Crofter Properties Ltd v Genport Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 22 March 2007
• Neutral Citation: [2007] IEHC 80
• Court: High Court
• Docket Number: No. 1624 P 2006 28COM/2005
• Date: 22 March 2007

CROFTER PROPERTIES LTD v GENPORT LTD

BETWEEN/

CROFTER PROPERTIES LIMITED

PLAINTIFF

AND

GENPORT LIMITED

DEFENDANT

[2007] IEHC 80

No. 1624 P 2006 28COM/2005

No. 2096 P 2006 19 COM/2005

No. 3212 P 2005 89 COM/2005

THE HIGH COURT

Commercial

LANDLORD AND TENANT

Lease

Covenant - Breach - Obligation to pay rent - Consequence of breach - Lessee remaining in temporary occupation under statutory authority pending determination of right to new tenancy - Discretion of court to terminate statutory right of temporary occupation - Factors to be considered - Whether continued occupation by lessee pending determination of right to new tenancy resulting in serious injustice to lessor - Whether lessor entitled to order for possession - Kenny Homes Ltd v Leonard (Unrep, SC, 10/6/1998) distinguished; Harrisgrange Ltd v Duncan [2003] 4 IR 1 considered - Landlord and Tenant (Amendment) Act 1980 (No 10), s 28 - Order for possession with stay pending compliance with conditions (2005/1624P, 2096P and 3212P - Finlay Geoghegan J - 22/3/2007) [2007] IEHC 80

Crofter Properties Ltd v Genport Ltd

Ms. Justice Finlay Geoghegan

1 The plaintiff ("Crofter") is the owner of Sachs Hotel on Morehampton Road in Dublin. The defendant ("Genport") is in occupation of the premises, which it held on a lease dated 12th May, 1981, for a term of twenty-one years from 1st August, 1980 ("the Lease"). The lease expired on 31st July, 2001. On the same day Genport served a notice of intention to claim relief pursuant to the Landlord and Tenant (Amendment) Act,1980.

2 On 18th January, 2002, Genport issued a Landlord and Tenant Civil Bill claiming new tenancy in the premises. Since that date it is in occupation pursuant to s. 28 of the Act of 1980.

3 There is a long history of litigation between Crofter and Genport in relation to Sachs Hotel and other matters. In proceedings Record No. 1996 No. 25 P., between Crofter and Genport, McCracken J. made an order on 8th November, 2002, in which he,inter alia, granted Genport relief against forfeiture, conditional on payment of all monies then due (€829,189.22) in respect of historic arrears of rent and current arrears of rent less certain set offs, within 28 days from the date of perfection of that order. The final order of McCracken J. in that case appears to have been perfected on 27th January, 2004. According to a letter of 23rd February, 2004, from Eugene F. Collins, Solicitors, then acting for Genport, to Lavelle Coleman, Solicitors, acting for Crofter, a sum of €1,915,501.67 was paid by Genport to Crofter, being all monies then due and owing by Genport to Crofter.

4 It is common case that in 2004 the rent payable by Genport to Crofter under the terms of the Lease and in accordance with the orders of McCracken J. was €141,634.06 per quarter. The last rent paid by Genport to Crofter, prior to the date of hearing herein, was a portion of the rent due on 1st May, 2004, leaving outstanding a sum of €45,421.06 due on that date. No subsequent rent has been paid.

5 On 10th May, 2005, Crofter issued proceedings 2005 No. 1624 P (Rent Proceedings) claiming possession of the premises. The amount then alleged to be due and owing for rent was €611,957.30, and the sum of €102,000 for insurance.

6 In June, 2005, Sachs Hotel was closed down and boarded up. On 17th June, 2005, Crofter issued a further set of proceedings 2005 No. 2096 P, claiming an injunction restraining Genport from carrying out building works in the premises and other reliefs. Interim and interlocutory relief was sought and an undertaking given on behalf of Genport to refrain from carrying out any building works on the premises known as Sachs Hotel, pending the trial of the action.

7 On 27th September, 2005, Crofter issued a third set of plenary proceedings No. 2005 No. 3212 P (Covenant Proceedings) claiming possession of the premises. In those proceedings multiple breaches of the terms of the expired lease are alleged.

8 Three proceedings were admitted to the Commercial List. By order of the 27th day of February, 2006, the parties were given an opportunity to resolve their differences by mediation. When this failed by the Autumn of 2006, the High Court proceedings were brought on for hearing.

9 Since 18th January, 2002, the Circuit Court Landlord and Tenant proceedings have progressed slowly. A defence was delivered in July, 2004. Crofter sought discovery and Genport made this in June, 2005. A notice of trial was filed by Genport in January, 2006. This appears to have been mislaid in the Circuit Court Office. A date for trial was not subsequently sought by the either party. Only in the course of this hearing, was a trial date obtained for 26th March, 2007.

10 At the hearing, it was agreed that Crofter's claim in the Injunction proceedings would be left over until after the determination of the primary claim for possession in the Rent and Covenant proceedings.

11 I find on the evidence adduced that on 10th May, 2005, at the date of commencement of the Rent proceedings there was unpaid rent and a sum in respect of insurance paid on 2nd December, 2004, totalling €713,957.30, due by Genport to Crofter. This amount is not disputed. However, Genport initially contended that it was entitled to set off a sum of approximately €850,000 in respect of costs and interests, pursuant to orders of the High Court and Supreme Court in proceedings 1996 No. 25 P.

12 Crofter do not dispute this amount nor the right of Genport to seek to set off this amount against all sums due by Genport to Crofter. However, it contends that Genport did not seek to set off this amount against the claim for arrears of rent until after the commencement of proceedings and the delivery of a defence in the Rent proceedings. It is further contended that on the contrary, by letter of 17th June, 2005, Eugene F. Collins, Solicitors, then acting for Genport, had expressly acknowledged the entitlement of Mr. Philip Smyth to use the benefit of the relevant costs orders for the purposes of bankruptcy proceedings then brought by Crofter against Mr. Smyth.

13 I also find that on 10th May, 2005, there were three further amounts due by Genport to Crofter in respect of sums outstanding on orders made in proceedings 1996 No. 25 P by the High Court and the Supreme Court and in proceedings 1988 No. 10501 P betweenGenport & Ors. and Crofter & Ors. Crofter was entitled to bring those into account in any set off in respect of the costs in the 1996 proceedings as claimed.

14 Crofter produced in the proceedings a schedule of rent and costs owing by the parties on 10th May, 2005, demonstrating that, even if Genport were entitled to set off the taxed costs in respect of the 1996 proceedings, there remained due and owing a net sum to Crofter of €435,844.36. It was agreed in the course of proceedings that there had to be deducted from that, a sum of €39,127.94 in respect of costs allegedly due to Crofter on proceedings 1988 No. 10501 P, as such costs were not taxed until November, 2006. The balance of €426,716.42 was due and owing and therefore, Genport was in default of its obligation to pay rent in accordance with the terms of the expired lease at the date of commencement of the proceedings.

15 At the date of the hearing, on 16th January, 2007, Crofter claimed that the amount then due in respect of rent and costs by Genport to Crofter was €813,010.39. In the schedule produced supporting that amount, the only dispute related to the insurance payment claimed pursuant to clause 2(x) of the expired lease. It is contended that the amount paid was excessive. I am satisfied on the evidence given by Mr. Tunney and Mr. Woods for the plaintiff and the exchanges which took place in November, 2005, that this contention is not made out. The insurance then obtained, having regard to the fact that the hotel was closed up, and steps taken by Mr. Tunney appear to have been reasonable. I find in accordance with the schedule produced in evidence, that at the date of the hearing, there was outstanding in respect of rent from May, 2004 to November, 2006, and insurance in respect of 2004, 2005 and 2006, a sum of €1,678,325.26. Further, that after set off in respect of orders for costs in prior proceedings, the net sum due to Crofter by Genport was €813,010.39. The next instalment of rent was stated to be due on 1st February, 2007, in the sum of €141,634.06.

16 Crofter makes multiple allegations of breaches of the terms of the Lease in the Covenant proceedings. It is not in dispute that at the date of commencement of the proceedings, Genport was in breach of the covenants at clause 2(b), to pay and discharge all rates and at 2(aa) "not to do or suffer to be done anything whereby the Intoxicating Liquor Licence attaching to the demised premises … may become forfeited or liable to be taken away …" The Intoxicating Liquor Licence had lapsed in September, 2004.

17 There is significant dispute about the alleged breaches of clause 2(d) "to maintain and keep the interior of the demised premises … in good and substantial order and repair" and clause 2(f) "to maintain and keep the roof and exterior of the demised premises including all exterior water and drain pipes and sewers in good and substantial order and repair" and clause 2(j) "not to alter the demised premises or to cut, maim or injure any part thereof or to make or suffer to be made thereto any structural alteration or any addition or any change in the internal layout thereof without prior consent in writing of the lessor (such consent not to be unreasonably withheld) and then only in accordance with plans and specifications previously approved by the lessor in writing".

18 I find on the evidence of Mr. Peter Hanna of the inspection carried...