Donnellan v Dungoyne Ltd

• Jurisdiction: Ireland
• Judge: O'Hanlon J.
• Judgment Date: 01 January 1995
• Neutral Citation: 1995 WJSC-HC 382
• Docket Number: 246 C.C.A./1993
• Court: High Court
• Date: 01 January 1995

1995 WJSC-HC 382

THE HIGH COURT

THE CIRCUIT COURT

246 C.C.A./1993

DONNELLAN v. DUNGOYNE LTD

ON APPEAL FROM

MIDLAND CIRCUIT

COUNTY OF LAOIS

BETWEEN

CONOR DONNELLAN AND JOE DONNELLAN

PLAINTIFFS

(RESPONDENTS)

AND

DUNGOYNE LIMITED

DEFENDANT

(APPELLANT)

Citations:

ESSO PETROLEUM CO LTD V MARDON 1976 1 QB 801

MCANARNEY V HANRAHAN 1993 3 IR 492

SPENCER BOWER ON MISREPRESENTATION (1974 ED) 139

Synopsis:

CONTRACT

Rescission

Lessee - Claim - Grounds - Lessor - Misrepresentation - New shop ping complex - Unit in complex demised to plaintiff lessee - Whether misrepresentation about extent of completed initial lettings of units - Refusal to rescind lease - Damages awarded - (Appeal from the Circuit Court - O'Hanlon J. - 15/8/94)

|Donnellan v. Dungoyne Ltd.|

DAMAGES

Assessment

Damage - Causes - Determination - Lessee - Business - Losses - Plaintiff lessee of unit at new shopping complex - Claim to rescission of lease - Negotiations for lease - Whether misrepresentation about extent of completed initial lettings of units - Refusal to rescind lease - Damages awarded - (Appeal from the Circuit Court - O'Hanlon J. - 15/8/94) - [1995] 1 ILRM 388

|Donnellan v. Dungoyne Ltd.|

LANDLORD AND TENANT

Lease

Rescission - Grounds - Lessor - Misrepresentation - Effect - New shopping complex - Unit in complex demised to plaintiff - Negotiations for lease - Whether misrepresentation about extent of completed initial lettings of units - Refusal to rescind lease - Damages awarded - (Appeal from the Circuit Court - O'Hanlon J. - 15/8/94) - [1995] 1 ILRM 388

|Donnellan v. Dungoyne Ltd.|

1 Judgment delivered the 15th day of August 1994 by O'Hanlon J.

2 In this case the Plaintiffs claimed rescission of a Lease dated 20th March, 1992, (but executed by the first-named Plaintiff as Lessee on the 22nd November, 1991), whereby the Defendant demised unto the first-named Plaintiff Unit No. 7 at the Laois Shopping Centre, Portlaoise, for a term of 35 years from the 1st October, 1991, subject to an initial rent of £20,000 per annum, (reviewable at five-yearly intervals), and to the covenants on the part of the lessee and lessor therein contained, and whereby the second-named Plaintiff guaranteed performance by the Lessee of the Lessee's obligations under the Lease in the manner and to the extent set out in the Fourth Schedule to the said Lease.

3 Other relief claimed in the Civil Bill included a claim for repayment of a deposit of £3,691.25 paid by the first-named Plaintiff; damages for negligent and/or fraudulent misrepresentation; and damages for breach of contract.

4 The claims were based upon the allegation recited in the Civil Bill that in order to induce the first-named Plaintiff to enter into the said Lease, the Defendants by their servant or agent represented to the said Plaintiff that all the units in the Shopping Centre had been leased to tenants and that all would be occupied before Christmas, 1991, when such representation was incorrect to the knowledge of the Defendants, their servants and agents. As a result the first-named Plaintiff claims that his business of shoe retail sales could not be carried on profitably in the said Shopping Centre, and failed, and that he has been caused considerable loss and damage for which he claims to be compensated in damages.

5 In the Circuit Court the learned Circuit Court Judge (Judge Lynch) found in favour of the Plaintiffs and awarded £20,000 damages in favour of the Plaintiffs and decreed that the Lease could be rescinded without penalty by the first-named Plaintiff provided possession of the premises were delivered up within one month of the date of his judgment, which was delivered on the 29th October, 1993. From that Order, the Defendants have appealed to this Court.

6 The Shopping Centre is a very elaborate and attractive structure, completed in the year 1991, and scheduled for opening towards the end of that year in time to benefit by the upsurge in trade which normally takes place around Christmas. The developers were fortunate in attracting the interest of the Quinnsworth Group and very extensive premises in the main Shopping Mall were acquired by Crazy Prices and Penneys as "anchor tenants", so a considerable flow of trade to the Shopping Centre was thereby immediately guaranteed. This was supplemented by an important letting to Kylemore Bakery, and as the year 1991 progressed, further lettings were made, or units were reserved for parties who had expressed interest and had documentation submitted to their legal advisers for consideration.

7 When the building work was nearing completion the Centre was opened for inspection by interested parties on or about the 22nd October, 1991, with the Minister for State at the Department of the Environment present as Guest of Honour, and the Press Release for that occasion referred to the fact that "to date 17 units have been reserved or let ... Mr. Pat Doherty of Dungoyne Limited said that he was delighted to welcome the anchor tenants Crazy Prices and Penneys to the centre and that he was confident that the remaining outlets would soon be filled." A Travelator leads from the Car Park to the main Shopping Mall. A brochure produced for the same occasion showed about 9 units available for letting, with the remainder (described as Supermarket, Department Store and 16 units) reserved already.

8 The Official Opening of the Centre took place on the 28th November, 1991, and as of that date the material put in evidence by the Defendant indicates that 15 units were then occupied and nine were vacant. Two of the units occupied were held merely on a temporary letting for the Christmas trade. The number of occupied units is given as 15.

9 These figures were tending to fluctuate from week to week but the over-all position was that suggested by the figures given above and there was little if any change in the situation by the end of the year.

10 Almost half the floor area of the entire Centre was, however, occupied by the anchor tenants, with other very substantial units occupied by Lifestyle, a restaurant, and a butcher's premises, so that in terms of floor area over 90% of the internal mall and over 70% of the overall floor area were occupied by the Opening Day and this still remained the position at Christmas and the end of the year.

11 Nevertheless, the number of units remaining unoccupied, particularly in the internal mall - the showcase of the Centre - was a cause of much concern at all stages to the letting agents, Messrs. Mason Owen and Lyons, and Raymond Cribbin, who were jointly engaged as agents, and also to the developers and to the occupying tenants and those who were attracted to the Centre as potential tenants.

12 The second-named Plaintiff is the father of the first-named Plaintiff, and has a shoe-shop of his own in Carlow. He was interested in setting up his son, the first-named Plaintiff, in business in the new Centre and was in contact with the letting agents as early as the month of February, 1991. From that time forward he had numerous meetings with Raymond Cribbin and with David Lyons of Mason Owen and Lyons, and all the negotiations were conducted by him on behalf of his son, the first-named Plaintiff. He made a number of offers to Raymond Cribbin, but the rent he was willing to pay was unacceptable and nothing came of these offers. He said he was told by the letting agents from the outset that they had enough enquiries from interested parties to fill the Centre.

13 Eventually, when the Centre was scheduled to open on the 28th November, 1991, the Plaintiffs met Messrs. Cribbin and Lyons by appointment at the Celtic Restaurant in Portlaoise, and had further negotiations - Mr. Cribbin leaving after a short time, and the matter thereafter being conducted by David Lyons on behalf of the Defendants.

14 The second-named Plaintiff said he asked David Lyons what was the position about the lettings and was told that all the units were let. "I said, let or signed? He said all were signed up with the exception of No. 7 - that all would be trading before Christmas except Peter Marks (Hairdresser) who would come after December." He said that they agreed that evening to take a letting at a rent of £20,000 per annum, with a deposit of £3,000 and a rent-free period of five months.

15 When the Centre opened on the 28th November, 1991, he said that he again raised the matter of the units that had not been let with David Lyons and was told not to worry, that the others would be all fitted out and trading by Christmas. He said that in January, 1992, he realised they had been misled completely by the auctioneers and contacted David Lyons by telephone but was told he was the only one complaining. He said had he known the true position in November, 1991, he would not have taken the lease.

16 Conor Donnellan, the first-named Plaintiff gave evidence in corroboration of what his father had recounted concerning the interview in November, 1991, when the agreement was made to take the lease.

17 David Lyons, of Mason Owen Lyons, gave a different account of the meeting with the Plaintiffs on the 1st November, 1991. He said there was a discussion regarding the current state of play in the letting of units in the Centre, and he told them the position. They asked about Peter Marks and he told them they were unlikely to take a letting. He denied that he said all units were let or signed. "I couldn't have said it. It wasn't true. A number of leases has been made, a number had signed, a number were showing interest. I definitely didn't say all the other units were signed up, he is certainly wrong about that. I didn't use words like "signed up". I did say the lettings were going well. I stated our ambition was to be fully let by Christmas. I didn't say it would be fully let. I outlined the interest and offers. I stated it as an ambition - our ambition was to be fully let by...