ALBION PROPERTIES Ltd v MOONBLAST Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Hogan
• Judgment Date: 16 March 2011
• Neutral Citation: [2011] IEHC 107
• Court: High Court
• Docket Number: [2009 No. 2789 S]
• Date: 16 March 2011

[2011] IEHC 107

THE HIGH COURT

[No. 2789 S/2009]

Albion Properties Ltd v Moonblast Ltd & Killalea

BETWEEN

ALBION PROPERTIES LIMITED

PLAINTIFF

AND

MOONBLAST LIMITED AND CIARAN KILLALEA

DEFENDANTS

AG v LEE 2000 4 IR 68

ICC BANK PLC v VERLING 1995 1 ILRM 123

CAMPUS OIL LTD v MIN FOR INDUSTRY & COMMERCE (NO.2) 1983 IR 88

RSC O.2 r1(2)

SUPREME COURT OF JUDICATURE (IRELAND) ACT 1877 S27(7)

COURTS (SUPPLEMENTAL PROVISIONS) ACT 1961 S48

CONSTITUTION ART 40.3.2

THE STATE (VOZZA) v O'FLOINN 1957 IR 227

MEADOWS v MIN FOR JUSTICE & ORS UNREP SUPREME 21.1.2010 2010 IESC 3

S (I)(A MINOR) & S (A)(A MINOR) v MIN FOR JUSTICE & ORS UNREP HOGAN 21.1.2011 2011 IEHC 31

BARNATON INVESTMENTS LTD v O'LEARY & RADIUS PIE LTD UNREP PEART 30.7.2004 2004/4/821 2004 IEHC 155

ECHR ART 13

ECHR ACT 2003 S3(1)

LANDLORD AND TENANT

Commercial lease

Terms of lease - Non-payment of rent - Equity - Interlocutory injunction - Whether plaintiff entitled to mandatory injunction - Test to be applied - Whether injunction possible in proceedings commenced by way of summary summons - Attorney General v Lee [2000] IESC 80, [2000] 4 IR 68 approved; Campus Oil Ltd v Minister for Industry (No 2) [1983] IR 88 distinguished; IS v Minister for Justice [2011] IEHC 31, (Unrep, Hogan J, 21/1/2011), Meadows v Minister for Justice [2010] IESC 3, [2010] 2 IR 701 and The State (Vozza) v DJ Ó Floinn [1957] IR 227 approved - Rules of the Superior Courts 1986 (SI 15/1986), O 15, r 2 - Supreme Court of Judicature (Ireland) Act 1877 (40 & 41 Vict, c 57), s 27(7) - Constitution of Ireland 1937, Article 40.3.2 - European Convention on Human Rights 1950, article 13 - (2009/2798S - Hogan J - 16/3/2011) [2011] IEHC 107

Albion Properties Ltd v Moonblast Ltd

Facts: The issue arose as to whether a commercial tenant defaulted in a material respect on the payment of rent and whether the Court had jurisdiction to grant a mandatory injunction requiring the tenant to deliver up possession of the premises. The Court had given summary judgement for unpaid rent in the sum of Eur 75,000. The parties had entered into a lease arrangement. Rent sums paid by the defendant were returned by the plaintiff as the plaintiff had not wanted the defendant to acquire any statutory rights to the retail unit. The defendant contended inter alia that the terms of the tenancy were not agreed and were not reduced to writing and that as the plaintiff had elected to pursue the matter by way of summary summons, he could not now seek an injunction.

Held by Hogan J. that it would be entirely just and convenient to grant a mandatory interlocutory injunction. It has already been judicially determined that the defendant owed the plaintiff a substantial sum in rent. There was a default on the payment schedule by the defendant and the default was material and fundamental also on its basic obligations. No considerations were relevant as to the balance of convenience. Closed premises in a retail area prejudiced the interests of the landlord. The claim for possession was virtually unanswerable and so that injunction would be granted with immediate effect.

Reporter: E.F.

1 1. Where a commercial tenant defaults in a material respect on the payment of rent to a landlord, does this Court have a jurisdiction to grant a mandatory interlocutory injunction requiring the tenant to deliver up possession of the premises in question to the landlord? While it might seem surprising that the existence of such a jurisdiction is in dispute, this is the net question which arises following an application to this Court by the plaintiff landlord ("Albion Properties") for such an injunction.

2 2. In the original judgment delivered by me on 12 ^th November 2010 I gave summary judgment in favour of Albion Properties as against the first defendant ("Moonblast") in the sum of €75,080 in respect of unpaid rent. That application had arisen in the following circumstances, the details of which may now be briefly restated.

3 3. In these proceedings the plaintiff had originally claimed summary judgment in the sum of €191,566. Moonblast is a company which was engaged in the running of a newsagent's outlet at Unit 12, Phibsboro Shopping Centre, Dublin 7. The second named defendant is a director of Moonblast and he also executed a guarantee which is the subject matter of the present proceedings. Moonblast ceased trading at the Unit 12 premises on December 24, 2010.

4 4. The parties originally entered into a lease of the premises in 12 ^th November, 2001. The lease was for a period of four years and nine months and it was expressed to run from 6 ^th November, 2001, to 6 ^th August, 2001. It provided for a rent of the unit for the sum of IR£50,000.00, albeit that this was abated to IR£45,000.00 for the first year of the lease. The background to the present dispute has it origins at the time the lease was due to expire in August, 2006. At the time, the tenant was anxious to stay in the premises. The plaintiff landlord, on other hand, was determined to ensure that the tenant would not acquire any statutory rights to a new tenancy and it was, therefore, not anxious to continue the lease.

5 5. A curious situation then ensued whereby the first named defendant ("Moonblast") paid the monthly rent of €5,750 via standing order to the plaintiff's agents, Chatham Services Ltd. ("Chatham"). However, these sums were repaid at the behest of Albion Properties because it did not want Moonblast to acquire any statutory rights in respect of the retail unit in question. It is not in dispute but that at the end of January, 2007 Chatham sent Moonblast a notice to quit which was previously sent on the 12 ^th August, 2006. The letter was addressed to Mr. Killalea and stated:

"Please find enclosed a copy of 'notice to quit' which was previously issued to yourself. I have also enclosed cheques totalling of €28,750.00, the amount of five months direct debits of €5,750.00 which were received into our account in error. Please arrange to have your direct debit cancelled with immediate effect."

6 6. At the first hearing in early November 2010, it appeared to be common case that the cheques which were then sent on by Chatham were not cashed by either Moonblast or Mr. Killalea. If this was correct, then the effect of this was that Albion Properties had actually received rent in the sum of €28,750.00. It equally followed that the maximum sum which Albion Properties could recover by way of unpaid rent is thus reduced to the sum of €162,816.00. In effect, therefore, on this analysis, the rent was paid for September, October, November, December, 2006 and for January, 2007. I should here record that in advance of the latest hearing before me on 7 ^th March 2011, Albion Properties' financial controller, Mr. O'Sullivan, swore a further affidavit disputing whether Moonblast is, in fact, entitled to claim credit in respect of €28,750 for the period now in dispute. For the purposes of the present application, at least, it is unnecessary to examine this question further and it must remain an open question as to whether I have any jurisdiction to re-open this issue, at least so far as the summary judgment issue is concerned.

7 7. Returning to the narrative, Moonblast remained in occupation of the premises. It appears that it continued to pay the monthly rent by standing order until in or about August 2008, but that on each occasion a corresponding cheque for the sum in question was issued by Chatham on behalf of Albion Properties and, on this occasion, the cheques were actually cashed by Moonblast.

8 8. By August, 2008, the economic storm clouds were gathering and Albion Properties had second thoughts with regard to Moonblast. It decided that it did want Moonblast as a tenant after all. While Moonblast did pay the rent by standing order up until August 2008, this was cancelled out by the fact that Chatham sent Moonblast a corresponding amount on Albion Properties' behalf which cheques, as we have just seen were cashed by Moonblast on this occasion. The effect of this was that Moonblast has in fact paid no rent in respect of the premises in question since early 2007. Clause 4(b) of the lease provides that:-

"If the tenancy hereby created should continue beyond the term herein specified it shall, in the absence of a new agreement, be deemed to be a tenancy determinable by one calendar month's notice in writing to be given by either party to the other and expiring on any gale day."

9 9. Having regard to the provisions of Clause 4(b), it is difficult, at least at first blush, to see how the tenancy did not continue on the same terms and conditions as heretofore obtained before the lease expired in August 2006. While it is true that Clause 4(b) does not in precise terms, quite provide for this, this, in my view, is nonetheless the clear sense of that provision.

10 10. It is, of course, quite correct to say that Albion Properties had served a notice to quit on Moonblast. But since they took no steps in pursuant to this notice to quit, the position remains as if it had never been served. On the face of it, therefore, the tenancy remains in place by virtue of the continuation clause in Clause 4(b), the expiration of the original lease notwithstanding.

11 11. This latter point is, however, vigorously denied by Moonblast. They contend that the lease was, in fact, altered by virtue of an oral agreement dating from 15 ^th March, 2007. But, in his first affidavit of 1 ^st December, 2007, Mr. Killalea says at para. 6:-

"At the said meeting of [15 ^th March, 2007] a verbal binding agreement was reached between your deponent and the plaintiff to the effect that the original lease would be disregarded for the purpose of...