Justice Máire Whelandelivered on the 15th day of January 2024

Introduction

1 . This is an appeal and cross-appeal against the ex tempore judgment delivered in the High Court on 2 ^nd June, 2022, and consequential orders made 21 ^st June, 2022, as amended and perfected on 6 ^th October, 2022, dismissing the claim of ACE Autobody Limited (ACE) for a decree of specific performance of an alleged agreement with Motorpark Limited (Motorpark) and Brecol Limited (Brecol) for the grant of a ten-year lease of a panel-beating/body shop (the body shop), in portion of premises situate at Monksland, Athlone, Co. Roscommon, Folio 35841F, Co. Roscommon.

2 . The claim was pursued by ACE on a number of alternative bases, including that the parties had concluded a binding agreement and/or based on sufficient acts of part performance. In the alternative it had sought a declaration of entitlement to a ten-year lease on grounds of estoppel including proprietary estoppel. ACE had contended that a binding and concluding oral agreement had been reached between ACE and Motorpark for the grant of the contended-for lease, on foot of which it had gone into occupation and possession of the unit on 16 ^th January, 2017 and had assumed other obligations, including payment of rent and assumption of four employees pursuant to European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) (TUPE). Brecol had counter-claimed for a declaration that ACE had no estate or title in the premises and sought an injunction that it vacate the premises and remove all equipment from same.

3 . The High Court dismissed both the claim for a decree of specific performance and Brecol's counterclaim. The trial judge concluded that ACE occupied on foot of a periodic tenancy from year to year, which required 6 months' notice to terminate and had not been validly terminated.

Background

4 . ACE is a crash repair company specialising in panel beating. Motorpark operated, inter alia, a motor vehicle dealership and allied activities and carried on trade at Monksland, Athlone, Co. Roscommon. Brecol was incorporated at the behest of Motorpark for the purposes of acquiring the freehold reversionary interest in the Monksland property, Folio 35841F, Co. Roscommon. In or about May 2018 JDM Automotive Limited (JDM) acquired the respective shareholdings of Motorpark and Brecol and thereby became beneficial owner of the entire freehold and leasehold interests, subject to the interests (if any) of ACE in the repair unit. JDM has taken over the defence and cross-appeal in the within proceedings.

5 . At issue is the nature and extent of the rights (if any) of ACE in the body shop unit occupied by it as a collision repair body shop since 16 ^th January, 2017, together with designated parking spaces, shared usage of kitchen and toilet facilities and an office on the ground floor, a shared office on the ground floor and an office on the first floor used by the body shop manager Mr. Brendan O'Gorman, one of four workers taken over by ACE when it went into occupation of the unit, and whether JDM is entitled to possession of same.

6 . ACE contends that prior to entering into occupation of possession of the body shop unit, it had reached a concluded agreement with Motorpark, evidenced by a Term Sheet Discussion Document dated 24 August, 2016, for the grant of a lease of the unit for the term of ten years, subject to a break clause in favour only of the tenant at the end of the fifth year. ACE contends that it carried out substantial acts of part performance referable to the said concluded agreement which entitle it to a grant of specific performance of the lease contended for. Further or in the alternative, it contended that in light of direct representations made and conduct on the part of Motorpark and statements made by, inter alia, Mr. Michael Barry (Managing Director of Motorpark) and his son, Mr. Colin Barry (the Group General Manager and company director), and of Gerard Halloran, a retired group general manager and director of Motorpark, who had authority to negotiate on its behalf, the respondents were estopped from denying that there was a specifically enforceable agreement for same. The circumstances and legal consequences of the conduct and representations leading to ACE going into occupation of the unit is the subject of intense dispute between the parties. In the course of a 5 day hearing in late May 2022, three witnesses were called on behalf of ACE; Mr. Robin Sutton (General Manager of ACE), Mr. Paul Plunkett (Managing Director of ACE) and Ms. Carolanne Reidy (of ARM). Mr. Gerard Halloran, Mr. Michael Barry and Mr. Kevin McNamara (solicitor for Michael Barry/Motorpark) were called as witnesses on behalf of the respondents.

Ex tempore judgment of the High Court

7 . An ex tempore judgment was delivered on 2 ^nd June, 2022, with the judge observing: “I am going to deliver this as an ex tempore judgment because it is not beaten into such shape as to justify it being delivered as a written judgment.” (p.3, lines 6 – 9). He identified the first issue as being “whether in late.. December 2016 a contract was concluded between Motorpark.. and ACE… to lease to ACE the vehicle body repair unit.. for ten years in terms orally agreed.” (p.3, lines 11–17). He observed that most of the contract terms which ACE contended for “were set out in document called ‘Term Sheet Discussion Document Only’”.

8 . The second issue identified was “whether the conduct of Motorpark or Brecol precludes them from either relying on the fact that no contract was concluded or on absence of an executed document complying with statutory formalities for the creation of a fixed term of more than a year… as required by section 51(1) of the Land and Conveyancing Law Reform Act, 2009.” He noted that “ACE made the case that Motorpark encouraged it to occupy the premises and to act to its detriment by representing that the lease based on the terms agreed would be forthcoming and should result in either a declaration of a right to a lease on those terms or specific performance to give effect to the rights acquired by proprietary estoppel or promissory estoppel.” (p.4)

In regard to estoppel, the court noted that it:

“…may arise where the conduct of a party is relied on which estops a party from relying on absence of statutory formalities under the doctrine of part performance which prevents such formalities to be used as a vehicle of fraud in equity. It may also arise in the context of the legal consequences of an arrangement which gives rise to an interest in land as a result of a proprietary estoppel or a constructive trust. It may also arise to estop a party from relying on rights which that party would otherwise have at law. It does not necessarily follow that a proprietary estoppel will recognise that a party to an arrangement which has been relied on as the basis of a legal relationship should be given the same interest in land as that which would be enforced by an order in an action for specific performance of a contract.” (p.4)

9 . The court noted that ACE had argued that “because nothing was said about a request by Motorpark for renunciation by ACE of any right to a new tenancy after the ten years under s.17(1)(a)(iii)(a) of the 1980 Act which was rejected by ACE, the effect of the subsequent requests that ACE occupy a unit on the promise of a lease and the terms agreed in 2016, Motorpark is estopped from raising absence of agreement on this point in answer to a claim for specific performance.” (p.5)

10 . The court identified the third issue as: “what is to happen if the claim by ACE fails. The claim might fail either on the basis that there was no concluded contract for a lease or on the basis that the proved facts are insufficient to justify a conclusion that ACE has acquired a proprietary right to occupy the body repair unit and ancillary easements for ten years. The judge further asked “What is the current legal status of the possession of ACE and is .. Motorpark entitled to succeed on the counterclaim that ACE is a trespasser and should be removed from the unit”.

11 . The following conclusions reached by the trial judge represent his essential determination:

“…the evidence does not establish that there was a contract for a ten year lease in place between Motorpark and ACE when ACE took possession of the vehicle body repair unit in the Motorpark premises… on 16 ^th January 2017.” (pp. 5/6)

The evidence may disclose a very limited basis on which conduct by Motorpark and Brecol could entitle ACE to equitable relief based on estoppel. This conduct consisted of bad faith in leaving ACE under the impression that Motorpark and Brecol would move towards finalising the negotiations of the ten-year lease, which was envisaged at the time that ACE took possession of the unit.

This could only relate to the period of notice appropriate to determine the legal relationship created when ACE went into possession. At some stage after ACE took possession of the unit, Michael Barry changed his mind on whether he would proceed to give a lease.

ACE never had a legitimate expectation that it would be given a lease without a disclaimer, or to be put, by equity, in a position where it would end up with a right to renewal of tenancy under Part II of the Landlord and Tenant ( Amendment) Act, 1980. The bone of contention as to whether the proposed deal would include a disclaimer of such rights was never resolved.

The evidence does not establish any convention or representation which existed which could have the effect of estopping Motorpark and Brecol from...