Campus and Stadium Ireland Development Ltd v Dublin Waterworld Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Gilligan
• Judgment Date: 21 March 2006
• Neutral Citation: [2006] IEHC 200
• Docket Number: [No. 1466P/2005]
• Court: High Court
• Date: 21 March 2006

[2006] IEHC 200

THE HIGH COURT

[No. 1466P/2005]

CAMPUS & STADIUM IRELAND DEVELOPMENT LTD v DUBLIN WATERWORLD LTD

COMMERCIAL

BETWEEN

CAMPUS AND STADIUM IRELAND DEVELOPMENT LIMITED

PLAINTIFF

AND

DUBLIN WATERWORLD LIMITED

DEFENDANT

TAXES CONSOLIDATION ACT 1997 PART IX

VAT ACT 1972 S4(A)

INTERMEDIATE LTD v SMITH UNREP CA 22.3.1991 (UK)

IGOTE v BADSEY 2001 4 IR 511

ARBITRATION ACT 1980 S5

KRAMER v ARNOLD 1997 3 IR 43

DUNLOP PNEUMATIC TYRE CO LTD v NEW GARAGE & MOTOR CO LTD 1915 AC 79

PAT O'DONNELL & CO LTD v TRUCK & MACHINERY SALES LTD 1998 4 IR 191

REARDON SMITH LINE v HANSEN TANGEN 1976 1 WLR 989

LOMBANK LTD v EXCELL 1964 1 QB 415

CONVEYANCING ACT 1881 S14

WALSH v WIGHTMAN 1927 NI 1

CROFTER PROPERTIES v GENPORT UNREP MCCRACKEN 6.12.1995 (TRANSCRIPT UNAVAILABLE)

JONES v CARTER 1846 15 M & W 718

CONVEYANCING ACT 1881 S14(1)

SILVESTER v OSTROWSKA 1959 3AER 642

MCILVENNY v MCGEEVER 1931 NI 161

PANNELL v CITY OF LONDON BREWERY CO 1900 1 CH 496

LOCK v PEARCE 1893 2 CH 271

BANK OF IRELAND v LADY LISA 1992 1 IR 404

G & S FASHIONS v B & Q 1995 1 WLR 1088

LANDLORD & TENANT (AMDT) ACT 1980 S66

WOODFALL LANDLORD & TENANT 36ED 1994 PAR 11.128

ARBITRATION ACT 1954 S27

RUSSELL ARBITRATION PAR 6.190

ARBITRATION ACT 1996 S58(1)

WYLIE LAND LAW 3ED 1997 P950

HYMAN & ANOR v ROSE 1912 AC 623

SHILOH SPINNERS LTD v HARDING 1973 1 AER 90

SOUTHERN DEPOT CO LTD v BRITISH RAILWAYS BOARD 1990 2 EGLR 39

CUE CLUB LTD & ORS v NAVARO LTD UNREP SUPREME 23.10.1996 1998/14/5185

CONTRACT

Breach

Covenants - Lease - Breach of covenant - Failure to pay rent - Forfeiture - Whether plaintiff entitled to possession - Whether breaches fundamental - Intention of parties -Kramer v Arnold [1997] 3 IR 43 followed - Plaintiff granted possession (2005/1466P -Gilligan J - 21/3/2006) [2006] IEHC 200 Campus and Stadium Ireland Ltd v Dublin Waterworld Ltd

Mr. Justice Gilligan

1 These proceedings concern the National Aquatic Centre situate at Abbotstown in the County of Dublin. By indenture of lease made on the 30th April, 2003, between the plaintiff company of the one part and the defendant company of the other part, the plaintiff agreed to let the National Aquatic Centre (to be hereinafter referred to as “the Centre”) to the defendant for a term of 30 years subject to the annual rent thereby reserved and to the covenants on the tenant's part and conditions in the lease contained therein.

2 The plaintiff company was established by the government in January, 2000 and its shareholders are the Taoiseach as to 25%, the Minister for Arts, Sports and Tourism as to 50% and the Minister for Finance as to 25%. It was incorporated to oversee the design and construction of a sports campus at Abbotstown with the Centre being the first element of the development. The Centre is a state of the art world class venue developed at a cost of €62 million excluding VAT. It was never intended that it be subsidised on an ongoing basis as it was to be operated as a commercially viable entity. It was officially opened on the 10th March, 2003, hosting its first major event in June, 2003 when the swimming events of the Special Olympics World Summer Games were held there. It provides a unique mixture of leisure waters and high class competitive swimming facilities designed to ensure that it would be a key part of Ireland's sporting infrastructure while providing facilities for the wider community at the same time. The competitive facilities are designed to cater for international standard swimming, diving, water-polo and synchronised swimming, such that major events can be hosted there.

3 The defendant is a limited company with its registered office at Caherweesheen, Ballyard, Tralee in the County of Kerry. The company is described as having been a shelf company which was purchased and the shareholders and directors became on or about the 12th February, 2001, Mr. Moriarty, Mr. Rutledge and Mr. Bohan. The accounts for the year ending the 31st December, 2003, (being the year in which the lease was created) show it as having an authorised and paid up capital of €127. It has no fixed assets and no current assets save for a sum of €12,243 which was due to it from its 100% owned subsidiary company, Dublin Waterworld Management Ltd. Dublin Waterworld Management Limited was also a shelf company which had previously been incorporated on the 28th June, 1999. It was purchased, with the necessary share transfers and appointment of directors taking place on or about the 7th February, 2001. In March, 2003 Mr. David Nolan received instructions which he complied with to have Dublin Waterworld Management Limited become a 100% subsidiary of Dublin Waterworld Limited. Dublin Waterworld Management Limited has 100 issued shares to a total of €127 all of which shares are owned by the defendant.

4 The plaintiff in these proceedings seeks an order for possession of the Centre, damages for breach of covenant and for breach of a licence agreement dated the 14th March, 2003, and further or other relief. The defendant has filed a full defence denying the plaintiff's entitlement to the relief sought and maintains that it is in possession of the Centre as tenant to the plaintiff, which tenancy has not been determined. The defendant has also brought a counterclaim seeking damages arising out of the condition of the Centre, including fixtures, fittings, plant and equipment and it further claims that if the lease has been validly forfeited (which is not admitted) the Court should grant relief against forfeiture.

5 Following the conception of the idea to construct the Centre, a bid procedure was put in place for the purposes of developing a public/private partnership arrangement. The successful bid was from The Waterworld Consortium, the principal players of which were Waterworld UK Limited (described as aquatic and leisure centre operators) and Ascon Rohcon Limited, the design and build contractor. Waterworld was described in the bid as being closely linked to one of the world's leading aquatic leisure operators and manufacturers of leisure pool attractions, Schlitterbahn. They are described as the operators for a similar new aquatic leisure centre in Southport, England, which was then currently under construction. It was indicated in their bid that they would enter an agreement directly with the plaintiff for the operation and ongoing maintenance of the Centre.

6 In the particularly detailed financial estimates of their bid, Waterworld UK Limited anticipated that in the first year the Centre would generate a net profit of IR£151,750, in the second year IR£368,000 and in the third year IR£426,000.

7 It was stated in the bid documentation that it was the intention of Waterworld UK Limited to set up a subsidiary company to run the operation in Ireland. Mr. Liam Bohan and Mr. Kieran Rutledge, who are described as "presently being two of the leading leisure managers in Ireland", would be directors of Waterworld Ireland with responsibility for the operation of the facilities at the Centre.

8 It was part of the successful bid that the anticipated capital cost including fees and statutory contributions for the construction of the Centre would be £53,005,848.83 and that a contribution in the sum of £52,505,848.83 would be required from the plaintiff. It was also part of the successful bid that there would be a contribution of IR£500,000 and VAT from the bidder and in addition there would be an annual contribution of 10% of the net annual profit achieved.

9 Subsequently on the 22nd February, 2001, heads of agreement were entered into between the plaintiff, Rohcon Limited and Waterworld UK Limited. Waterworld UK Limited was,inter alia, to enter into a lease which would oblige it to operate and maintain the Centre for a period of 30 years in compliance with the lease. The plaintiff was to make no payment to Waterworld UK Limited in respect of the operation and maintenance of the Centre and with the passage of time the latter would be entitled to increase the cost of subscriptions, entrance fees and concession fees but only with the prior approval of the plaintiff, unless such approval was being unreasonably withheld.

10 It was specifically provided at clause 9.5 of the heads of agreement that Waterworld UK Limited would furnish a performance bond to the plaintiff in respect of its obligations, such bond to be provided in a form similar to the form set out in appendix 4 attached to the heads of agreement or in such other form as may be approved by the plaintiff. If the provision of such a bond involved costs over and above those contemplated by the bid, the same was to be borne by the plaintiff. It was further provided at clause 10.4 of the heads of agreement that, upon the granting of the proposed lease, Waterworld UK Limited was obliged to make a payment to the plaintiff of IR£500,000 plus VAT at the appropriate rate.

11 Subsequent to the heads of agreement being signed by the parties, it became apparent that Waterworld UK Limited was not in a position to live up to its anticipated financial expectations and the reality appears to be that, with Rohcon Limited ready to commence construction of the Centre, there was in fact no operator in place. At this stage Mr. John Moriarty entered the scene and the plaintiff took legal advice as to whether or not he could step into the shoes of Waterworld UK Limited. Having received approval, he became involved by means of the defendant company, Dublin Waterworld Limited, which had as its directors and shareholders Mr. John Moriarty (60%), Mr. Kieran Rutledge (20%), Mr. Liam Bohan (15%) and finally, Mr. Roger Curry (5%), who was also a director and shareholder in Waterworld UK Limited.

12 As an inducement to procure an operator for the Centre, Rohcon Limited agreed to pay to the defendant a sum of IR£750,000 plus...