BNY Trust Company (Ireland) Ltd and Another v Treasury Holdings

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 05 July 2007
• Neutral Citation: [2007] IEHC 271
• Docket Number: [No. 385 SP/2007]
• Court: High Court
• Date: 05 July 2007

BNY Trust Company Ltd v Treasury Holdings

BETWEEN

BNY TRUST COMPANY (IRELAND) LIMITED AND ARK LIFE ASSURANCE COMPANY LIMITED

PLAINTIFFS

AND

TREASURY HOLDINGS

DEFENDANT

[2007] IEHC 271

[No. 385 SP/2007]

THE HIGH COURT

CONTRACT

Interpretation

Co-ownership agreement - Whether breach of obligations under agreement - Clause regulating transfer of interest by single party - Clause regulating joint sale - Whether clause regulating transfer of interest by single party applicable on joint sale - Principles of construction - Surrounding circumstances - Commercial purpose of contract - Objective intention of parties - Evidence of prior negotiation not permissible - Definition of Çÿparty' - Contractual status of put and call option - Nature of obligations arising on joint sale - Whether put and call option inconsistent with obligations - Distinction between put and call option and contract for sale - Validity of notice served under clause regulating joint sale - Entitlement of successor to rely on invalidity - Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989; Kramer v Arnold [1997] 3 IR 43; Igote Ltd v Badsey Ltd [2001] 4 IR 511; Antaios Compania SA v Salen AB [1985] AC 191; Analog Devices v Zurich Insurance [2005] 2 ILRM 131; Investors Compensation Scheme Ltd v West Bromwich BS [1998] 1 WLR 896 and Yoshimoto v Canterbury Golf International [2001] 1 NZLR 523 considered - Declaratory orders made (2007/385SP - Clarke J - 5/7/2007) [2007] IEHC 271BNY Trust Company Ltd v Treasury Holdings

REARDON SMITH LYON v YNGVAR HANSEL-TANGEN 1976 3 AER 570

KRAMER v ARNOLD 1997 3 IR 43

IGOTE LTD v BADSEY LTD 2001 4 IR 511

ANNTAIOS COMPANIA NAVIERA SA v SALEN REDERIERNA AB 1985 AC 191

MANNAI INVESTMENT CO LTD v EAGLE STAR LIFE ASSURANCE CO LTD 1997 AC 749 1997 3 AER 352

ANALOG DEVICES BV & ORS v ZURICH INSURANCE CO & ANOR 2005 1 IR 274 2005 2 ILRM 131 2005/2/242 2005 IESC 12

INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY 1998 1 WLR 896 1998 1 AER 98

YOSHIMOTO v CANTERBURY GOLF INTERNATIONAL LTD 2001 I NZLR 523

JUDGMENT of

Mr. Justice Clarke

delivered on 5th July, 2007

2 1.1 The Northside Shopping Centre ("the Shopping Centre") is located at Kilmore, Coolock in Dublin. The freehold in the shopping centre is held by Percy Nominees Limited ("Percy") as trustees for a number of co-owners. As of 12^th November, 1998 those co-owners were firstly Allied Irish Banks plc ("AIB") who held, in turn, as trustee for the Allied Irish Property Fund, secondly Ark Life Assurance Company Limited ("Ark") and thirdly a Peter Conlan ("Mr. Conlan"). There had, since the Shopping Centre was built, been a number of changes in the beneficial ownership of the freehold. However, each of the parties who, up to 1998, had held an interest in the beneficial freehold had been a party for whom AIB Investment Managers Limited ("AIBIM") had acted as property managers. However when Mr. Conlan came to own a beneficial interest in the Shopping Centre, that situation changed in that Mr. Conlan did not, in general terms, have his property managed by AIBIM. In those circumstances AIB, Ark, Mr. Conlan and AIBIM entered into what was described as a co-ownership agreement on the 12^th November, 1998. These proceedings concern the construction of that agreement in the content of events which have happened.

3 1.2 Some of the changes in circumstance that have occurred subsequent to November 1998 are of importance to the issues which I have to decide. In particular Mr. Conlan has recently sold his beneficial interest to the defendant ("Treasury"). In addition the beneficial interest of the Allied Irish Property Fund came to be held through a different trustee, the first named plaintiff ("BNY").

4 1.3 Furthermore BNY (as such trustee) and Ark have entered into an agreement to sell their beneficial interests in the freehold to N1 Property Developments Limited ("N1"). N1 already has an interest in the Shopping Centre, being entitled to the interest of a lessee under a lease dated 12^th October, 1976.

5 1.4 At its simplest Treasury contends that BNY and Ark were in breach of their obligations under the co-ownership agreement by entering into the relevant arrangements to sell their beneficial interest in the freehold to N1. As part of that case Treasury maintains that it is now entitled to the benefit of the same rights in the co-ownership agreement as were formerly vested in Mr. Conlan. With a view to resolving those issues BNY and Ark have brought these proceedings in which they seek declarations to the effect that their agreement with N1 is not in breach of the co-ownership agreement in all the circumstances of the case.

6 1.5 By way of completeness in relation to the general background, I should also note that there are in being separate proceedings between Treasury as plaintiff and N1, its principals, BNY, Ark, AIBIM and Percy, as defendants, in which Treasury maintains that an agreement was reached on 13^th July, 2003 between Treasury on the one part and N1 and its principals on the other part, which provided for a joint development of the Shopping Centre. In those proceedings (Record No. [2007/3983P]) it is maintained by Treasury that the agreement reached between BNY and Ark on the one part and N1 on the other part for the purchase of the beneficial freehold interest of BNY and Ark in the Shopping Centre, amounts to a breach of those arrangements. Those proceedings also claim relief as against BNY, Ark and AIBIM. Insofar as there may be an overlap between some of the issues raised, in these proceedings, between Treasury on the one hand and BNY, Ark and AIBIM on the other hand, with the issues raised in these proceedings, then it is clear that such issues may be determined in these proceedings. However, insofar as the wider range of issues which exist between the parties to the other proceedings are concerned, same are not before me in these proceedings and are not relevant to the issues which I have to decide in these proceedings.

7 1.6 These proceedings are confined to questions which involve the proper interpretation of the co-ownership agreement. Finally, by way of background, it should be noted that the two principal operative clauses of the co-ownership agreement, with which I am concerned, are clauses 3 and 4. As originally constituted, these proceedings sought only declarations to the effect that the plaintiffs were not in breach of clause 3. However questions concerning a possible breach by the plaintiffs of their obligations under clause 4 were raised in the other proceedings. With that in mind, and with the agreement of the parties generally, the plaintiffs amended the summons in this case for the purposes of adding declaratory relief concerning clause 4.

8 1.7 In substance, therefore, these proceedings concern the proper interpretation of clauses 3 and 4 (in the light, where appropriate, of the other terms in the co-ownership agreement) and the determination of whether, on the basis of undisputed facts, and such proper interpretation, it can be said that the plaintiffs are, in any way, in breach of that agreement.

9 1.8 In order to have a proper understanding of the issues it is necessary to turn to the terms of the co-ownership agreement which I now do.

2 2.1 Insofar as material to the issues which I have to decide there are a number of aspects of the co-ownership agreement, other than the key clauses 3 and 4, which need to be noted.

3 2.2 The parties are described as, firstly AIB (which is specified as acting as trustee "for and behalf of the Allied Irish Property Fund"), secondly Ark, thirdly Mr. Conlan, and fourthly AIBIM which is described as the "Manager". Immediately after setting out the names of those persons and bodies, those parties are designated as being "hereinafter collectively called "the Parties".

4 2.3 In the interpretation section of the agreement (s. 1) "Parties" is stated to mean "the parties listed at (1), (2) and (3) above" and it is further specified that a "Party" should mean "any one of them". The parties listed at (1), (2) and (3) are respectively AIB, Ark and Mr. Conlan. While it may not be of any great materiality to these proceedings, it is worthy of some note that there is an inconsistency in the use of terminology in the agreement in that the Parties as defined immediately after the listing of the names of those subscribing to the agreement appears to define the term by reference to all four subscribing entities whereas in the definition section the same word is defined as relating to only the first three (and thus excluding AIBIM).

5 2.4 Before leaving the interpretation section, I should also note that it contains a typical clause providing that words importing the singular number should import the plural and vice versa, and also contains a typical sole agreement clause. Clause 2 simply contains recitals and does not appear to have any influence on the issues of construction with which I am concerned. Clause 5 contains certain general provisions, the only one of which that appears to be material being clause 5.2, which provides that the agreement shall be binding "upon each Party's successors and personal representatives (as the case may he (sic))."

6 2.5 As previously indicated the meat of the agreement is to be found in clauses 3 and 4 which regulate the circumstances in which a sale of the interest of a party or parties may be effected. It is appropriate that I set out both clauses in full. They are in the following terms:-

2 "3.1 In the event that one Party wishes to transfer his interest, then:-

(a) In such circumstances that Party (the "Selling Party") shall serve on the Manager a notice to this effect (the "Sale Notice"),

(b) If the Manager (after advising all the other Parties) has identified from among the other Parties a party or parties (the...