Dunnes Stores and Another v McCann

• Jurisdiction: Ireland
• Judge: Mr. Justice David Barniville
• Judgment Date: 14 March 2018
• Neutral Citation: [2018] IEHC 123
• Docket Number: [2017 No. 5675 P]
• Court: High Court
• Date: 14 March 2018

BETWEEN

DUNNES STORES

AND

ALMONTE

PLAINTIFFS

AND

PAUL MCCANN

DEFENDANT

[2018] IEHC 123

Barniville J.

[2017 No. 5675 P]

THE HIGH COURT

COMMERCIAL

Practice & Procedure – Discovery application – Relevancy and necessity – Proportionality – Saving of costs – Use of interrogatories

Facts: The plaintiffs sought an order for discovery against the defendant/receiver. The receiver also sought an order for discovery against the plaintiffs. The plaintiffs contended that the discovery of subject documents was relevant and necessary for the fair disposal of issues between the parties. The receiver argued that the use of interrogatories by the plaintiffs was more appropriate rather than seeking the discovery of documents.

Mr. Justice David Barniville granted an order for discovery of certain categories of documents to the plaintiffs and refused to discover the other categories of documents. The Court also amended the discovery of certain categories of documents sought by the plaintiffs. The Court held that those documents were relevant and necessary for advancing the plaintiffs' case. The Court granted an order for discovery to the receiver in relation to only one category of document subject to certain amendments made by the Court. The Court further held that the plaintiffs were at liberty to file interrogatories in relation to that category of documents if they needed more information. The Court refused to discover the documents pertaining to the other category, as in the opinion of the Court the discovery of those documents was neither relevant nor saving costs.

JUDGMENT of Mr. Justice David Barniville delivered on the 14th day of March, 2018.

Introduction

1 This is my judgment on an application on an order for discovery sought by the plaintiffs against the defendant and on another application for an order for discovery sought by the defendant as against the plaintiffs.

The Proceedings

2 The proceedings involve a series of disputes between the parties concerning the Ashleaf Shopping Centre in Crumlin, Dublin 12 (the ‘Centre’). The first named plaintiff, Dunnes Stores, occupies the anchor unit at the Centre. The second named plaintiff, Almonte, is another company within the Dunnes Stores group of companies. For ease of reference, I will call the first named plaintiff, Dunnes Stores and the second named plaintiff, Almonte.

3 The defendant is an insolvency practitioner who was appointed as a Receiver by Allied Irish Banks plc over the secured assets of a Gary Smith by deed of appointment dated 5th February, 2013. I will refer to the defendant as the Receiver.

4 The proceedings concern the operation of the anchor unit and the car park at the Centre. The ownership and operation of the Centre and of the car park is governed by a series of agreements which it is not necessary to describe in detail in this judgment. Briefly, the anchor unit was demised to Dunnes Stores for a term of twenty years by a company called Primeview Company (‘Primeview’) on foot of a lease dated 5th April, 2000 (the ‘anchor lease’). AIB was also a party to the anchor lease. On the same date, Primeview demised the reversionary interest in the anchor unit to Almonte for a term of 925 years commencing on the expiration of the anchor lease (the ‘anchor unit reversionary lease’). AIB was also party to that lease. Primeview was the corporate entity through which the Centre was developed by Frank and John Smith. As regards the car park, by a lease dated 30th June, 1998, Primeview demised the car park (save for about 50 spaces) to Almonte for a term of 925 years (the ‘car park long lease’). By a further lease dated 27th April, 2000, Almonte demised the car park to John and Frank Smith for a term of twenty years (the ‘car park occupational lease’).

5 In 2006, Gary Smith acquired the interests of John and Frank Smith in the Centre and its car park. He was funded by AIB. This acquisition was effected by means of a series of further agreements. By a licence for assignment dated 24th November, 2006, between Almonte, John and Frank Smith, Gary Smith, Primeview and Dunnes Stores, Almonte consented to the assignment of the car park occupational lease to Gary Smith. The car park occupational lease and the interests of John and Frank Smith in the Centre were assigned to Gary Smith by way of a further deed dated 24th November, 2006, involving a number of parties including Primeview, John and Frank Smith and Gary Smith (the ‘deed of assignment’).

6 In addition, by a mortgage, charge and assignment dated 24th November, 2006, Gary Smith secured his interest in the centre and the car park in favour of AIB (the ‘AIB mortgage’).

7 The plaintiffs allege that the licence for assignment was an integral part of the overall transaction under which Gary Smith acquired the interests of John and Frank Smith in the Centre and the car park. The plaintiffs further allege that Clause 11 of the licence for assignment, which provided for certain monies to be set off against other monies, was ‘ integral’ to Almonte agreeing to the assignment of the car park occupational lease to Gary Smith and that without it Almonte would not have agreed to that assignment. Clause 11 of the licence for assignment is described in the pleadings variously as ‘Clause 11’ or as the ‘ set off clause’. I will adopt those descriptions here.

8 The plaintiffs allege that in accordance with the terms of the set off clause, monies due and owing by Gary Smith to Almonte in respect of the car park (under the car park occupational lease) were to be set off against monies due and owing by Dunnes Stores to Gary Smith in respect of the anchor unit under the anchor lease and that the set off was applied and given effect to by Dunnes Stores, Almonte and Gary Smith. This is denied by the Receiver.

9 The Receiver was appointed by AIB over the Centre and the interest of Gary Smith in the car park and over his interest in the anchor lease and car park occupational lease pursuant to a deed of appointment dated 5th February, 2013. Gary Smith was adjudicated a bankrupt in the Central London County Court on 9th December, 2013. It is alleged by the Receiver that on foot of correspondence from DLA Piper, Solicitors, acting for AIB, Gary Smith's trustee in bankruptcy issued a notice of disclaimer under s. 315 of the (English) Insolvency Act 1986, disclaiming his interest in the car park occupational lease and in respect of another agreement which was entered into at the same time (a put and call option agreement) (the ‘disclaimer’).

10 There is a dispute between the parties about several aspects of the disclaimer. The plaintiffs seek to dispute the validity of the disclaimer in the course of the proceedings. The Receiver maintains that it is not open to the plaintiffs to challenge the validity of the disclaimer and that the Irish courts do not have jurisdiction to deal with that issue. The Receiver contends that the disclaimer is presumed to be valid unless its validity is successfully challenged in the courts in England and Wales and, without prejudice to that, the Receiver pleads that AIB did receive the disclaimer within seven days of its issue. The Receiver claims that by virtue of the disclaimer the obligations and liabilities of Gary Smith under the car park occupational lease and the licence for assignment, including the obligation to pay rent and to permit any set off pursuant to clause 11 were determined as of from the date of the disclaimer.

11 The parties are also in dispute in relation to the occupation, control and management of the car park. The plaintiffs claim that following his appointment the Receiver commenced occupying, controlling and managing the car park with effect from 5th February, 2013 and continues to do so. The plaintiffs point to various steps allegedly taken by the Receiver in that capacity including collecting and retaining income from the use of the car park, controlling entry to and exit from the car park, maintaining the car park, engaging cleaning contractors to clean the car park and so on. The plaintiffs claim that the Receiver is liable to Almonte in respect of his alleged occupation and use of the car park and that in total the Receiver has a rent liability to Almonte on foot of the car park occupational lease in an amount of in excess of €2.2million. Without prejudice to their claim against the Receiver pursuant to the car park occupational lease, the plaintiffs put forward various alternative grounds on which it is alleged that the Receiver has been in occupation of their car park. They allege that he is liable as a tenant pursuant to an implied lease or tenancy or alternatively, a trespasser liable to Almonte for mesne rates or profits. The Receiver denies that he has been in occupation of the car park under the car park occupational lease and asserts that he has exercised the rights reserved to the landlord under the car park long lease including the right to operate and manage the car park under certain provisions of that lease. He relies on the disclaimer and, in the alternative, pleads that he has no liability to Almonte as a matter of law under any pre-Receivership contracts entered into by Gary Smith. The Receiver denies any alleged tenancy and any liability for mesne rates or profits. The Receiver claims that Dunnes Stores is liable to him in respect of service charges under the anchor lease and that, as of October, 2017, Dunnes Stores was liable in respect of service charges to the Receiver in the sum of almost €2.2 million.

12 The plaintiffs seek to rely on the set off provisions contained in clause 11/the set off clause. The Receiver denies that that clause applies on various grounds including the disclaimer, the fact that the licence for assignment is a pre-Receivership contract which the Receiver says is not binding upon him and that clause 11 contravenes the pari passu rule in bankruptcy, is...