Dunnes Stores v McCann

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 23 November 2017
• Neutral Citation: [2017] IEHC 700
• Docket Number: 2017 No. 5675P
• Court: High Court
• Date: 23 November 2017

[2017] IEHC 700

THE HIGH COURT

Barrett J.

2017 No. 5675P

Between:

DUNNES STORES

and

ALMONTE

Plaintiffs

– and –

PAUL McCANN

Defendant

Landlord and Tenant – Anchor lease – Assignment of car park lease – Insolvency of third party – Appointment of receiver – Injunction – Stateable case

Facts: The first named plaintiff filed the present proceedings against the receiver for seeking various reliefs. The first named plaintiff filed a motion to seek an injunction for restraining the receiver to alter the hours during which services were provided to the premises of the first named plaintiff pursuant to the car park occupational lease. The dispute arose after the interests in car park were transferred to a third party who in turn demised that interests to another person from whom it went to the receiver after that person was declared insolvent by the Court of England. The receiver argued that it had no contractual relationship with the first named plaintiff and the contracts entered before receivership did not bind him.

Mr. Justice Max Barrett refused to grant the injunction to the first named plaintiff. The Court held that the English bankruptcy trustee had disclaimed the car park occupational lease, and the first named plaintiff had never challenged the validity of that disclaimer in England. The Court stated that it had no jurisdiction to declare the acts done pursuant to English bankruptcy as valid or invalid. The Court further noted that an obligation under a pre-receivership contract did not bind the receiver and thus, the first named plaintiff could not compel the receiver to do certain acts. The Court found that the first named plaintiff did not establish a strong case for warranting an injunction.

JUDGMENT of Mr Justice Max Barrett on 23rd November, 2017.

I. Background

(i) General.

1 Ashleaf Shopping Centre is a pleasant shopping venue in Crumlin, County Dublin. By lease dated 5th April, 2000 (the “Anchor Lease”), Primeview Company, as landlord, demised a leasehold interest for 20 years in the anchor unit of the centre to Dunnes Stores, as tenant. Clause 4.1.2 of the Anchor Lease provides for the payment of service charges by Dunnes Stores. Commensurate with the execution of the Anchor Lease, Primeview Company, as landlord, demised the reversionary interest in the Anchor Unit to Almonte, as tenant, for a term of 905 years commencing on the expiration of the Anchor Lease (the “Anchor Unit Reversionary Lease”). (Dunnes Stores and Almonte are related companies within the Dunnes Stores group of companies).

2 Ashleaf Shopping Centre is served by a car park situate in its basement. By lease dated 30th June, 1998, Primeview Company, as landlord, demised the car park (minus 50 spaces) (the “Car Park”) to Almonte, as tenant, for a term of 925 years (the “Car Park Long Lease”). By lease dated 27th April, 2000, Almonte, as landlord, demised the Car Park to Messrs John and Frank Smith for 20 years (the “Car Park Occupational Lease”). On 27th April, 2000, Messrs John and Frank Smith executed an agreement called the “Car Park Contribution Agreement”, the effect of which was that for 13 years thereafter, Dunnes Stores was to pay €100k p.a. to Messrs John and Frank Smith in respect of the Car Park. In practice, that €100k p.a. was set off against the rent owing under the Car Park Occupational Lease.

3 The interests of Messrs John and Frank Smith were transferred in or around 2006 to Mr Gary Smith. Pursuant to the terms of an agreement referred to generally and hereafter as the “Licence for Assignment” of 24th November, 2006, between Messrs John and Frank Smith, Mr Gary Smith, Primeview Company and Dunnes Stores, Almonte consented to the assignment of the Car Park Occupational Lease to Gary Smith. On 5th February, 2013, AIB Banks plc appointed a receiver over the interest of Mr Gary Smith in the Car Park. Following the appointment of the receiver, it appears that there was no practical change in the manner in which the Car Park was controlled or managed. On 9th December, 2013, Mr Gary Smith was declared bankrupt by the Central London County Court. The Car Park Occupational Lease was disclaimed by Mr Gary Smith's English bankruptcy trustee on 24th April, 2015. Notably, Dunnes Stores has never challenged the validity of the English bankruptcy trustee's disclaimer of 24th April, 2015, before the courts of the neighbouring jurisdiction; and the Irish courts have no jurisdiction to declare invalid an act in an English bankruptcy.

4 Sometime after the appointment of the receiver, a dispute arose between the parties to these proceedings concerning the above-described set-off arrangement that is claimed previously to have applied. The receiver contends that the necessary mutuality for such a set-off arrangement does not exist, and offers the additional rationale that Mr Gary Smith's trustee in bankruptcy, in April 2015, has disclaimed Mr Smith's obligations. Dunnes Stores maintains, inter alia, that the necessary mutuality does exist and that it has in any event an express contractual right of set-off. It contends that the receiver is in occupation of the Car Park under the Car Park Occupational Lease and that there has been no valid disclaimer of that lease. These contentions are denied. Mediation has been tried between the parties and appears effectively to have failed.

5 To borrow a colloquialism, the “long and the short” of the foregoing in purely cash terms, has been that (1) since the appointment of the receiver, no monies have been paid by Dunnes Stores to the receiver in respect of service charges on the anchor unit, (2) no monies have been paid by the receiver to Dunnes Stores, and (3) because the receiver has received no monies from Dunnes (Dunnes says rightly; the receiver says wrongly), he has had to delve into his existing resources to meet circa. €2m of expenses incurred in the provision of extended-hour Services and access to Common Areas since his appointment.

(ii) Provision of services and access to service-yard.

6 Clause 5.6 of the Anchor Lease provides as follows:

‘If the Demised Premises are opened for trading to the general public outside the Shop Opening Hours in The Centre and/or if the Tenant requires the Common Areas or any part or parts thereof or the Car Park to be kept open for use of or for access to or egress from the Demised Premises or for any other purpose outside the Shop Opening Hours or the Service Hours, the Landlord will keep the same or procure that the same are kept open and provide such of the services specified in Clause 6 and the Seventh Schedule as shall be necessary or reasonably requested by the Tenant for such purpose or purposes and in the case of the Car Park the Landlord will operate or procure the operation of the Car Park…’.

7 So, if Dunnes Stores (a) wishes to keep its store open outside the Shop Opening Hours or (b) requires usage of the Common Areas outside the Shop Opening Hours or the Service Hours, the landlord (receiver) must, subject to two qualifications, keep the Common Areas open and provide certain Services to the Common Areas, e.g., carrying out repairs, decorating, keeping the Common Areas clean, maintained and adequately lighted, providing refuse facilities, etc., in effect all the kinds of things that one would expect of a shopping centre landlord vis-à-vis a shopping centre tenant. The two qualifications are as follows.

(1) as can be seen from the text of cl.5.6 the Services must be ‘ necessary’ or ‘ reasonably requested by the Tenant’ (the receiver will contend at trial that it cannot be reasonable to request Services in circumstances where the “hard cash” immediately necessary to fund same is being provided by the receiver).

(2) the landlord's (receiver's) obligations are subject to clauses 4.26.1 and 4.26.2 of the Anchor Lease, which each require the payment to the landlord (receiver) of reasonable additional costs incurred for the extra-hours openings, providing as follows under the heading ‘ Hours of Servicing/Trading’:

‘4.26.1 If the Tenant shall use the means of access to or egress from the Demised Premises for the purpose of servicing or making deliveries to the Demised Premises outside the Service Hours to pay to the Landlord all such reasonable additional costs properly incurred by the Landlord on account of the Tenant availing of such access/egress or in the case of such access or egress being availed of at the same time by the Tenants or occupiers of any other Lettable Areas to pay to the Landlord a fair and reasonable portion of the said additional costs.

4.26.2 If the Tenant decides to trade from the Demised Premises outside of the Shop Opening Hours or (save as provided in clause 4.26.1 above) avails of access to or use of the Common Areas or the Car Park outside the Shop Opening Hours (including a period of one hour before and one hour after Shop Opening Hours each day) for any purpose then and in each of those events the Tenant will pay to the Landlord all such reasonable additional costs in respect of The Centre (if any) and the Car Park (if any) properly incurred by the Landlord on account of the Tenant exercising such rights or if the Tenants or occupiers of any other Lettable Areas trade or avail of such access or use outside the Shop Opening Hours then a fair and reasonable portion of the said additional costs shall be payable by the Tenant.’

8 Under cl. 5.7. of the Anchor Lease, inter alia, the Landlord covenants with the Tenant as follows:

‘5.7.2 To use all reasonable endeavours to extend the Shop Opening Hours at the request of the Tenant in accordance with extended trading hours of the Tenant from time to time.’

9 The receiver will contend at trial that it cannot be unreasonable to decline such a request services where the “hard cash” necessary to fund same is being provided by the receiver.

(iii) Events that Have...