Bradshaw v McMullan

JurisdictionIreland
Judgment Date22 January 1920
Date22 January 1920
CourtCourt of Appeal (Ireland)
Bradshaw v. M'Mullan.
BRADSHAW
and
M'MULLAN (1)

Appeal.

Landlord and tenant - Rates - Poor-rate - Liability for Poor-rate - Lease at a rent "including rates and taxes" - Indemnity - Deduction - Estoppel - Res judicata - Local Government (Ireland) Act, 1898 (61 & 62 Vict. c. 37), sect. 52, sub-s. 2.

By a proposal in writing, dated the 1st December, 1908, and subsequently accepted, M. agreed to take from B. certain business premises for a term of thirty-one years, at the yearly rent of £240, "including all rates and taxes as at present existing or assessed on said premises," and M. further agreed to pay five-sevenths of all future or increased taxation caused by alterations or improvements stipulated for in the agreement.

In an action for rent by B. against M., in which M. claimed credit for the amounts of poor-rate paid by him,

Held, by the Court of Appeal, affirming the decision of the majority of the King's Bench Division, that the contract was one of indemnity by the landlord against the poor-rate, and not a contract respecting deduction by the tenant from his rent of any part of the poor-rate, and consequently that the contract was not rendered void by sub-s. 2 of sect. 52 of the Local Government (Ireland) Act, 1898 (61 & 62 Vict. c. 37) (2).

Appeal.

The action was one to recover the sum of £140, being seven months' rent of premises at Bachelors' Walk, Dublin, held by the defendant from the plaintiff under an agreement for a lease, dated the 1st January, 1909. The agreement was for a term of thirty-one years, at the yearly rent of £240, "including all rates and taxes as at present existing or assessed on said premises," the defendant agreeing "to pay five-sevenths of all future or increased taxation caused by the alterations or improvements hereinafter

stipulated." The defendant also agreed to expend the sum of £400 on certain improvements, which he did. Subsequently the valuation of the premises held by the defendant was raised to £109, the defendant being rated as occupier, and for some years he paid the rates, and was allowed credit therefor in the rent accounts. In the year 1913 the rent had fallen into arrear to the extent of £500, and by a deed of the 17th September, 1913, the defendant executed in favour of the plaintiff a mortgage of other property to secure the arrears due, with interest. This deed contained a recital that the defendant had paid certain rates and taxes which he was not bound to pay under his lease, and contained a covenant whereby the defendant as mortgagor covenanted to pay the sum of £500, with interest, less any money paid by him in respect of rates and taxes which he was not bound to pay under the lease. A suit was afterwards instituted in the Court of the Master of the Rolls in respect of this mortgage, which involved the taking of an account between the plaintiff and the defendant; and in the course of this suit the plaintiff brought in a memorandum for the opinion of the Judge which contained the following statement:—"The plaintiff, as appears by the affidavits of J. P. Bradshaw, filed on the 10th June, 1914, and 16th December, 1914, contended that the defendant was liable to pay five-sevenths of the taxation on the increased valuation, namely, £75, under the terms of said agreement, or, in the alternative, that the defendant should pay the entire of the poor-rate payable out of the said premises." In the result the Master of the Rolls decided that the increase in the valuation had not been occasioned by the improvements made by the defendant, but was accounted for by general causes, and the account was finally settled on this basis, credit for all rates being allowed to the defendant. Subsequent to the decision of the Master of the Rolls a consent was made a rule of Court in an action for rent in the King's Bench Division, the consent being on the basis that full credit for poor-rate should be allowed to the defendant. In the present action the defendant paid into Court the amount claimed, less by £27 6s. 7d., the amount of rates paid by him during the period in respect of which rent was claimed, of which sum only about £9 had been paid in respect of poor-rate.

By an order of the majority of the Divisional Court, dated the 13th May, 1918 (1), the judgment entered for the plaintiff at the trial of the action was set aside, and judgment entered for the defendant. Hence this appeal.

Cur. adv. vult.

Molony C.J. :—

By a proposal in writing dated the 1st December, 1908, the defendant agreed to take from the plaintiff a lease of portion of the premises known as No. 30 Bachelor's Walk, Dublin, for a term of thirty-one years, at the yearly rent of £240, "including all rates and taxes as at present existing or assessed on said premises, but we agree to pay five-sevenths of all future or increased taxation caused by the alterations or improvements hereinafter stipulated." This agreement was duly accepted by the plaintiff, and the defendant entered into possession under it, and paid the rent. It was clearly understood by both parties that, apart from increased taxation caused by improvements, the plaintiff should be liable for all the rates and taxes, including poor rates, payable in respect of the premises, and up to the present time the rent has been settled upon this basis. It is, however, now contended by the plaintiff that, having regard to sect. 52, sub-s. 2, of the Local Government (Ireland) Act, 1898, the agreement entered into by her was illegal, and that she is entitled to recover the entire rent, and, in addition, to cast the liability for poor rates upon the defendant.

Sub-s. 2 of sect. 52 is as follows:—"The occupier of a hereditament shall not be entitled to deduct from his rent any part of the poor rate, and any contract to the contrary respecting such deduction shall be void; subject nevertheless to the exceptions in this Act, and to the provisions hereinafter contained respecting occupiers under existing tenancies."

This sub-section is limited to deductions, and the contract which is declared invalid must be a contract in respect of deductions, and it lies at the root of this case to see what is the precise nature of the contract entered into by the parties.

The defendant wanted to pay a rent of £240 yearly to cover everything, and that he should not be under any liability or in any way asked to pay any rates or taxes in respect of the premises. The plaintiff agreed to these terms. If the defendant was not to pay, the only person to pay was the plaintiff, and undoubtedly the substance and effect of the agreement was that the plaintiff was to indemnify the defendant against paying, or being called upon to pay, any part of these rates and taxes. It was not a right of deduction which the defendant got, but a right of indemnity, and if taxes accrued and were claimed at a time when no rent was due it would have been quite open to the defendant to at once assert his rights to an indemnity as against the plaintiff. I have not...

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