Castletown Foundation Ltd v Magan

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 21 November 2018
• Neutral Citation: [2018] IEHC 653
• Court: High Court
• Docket Number: [2018 No. 5971 P.]
• Date: 21 November 2018

BETWEEN

CASTLETOWN FOUNDATION LIMITED

PLAINTIFF

AND

GEORGE MAGAN

DEFENDANT

[2018] IEHC 653

Haughton Robert J.

[2018 No. 5971 P.]

THE HIGH COURT

Summary judgment – Arrears of rent – Abuse of process – Plaintiff seeking summary judgment against the defendant in respect of arrears of rent – Whether the proceedings were an abuse of process

Facts: This judgment related to two applications commenced by plenary summons dated 3rd July, 2018, and admitted to the Commercial Court by order of Haughton J made on 9th July, 2018. The proceedings concerned a property known as Castletown Cox House and Estate, County Kilkenny. In the first application the plaintiff, Castletown Foundation, sought summary judgment against the defendant, Mr Magan, in the sum of €571,893 together with interest pursuant to statute in respect of arrears of rent. In a cross motion issued on 20th July, 2018 the defendant sought orders dismissing, or placing a permanent stay on, the proceedings pursuant to the inherent jurisdiction of the court, or pursuant to O. 19 r. 28 of the Rules of the Superior Courts, on the basis that there was no jurisdiction, or that they were frivolous and vexatious, or an abuse of the process and bound to fail. Counsel for the defendant confirmed that the defendant was not maintaining a claim that the High Court did not have jurisdiction to hear the plaintiff’s claim for arrears of rent, but would argue that he had a bona fide defence by way of counterclaim and entitlement to equitable set off such that the application for summary judgment should be refused. As there was significant overlap in terms of background, relevant facts and affidavit evidence, Haughton J determined that both motions should be heard together. The hearing of a third motion, the defendant’s application for discovery, was postponed pending the delivery of this judgment.

Held by the High Court (Haughton J) that there would be summary judgment against the defendant in respect of the arrears of rent up to and including 12th April, 2018 in the sum of €571,893. Haughton J held that he would hear counsel further in relation to: (a) the framing of the order to reflect the obligation of the defendant to withhold and remit to the Collector General 20% by way of Withholding Tax; (b) the claim to interest pursuant to the Courts Act 1981; and (c) whether there should be any stay on the judgment. The court declined to strike out or dismiss the plaintiff’s claims in these proceedings related to the purported termination of the Letting Agreement dated 15th December, 2010, and related reliefs such as those sought at numbers 1 and 5 in the Plenary Summons, on any of the grounds raised by the defendant. Haughton J held that he would hear the parties further in relation to staying the plaintiff’s claims to the reliefs in these proceedings pending the determination in the Circuit Court of issues that may arise as to the validity of the purported termination of the Letting Agreement.

Haughton J held that he would not strike out the reliefs sought at numbers 2, 3, 4 and 5 in the Plenary Summons, being the reliefs at numbers 32 – 35 inclusive in the Statement of Claim, and related pleas, on any of the grounds raised by the defendant. Haughton J held that a stay would be granted on the plaintiff pursuing those reliefs in these proceedings pending the final determination of the defendant’s application for a new tenancy in the Landlord and Tenant Civil Bill proceedings, but in respect of that stay the plaintiff would have liberty to apply.

Application granted.

Judgment of Mr. Justice Robert Haughton delivered on the 21st day of November, 2018

Paragraph Title

1 Introduction

2 Background facts

16 The Jersey Proceedings

22 The Bermuda Proceedings

24 Notices of Termination

31 Reference to the Residential Tenancies Board

38 Proceedings under the Landlord and Tenant (Amendment) Act 1980

42 Plaintiff's Motion for Summary Judgment in Respect of Arrears of Rent

52 Counterclaim for Maintenance/Upkeep

68 Counterclaim for Damages/Aggravated Damages

73 Conclusion on Application for Summary Judgment

74 The Defendant's Application to Dismiss

81 Validity of Second Termination Notice

87 The Claim for a Declaration that the Defendant is Not Entitled to a New Tenancy

104 Discussion

109 Urgency

112 Conclusion

114 Summary

Introduction

1 This judgment relates to two applications in these proceedings which were commenced by plenary summons dated 3rd July, 2018, and admitted to the Commercial Court by my order made on 9th July, 2018. The proceedings concern a property known as Castletown Cox House and Estate, County Kilkenny. In the first application the plaintiff seeks summary judgment against the defendant in the sum of €571,893 together with interest pursuant to statute in respect of arrears of rent. In a cross motion issued on 20th July, 2018 the defendant seeks orders dismissing, or placing a permanent stay on, the proceedings pursuant to the inherent jurisdiction of the court, or pursuant to O. 19 r. 28 of the Rules of the Superior Courts, on the basis that there is no jurisdiction, or that they are frivolous and vexatious, or an abuse of the process and bound to fail.

2 At the outset counsel for the defendant confirmed that the defendant was not maintaining a claim that the High Court did not have jurisdiction to hear the plaintiff's claim for arrears of rent, but would argue that it had a bona fide defence by way of counterclaim and entitlement to equitable set off such that the application for summary judgment should be refused.

3 As there was significant overlap in terms of background, relevant facts and affidavit evidence, I determined that both motions should be heard together. Separate written legal submissions were filed in respect of each motion by both sides, and were considered along with the affidavit evidence. Oral argument in respect of both motions was heard on 25th October, 2018. The hearing of a third motion – the defendant's application for discovery – was postponed pending the delivery of this judgment.

Background Facts

4 In or about 1991 the defendant, who is a life peer, purchased Castletown House, also known as Castletown Cox, through Castletown Estates Ltd (‘CEL’). Through the 1990s he purchased the surrounding farmlands resulting in a total acquisition, to include the house, of 513 acres, through a company Castle Farms Ltd. Castletown House is one of Ireland's few surviving great Georgian houses, having been built in or about 1776. Since 1999 significant sums have been spent on refurbishment and modernisation of Castletown House.

5 The defendant arranged for the transfer of Castletown House and Estate into a trust – Eaglehill Trust – for two of his children, Henrietta Black (nee Magan) and Edward Magan. The current trustee – having been appointed on 4th April, 2013 – is Yew Tree Trustees Ltd (formerly DW Trustees Ltd). The trust is administered in Jersey. The plaintiff is a limited liability company registered in the British Virgin Islands, and is the actual owner of Castletown Cox House and Estate, but it is a company owned and controlled by the trustee, Yew Tree Trustees Ltd. CEL is a management company that manages Castletown Cox House on behalf of the Eaglehill Trust.

6 Of tangential relevance is that the same trustee operates a separate trust, which is settled by the defendant for the benefit of his third child, Patrick Magan. That trust is known as the Clonearl trust and has other holdings in the United Kingdom and elsewhere.

7 While the defendant has a place of residence in London, Castletown Cox has been a secondary home for the Magan family. The defendant also variously describes himself as Lord Magan of Castletown/Baron Magan of Castletown.

8 By Letting Agreement dated 15th December, 2010 the plaintiff let ‘Castletown House on lands consisting of 53.61 acres statute measure at Castletown Demesne in the County of Kilkenny as shown delineated on the map annexed hereto’ for a term from 13th December, 2010 to 12th December, 2013 at a rent of €100,000 per annum together with VAT, payable by monthly instalments (‘the Letting Agreement’). The Letting Agreement appears to have replaced an existing business tenancy concluded between the parties in 2004. The terms of the Letting Agreement are central to both applications, and certain clauses are particularly relevant:-

• Under Clause 2.1 the defendant agreed ‘to pay the rent at the time and in the manner specified, the first payment being made on the date of this agreement.’

• In Clause 2.7 the defendant agreed ‘not to reduce any payment of rent by making any deductions from it or by setting any sum off against it.’

• In Clause 2.17 the defendant agreed that ‘to use the property as a residence only for the named tenant and his dependants.’

• Clause 4, insofar as relevant reads:

‘4. The parties agree:

4.1 whenever the tenant:

4.1.1 is seven days late in paying any rent, even if it was not formally demanded:…

4.2 the landlord may end this tenancy. He must first give the Tenant not less than 4 weeks written notice ending on any day. This tenancy shall end on that day but this will not cancel any outstanding obligations which the Tenant owes the Landlord.’

• In Clause 3.2 the landlord agrees ‘to do the repairs to the property which the Housing (Standards for Rented Houses) Regulations, 1993 and Section 12(i)(b) of the Residential Tenancies Act, 2004 require.’

Notwithstanding Clause 2.17, the plaintiff did not register the tenancy with the Residential Tenancy Board (‘RTB’) under the Residential Tenancies Act, 2004.

9 It is common case that on the expiry of the term of the Letting Agreement on 12th December, 2013 the defendant continued in occupation under the terms of the Letting Agreement on foot of a tenancy from year to year, arising by implication.

10 The last payment or contribution to rent made by the defendant was...