Airscape Ltd v Heaslon Properties Ltd

JurisdictionIreland
JudgeMr Justice John Edwards
Judgment Date31 March 2008
Neutral Citation[2008] IEHC 82
Docket NumberRecord No: No 9627P/2004
CourtHigh Court
Date31 March 2008

[2008] IEHC 82

THE HIGH COURT

Record No: No 9627P/2004
Airscape Ltd v Heaslon Properties Ltd
[2008] IEHC 82.
Between/
AIRSCAPE LIMITED
PLAINTIFF

AND

HEASLON PROPERTIES LIMITED
DEFENDANT

MCDERMOTT CONTRACT LAW 2001 PARA 7.45

THE MOORCOCK 1889 14 PD 64

TRADAX (IRL) LTD v IRISH GRAIN BOARD LTD 1984 IR 1

SHIRLAW v SOUTHERN FOUNDRIES LTD 1939 2 KB 206

CARNA FOODS v EGAL STAR INSURANCE 1997 2 ILRM 499

SULLIVAN v SOUTHERN HEALTH BOARD 1997 3 IR 123 1998/32/12464

SWEENEY v DUGGAN 1997 2 ILRM 211

CHITTY ON CONTRACTS 27ED 1994 1168 PARA 24.027

STARTUP & ANOR v MACDONALD 1843 6 MAN & G 593

MACKAY v DICK & ANOR 1881 6 AC 251

MCDERMOTT CONTRACT LAW 2001 PARA 19.64

ROONEY v BYRNE 1933 IR 609

CONNOR v PUKERAU STORE LTD 1981 1 NZLR 384

ROSS T SMYTH & CO LTD v TD BAILEY SON & CO 1940 3 ALL ER 60

DECRO-WALL INTERNATIONAL SA v PRACTITIONERS IN MARKETING LTD 1971 2 AER 216 1971 1 WLR 361

MCDERMOTT CONTRACT LAW 2001 PARA 21.112

HEYMAN v DARWINS LTD 1942 AC 356

CHITTY ON CONTRACTS 27ED 1994 11168 PARA 1158 24.011

CONTRACT

Breach

Development agreement - Non-performance of building works - Implied term of co-operation - Whether condition precedent - Whether breach of fundamental term - Whether repudiatory breach - Business efficacy test - Officious bystander test - Tender performance - Estoppel - Damages -The Moorcock [1889] 14 PD64; Tradax (Ireland) Ltd v Irish Grain Board [1984] IR 1; Shirlaw v Southern Foundries Ltd [1939] 2 KB 206; Carna Foods Ltd v Eagle Star Insurance [1997] 2 ILRM 499; Sullivan v Southern Health Board [1997] 3 IR 123; Sweeney v Duggan [1997] 2 ILRM 211; Mackay v Dick [1881] 6 App Cas 251; Rooney v Byrne [1933] IR 609; Conor v Pukerau Store Ltd [1981] 1 NZLR 384; Ross Smyth and Company Ltd v Bailey Son and Company [1940] 3 All ER 60; Decro-Wall International v Practitioners in Marketing [1971] 2 All ER 216 and Heymans v Darwins Ltd [1942] AC 356- Declaration of breach of contract and counterclaim dismissed (2004/9627P - Edwards J - 31/3/2008) [2008]] IEHC 82

Airscape Ltd v Heaslon Properties Ltd

Facts: A dispute arose between the parties as to an alleged breach of contract in a building works agreement, where the plaintiff was to carry out certain works for the defendant. The plaintiff claimed that it was an implied term of the agreement that the defendant would not withhold cooperation and the defendant did not cooperate. The plaintiff alleged that a fundamental breach had taken place and sought to be discharged from the contract and sought monies retained to be returned. The defendant alleged that the plaintiff was in breach of contract and counterclaimed accordingly.

Held by Edwards J. that a lack of cooperation was evident on the part of the defendant and that it persisted and broadened so as to constitute a breach of an implied term of cooperation. The plaintiff had attempted to engage meaningfully with the defendant only to be rebuffed by the defendant. The plaintiff could rely on a breach of a condition precedent and could be discharged from the contract, recouping monies retained. Costs would follow the event.

Reporter: E.F.

Introduction - the proceedings in outline.
1

1. This is a breach of contract action based upon an acknowledged agreement of the 5 th of March 2002 under which the plaintiff was to carry out certain building works to a premises supplied by it to the defendant. The plaintiff claims that it was an implied term of the said agreement that the defendant would not unreasonably withhold its co-operation for the carrying out of the works in question, that the defendant did not in fact co-operate with the plaintiff, and that as a result of the defendants lack of co-operation the plaintiff could not fulfil its obligations under the agreement. The plaintiff says that in the circumstances the defendant was guilty of breach of contract; that that breach was a fundamental breach; and that by virtue of the defendant's fundamental breach the plaintiff is entitled to be discharged from any further obligation pursuant to the agreement. The plaintiff claims an order directing the return of a retention sum of €317, 434.52, and any interest accrued thereon, held pursuant to the agreement on joint deposit account by the parties' respective Solicitors pending completion of the works. The plaintiff further claims a declaration that it is discharged from its obligations pursuant to the said agreement. The plaintiff further, or in the alternative, claims damages for breach and/or repudiation of contract.

2

2. The defendant has sought to fully defend the plaintiff's claim. In substance the defence alleges unjustifiable non performance by the plaintiff, and that the plaintiff did not in fact make any or any reasonable attempts to carry out the works, nor to satisfy what the defendant characterises as it's "reasonable requests concerning works of repair to the roof". The defence asserts that it is the plaintiff that is in breach of contract rather than the defendant, and the plaintiff's entitlement to relief is denied.

3

3. The defendant in turn counterclaims against the plaintiff for breach of contract. The defendant alleges that the agreement of the 5 th of March 2002 was in fact supplemental to an earlier agreement of the 18 th of July 2000. The defendant variously alleges that, on the one hand, there was a failure to carry out certain agreed works, and on the other hand, that works in fact carried out were carried out in "a grossly defective and incompetent fashion". In the circumstances the defendant claims that the plaintiff is guilty of breaches of both agreements. The defendant claims to have suffered loss, damage and expense on account of plaintiff's said alleged breaches of contract and counterclaims for damages for breach of contract and also, in the case of the agreement of the 5 , h of March 2002, a declaration as to the plaintiff's breach of contract.

4

4. In it's reply and defence to the defendant's counterclaim the plaintiff, in substance, denies the alleged breaches of contract and asserts that the agreement of the 5 th of March 2002 superseded the earlier agreement and that any claims that the defendant might have arising from the earlier agreement (which were not admitted) were "fully compensated ...within the terms of the subsequent agreement." Further the claim of repudiatory breach by the defendant is reiterated, and there are also pleas, in the alternative, of negligence, breach of duty, breach of contract and unreasonable conduct on the part of the defendant.

The hearing.
5

5. There was a full plenary hearing in this matter. Evidence was heard over five days in the course of which both sides called and cross-examined witnesses and produced copious documentation by way of exhibits.

Facts relevant to the liability issue as established in evidence.
6

6. For many years the Semperit Tyre Company operated a substantial tyre manufacturing plant at Gallanstown, Ballyfermot, Co Dublin. Unfortunately, during the mid 1990's the Semperit factory closed with the loss of many jobs. Following the closure the factory buildings and appurtenant lands were acquired by the plaintiff, a property development company. The plan was to convert the Semperit campus, so to speak, into an industrial park comprising a number of self contained industrial units for commercial letting to businesses. The development was to be called the "Park West Industrial Estate". The plan, as conceived, involved subdividing the existing factory premises into a number of smaller units and the construction of a number of additional units on lands not previously built on. The plan further envisaged the provision of critical infrastructure within the campus such as roadways, paths, parking areas, loading bays, public lighting, signage and so forth .Planning permission was duly applied for, and successfully obtained, by the plaintiff. Works commenced in due course and by 1999 matters had progressed sufficiently to enable the plaintiff to begin letting units.

7

7. The lettings were conducted through two firms of Industrial Sales and Letting Agents, namely Palmer, McCormack Lambert, Smith, Hampton and DTZ Sherry Fitzgerald.

8

8. During 1999 DTZ Sherry Fitzgerald introduced a client to the plaintiff as a potential tenant. That client was an office furniture manufacturer, then based in Chapelizod, incorporated as Europlan Furniture Ltd and trading as Europlan Furniture. It was looking to relocate to new premises as it's existing premises was too small, and in any case was unsuitable. It was decided to move the business to a 65, 000 sq ft unit in the Park West Industrial Estate, being Unit S4, a unit in the now subdivided former tyre factory building.

9

9. Although the former tyre factory building had been physically subdivided, significant additional works required to be done to Unit S4 to render it suitable for Europlan Furniture to relocate there. Accordingly, on the 18 th of July 2000 the plaintiff entered into a Contract of Sale with the defendant company (a company associated with Europlan Furniture Ltd) to sell Unit S4 to the defendant on the basis of a long lease, coupled to a Development Agreement of the same date and on foot of which the significant additional works were to be carried by the plaintiff to render Unit S4 suitable for Europlan Furniture to use as it's new manufacturing centre. The total consideration payable by the defendant to the plaintiff in respect of both the Contract of Sale and the Development Agreement was IR£4, 235, 625 (equivalent to €5, 378, 134) apportioned equally between both contracts.

10

10. It is important at this stage to deal in a little more detail with the relationship between the defendant and Europlan Furniture Ltd. The defendant Heaslon Properties Ltd is one of four associated companies, which I shall...

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