O'Donnell v Ryan

JudgeMs. Justice Baker
Judgment Date20 October 2017
Neutral Citation[2017] IEHC 607
Docket Number[2012 No.129 32P]
CourtHigh Court
Date20 October 2017
Trading as The Rybo Partnership
Trading as ELK Building Systems
Trading as Mark O'Reilly and Associates



[2017] IEHC 607

Baker J.

[2012 No.129 32P]


Construction – Landlord & Tenant – Contractual obligation – De facto possession – Developer – Interpretation of policy document

Facts: The first defendant sought an order to strike out the proceedings against him, on the grounds that it was false and vexatious. The first defendant was the owner of the lands on which the second defendant (‘developer’) had constructed the disputed and defective properties. The first defendant argued that only contractual connection between the plaintiffs and himself was that he was the lessor in the purchase lease. The first defendant also alleged that he had handed over legal and de facto possession of the lands in accordance with his obligation under the License before construction commenced.

Ms. Justice Baker granted an order for striking out the plaintiff's claim in part. The Court however, noted that there might be a residual claim of negligence against the first defendant on the basis that the first defendant exercised some degree of control. The Court held that he could not decide the issue of extent of control exercised by the first defendant on affidavit. The Court adjourned the present case on that issue. The Court stated that the first defendant did not come within the definition of ‘developer’ in view of clause H of the policy document and that part of the claim against the first defendant ought to fail. The Court also stated that the contractual obligations arising out of a contract between landlord and tenant did not illustrate the agreement between the plaintiff and the first defendant.

JUDGMENT of Ms. Justice Baker delivered on the 20th day of October, 2017.

The first defendant has sought by motion to have the proceedings against him struck out on the grounds that the action is bound to fail and/or is vexatious and frivolous. It is accepted by the parties that the jurisdiction exists to strike out some or all of the claim.


The first defendant seeks in the alternative that the proceedings against him be struck out on the grounds that same constitute a recovery action maintained by the underwriters of a buildings defects guarantee scheme motivated by his claim to be entitled to the benefit of that scheme.

Background facts

Mr. Ryan was, until the occurrence of matters later explained in this judgment, the registered owner of the lands comprised in Folio 33624F and Folio 1637 of the Co. Meath Register, situate at Fairyhouse Road, Ratoath, Co. Meath, upon which a development of 26 apartments, known as Riverwalk, was constructed by Saltan Properties Limited, the second defendant (‘Saltan’). The apartments were sold with the benefit of a defects liability scheme, the Premier Guarantee for Ireland Scheme (‘the Guarantee’).


The apartment scheme was part of a larger development containing other types of residential units, sold in fee simple, and commercial units, which are not relevant to the present proceedings.


The plaintiff is one of 26 plaintiffs who have commenced proceedings to recover monies paid by the insurers on foot of the Guarantee following complaints by the owners of the apartments regarding water ingress alleged to have been caused by defects in the structural elements of the development, most especially defects in the balcony rainwater outlets, the waterproof balcony membranes, the seals of the windows and doors, the external drainage system and defects in the external walls.


The plaintiff pleads that, by reason of the ingress of moisture the structural fabric of the apartment and the surrounding development has been compromised to such a degree that the plaintiff has been deprived of, inter alia, the subjacent and lateral support, shelter and protection from the common areas, other apartments within the development and the sub-soil there under.


These proceedings are being maintained by the plaintiff primarily as a recovery action in respect of expenditure already incurred by the insurers under the Guarantee but the claim also seeks damages in respect of other alleged fire safety and acoustic defects not covered by the Guarantee.


In all, 26 sets of proceedings were instituted. They were all issued on 19th December, 2012, and, in each case, the relevant plaintiff is the owner of an apartment or duplex within the development.

The parties to the proceedings

The plaintiff is the owner and the original purchaser of apartment no. 1 in the development.


The first defendant trades as a partnership, RYBO, but Michael Ryan is now the sole owner of the business operated by the partnership. He was the owner of the lands on which Riverwalk was constructed.


The second defendant, Saltan, is a limited liability company and was the developer of the Riverwalk complex.


The third defendant is a limited liability company and was contracted by Saltan to supply and install prefabricated structures known as the ‘ELK’ system. Briefly, the ELK system is a single skin external wall made complete in a factory. It includes windows, doors, internal plasterboard and external weather and insulation systems. The system also included the balcony of the apartment.


The fourth defendant is a company registered in Austria and was the body which constructed and supplied the ELK system.


The fifth defendant is a firm of architects engaged to supply architect services in respect of the development.


The sixth defendant is an engineer engaged to supply engineering services in respect of the development.


The seventh defendant is a limited liability company engaged to supply engineering services in respect of the development.


The defendants are Saltan, the members of the design team, the manufacturers and installers of the building system and the architects and engineers employed in regard to the development and the structure.


The first defendant argues that he is incorrectly joined as a defendant and that he had an insufficient engagement with the building of Riverwalk to now be the subject of litigation concerning the alleged defects.

The licence to enter and build

By licence agreement made on 5th March, 2004 (‘the Licence’), titled a ‘building lease agreement’ and made between Mr Ryan and John Bourke, (‘RYBO’) the partners at the time, of the one part and Saltan of the other part, the freehold owners granted a licence to Saltan to enter and build Riverwalk on the lands. The developer thereby took a non-proprietary interest in the development site and avoided stamp duty, which would be levied on an outright sale. The stamp duty was paid by the purchasers of the finished units on the assurance to them.


The Licence recited that the partnership had obtained planning permission in 2002 and 2003 to construct, inter alia, 26 apartments on part of the folio lands. The Licence gave leave to Saltan to enter the lands for the stated purpose of the works of construction, contained an obligation on the part of RYBO, as owner of the lands, to execute an assurance of the finished units to the purchasers nominated by the developer and, following the sale of the last unit, to assure the common areas and the reversion in the leases to the management company of the estate.


Certain features of the Licence are of note: the licensor (the partnership) is recited as being the owner of the lands. The Licence gave liberty to Saltan to enter upon the lands for the stated purpose of carrying out the works permitted by, and complying with, the obligations arising from the planning permission and Saltan agreed to erect and complete at its own expense the apartments in accordance with the planning permissions. The Licence granted exclusive licence and authority to be on the lands during the licence period of 5 years commencing on 1st January, 2003, which was expressly granted for the benefit of the licensee, its employees, subcontractors and agents. It was expressly agreed and acknowledged that the Licence conferred no estate or interest in the lands and was permissive and limited for the stated purpose of carrying out the works.


Payment was in the form of a ‘site fine’ totalling €50,000 per site plus VAT at the prevailing rate, to be paid on the sale to the purchasers of the individual apartment units, in consideration of which the licensor was, at the request of the licensee, to execute an assurance of each apartment unit to the nominated purchaser.


The Licence was part of the title offered to purchasers of the apartments. The draft of the form of deed to the purchasers was contained in schedule 4 to the Licence.

The contract for sale of the apartments

Each of the apartment sales was made between the intending purchaser and Saltan in accordance with the Law Society 2001 standard Building Agreement and Contract for Sale. That contract contained an agreement on the part of Saltan to complete the works and make same ‘fit for habitation and use’ within 18 months from the date thereof. Special condition 21.2 recited the Licence granted by RYBO and provided that, on completion of the construction, Saltan would procure from RYBO a deed of assurance in the agreed form contained in the booklet of title. The Licence was part of the title documents furnished in the contract for sale.


RYBO was not a party to the Building Agreement and Contract for Sale.


The sales of the individual apartments and duplex units closed between November, 2004 and March, 2006 and were made in each case by way of a purchase lease for 950 years, subject to a...

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