Cosmoline Trading Ltd v D.H. Burke & Son Ltd and Another

• Jurisdiction: Ireland
• Judge: Mr Justice Finnegan,Finnegan P.
• Judgment Date: 14 June 2007
• Neutral Citation: [2006] IEHC 38,[2007] IEHC 186
• Judgment citation (vLex): [2007] 6 JIC 1403
• Docket Number: RECORD NO. 2005/1335P,[RECORD No. 1335 P./2005]
• Court: High Court
• Date: 14 June 2007

[2006] IEHC 38

THE HIGH COURT

RECORD NO. 2005/1335P

COSMOLINE TRADING LTD v D H BURKE & SON LTD & DHB HOLDINGS LTD

COSMOLINE TRADING LIMITED

PLAINTIFF

AND

D.H. BURKE & SON LIMITED AND DHB HOLDINGS LIMITED

DEFENDANTS

IRISH SHELL v JOHN COSTELLO LTD 1981 ILRM 66

SILVER WRAITH LTD v SIUCRA EIREANN CPT KEANE 8.6.1989 1989/9/2389

LAW v MURPHY UNREP HIGH 12.4.1978

CRANE v NAUGHTEN 1912 2 IR 318

O'FLAHERTY v ARVAN PROPERTIES LTD UNREP SUPREME 21.7.1977

SHANNON v BRADSTREET 1803 1 S & L 52

ORMOND v ANDERSON 1813 2 B & B 363

DORE v STEPHENSON UNREP KENNY 24.4.80 1981/4/472

DEASYS ACT 1860 S7

LYNCH v LYNCH 1843 6 IRLR 131

CONTRACT

Specific performance

Agreement for lease - Whether parties ad idem as to material terms of lease - Whether completed contract in existence - Whether specific performance should be ordered -Dore v Stephenson (Unrep, Kenny J,24/4/1980) and Lynch v Lynch (1843) 6 Ir LR131 considered - Lease - Surrender -Whether surrender of prior lease by act and operation of law - Order for specific performance refused and order that plaintiff be compensated by defendant for non surrender of prior lease (2005/1335P -Finnegan P - 8/2/2006) [2006] IEHC 38 Cosmoline Trading Ltd v D H Burke & Son Ltd

Finnegan P.

1 By indenture of lease made the 24th November 1997 ("the lease") the first named Defendant demised to the Plaintiff supermarket premises situate at Abbey Trinity, Tuam, Co. Galway (old A.T.) for a term of 35 years from the 24th November 1997. The lease further demised premises at nine other locations in Tuam, Athenry, Boyle, Athlone, Ballinasloe, Castlebar, Drumshambo, Ballyhaunis and Roscommon. The initial rent payable was the sum of IR£550,000 per annum and was not apportioned in the lease between the several premises and was subject to review on the 1st day of the 6th, 11th, 16th, 21st, 26th and 31st years of the term. The review provided for in the 6th year of the lease was carried out and the rent was reviewed to €800,000. The second named Defendant holds Kevin Burke's shares in the first named Defendant. However for the purposes of this action it has been agreed that no distinction is to be drawn between the Defendants.

2 The Plaintiff's case is that it entered into an agreement with the Defendants to the following effect û

3 (a) The Plaintiff would by the end of September 2003 vacate part of old A.T. to allow for the redevelopment and/or construction of a shopping, office and residential development to include a supermarket premises comprising 7,500 sq. ft. at the front of the premises.

4 (b) That the Plaintiff would move to and trade from the rear of old A.T. and that the Defendants would construct a temporary dividing wall and temporary toilet facilities and that the Plaintiff would otherwise pay its own moving costs.

5 (c) The Plaintiff would relocate into the new supermarket premises comprising 7,500 sq. ft. ("new A.T.) as soon as it was constructed in order to allow the Defendants to complete the second phase of the redevelopment of the old A.T. by 31st December 2004.

6 (d) The new supermarket premises would be located at the front of the premises as reconstructed.

7 (e) During the second phase of the redevelopment the Defendants would construct and provide for the Plaintiff a new store of approximately 2000 sq. ft. and approximately in the same location as the existing store forming part of the old A.T.

8 (f) The Defendants would provide the Plaintiff with approximately 1,000 sq. ft. of office space in one of two premises owned by the Defendants to be selected by the Defendants.

9 (g) The Plaintiff would have the use of the Defendants” premises known as the Bontex premises situate at Weir Road, Tuam, Co. Galway as a temporary storage facility and/or offices during the redevelopment of old A.T.

10 (h) The Defendants would not charge the Plaintiff any rent in respect of old A.T. or the Bontex premises from the 1st September 2003 to the 31st December 2004.

11 (i) The annual rent payable in respect of the new supermarket, store and offices which were to be available to the Plaintiff under the lease from the 1st January 2005 was to be as follows û

(i) €15.75 per square foot in respect of the supermarket

(ii) €12 per square foot in respect of the store

12 (iii) €10 per square foot in respect of the office.

13 The Plaintiff claims that the agreement is recorded in a letter dated 25th August 2003 written by the Defendants to the Plaintiff. In pursuance of the agreement the Plaintiff relocated to the rear of old A.T. and traded from there while the Defendants proceeded with the development of the remainder of the premises. The Plaintiff found trading difficult due to the development works and parking problems and in March 2004 agreed to relocate to the Bontex premises and vacated old A.T. entirely. On the 2nd November 2004 the Defendants wrote to the Plaintiff in relation to other premises and in addition dealt briefly with the Abbey Trinity premises in the following terms û

"With regard to the licence which attached to the Abbey Trinity/Chapel Lane premises, as you are aware we allowed this licence to be transferred to your premises at Circular Road, Tuam to allow demolition works to take place at Chapel Lane. This licence while in Cosmoline's name for trading purposes remains the property of D H Burke & Son Limited. As you are further aware, the intention was that this licence would revert to our new premises at Abbey Trinity when completed and would continue to form part of the property being leased by DH B to Cosmoline. As Cosmoline have decided to relocate to an alternative premises in Abbey Trinity the issues of this licence obviously has to be revisited."

14 The reference to alternative premises in Abbey Trinity is a reference to another development in the area being carried out by a different developer which I will refer to as the Tiernan development. The Plaintiff pleads that the letter constitutes a repudiation of its agreement with the Defendants. The relief sought by the Plaintiff at the hearing of the action is specific performance of the agreement pleaded.

15 The Defendants delivered a Defence and Counterclaim. The agreement is denied. In paragraph (6) of the Defence the Defendant pleads as follows û

"(6) Insofar as the Plaintiff contends for an agreement purportedly made in August 2003 (which is denied) and apparently evidenced in writing by letter from Kevin Burke dated 25 August 2003 written on behalf of both Defendants, the Defendants contend as follows:-"

(i) The said letter sets forth the Defendants” understanding on material matters that had been agreed in principle between the parties not just in relation to the relevant premises but also other premises held under the said lease.

(ii) The letter clearly contemplated that the Plaintiffs would clarify its position to the defendants on those matters and in particular, with reference to the premises at Abbey Trinity, whether the Plaintiff intended to surrender its interest therein.

(iii) The Plaintiff failed to formally respond on many of the material matters set forth in the said letter but subsequently, by express agreement the parties agreed as follows:-

(a) With effect from March 2004 the Plaintiff would surrender its interest in the premises at Abbey Trinity.

(b) The Plaintiff would enjoy the use of the premises known as Bontex until the anticipated date of taking up occupation of the premises at Abbey Trinity then under development and hereinafter described as the Tiernan development without directly incurring any liability to rent in respect of that premises, the said anticipated date being January 1 2005.

(c) The Plaintiff would enjoy the benefit of the licence attaching to the premises at Abbey Trinity until such time as the said transfer of its business after which time the said licence would revert to the defendants.

(d) Insofar as the said letter dated 25 August 2003 made provision for the Plaintiff to lease some part of the new development by the Defendants of the Abbey Trinity premises, now known as Lar na Cathrach, the said agreement in principle was varied by express agreement or alternatively through operation of law by the surrender of the said lease insofar as it related to the said premises."

16 The Defence further pleads at paragraph (9) thereof in relation to the vacation by the Plaintiff of the premises at Abbey Trinity as follows:-

"(9) For the avoidance of doubt it is expressly denied that the Plaintiff vacated the said premises at Abbey Trinity on the terms contended for or that it has suffered the losses alleged or any loss as a consequence of trading from Bontex. In fact the Plaintiff vacated the said premises at Abbey Trinity because of difficulties it experienced through lack of parking facilities as a consequence of the independent act of a third party."

17 In their Counterclaim the Defendants seek a declaration that the Plaintiff has surrendered its interest in old A.T.

18 The following persons gave evidence on behalf of the Plaintiff û

19 Senan McGonigle, Joseph Cummins, Jane Walsh, an engineer, Liam Hession and David O'Connor: the Plaintiff also called the Defendants” architect Brendan McGettigan.

20 Mr. McGonigle gave evidence as follows. He is a chartered accountant and a director of the Plaintiff having become involved with the Plaintiff in early 2001. At that time the Plaintiff was going into examinership and he invested in an arrangement to enable it to be taken out of examinership. He invested the sum of £100,000. He was not involved in the day to day running of the company. In early 2002 he was involved in a meeting with other shareholders in looking at the Plaintiff's business and seeing how it could be developed. At that time there were eight outlets three of which were profitable, one marginal and four loss...