Emo Oil Ltd v Oil Rig Supplies Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice McDermott
• Judgment Date: 18 August 2017
• Neutral Citation: [2017] IEHC 594
• Docket Number: [2017 No. 3432 P.]
• Court: High Court
• Date: 18 August 2017

BETWEEN

EMO OIL LIMITED

PLAINTIFF

AND

OIL RIG SUPPLIES LIMITED

DEFENDANT

[2017] IEHC 594

[2017 No. 3432 P.]

THE HIGH COURT

Land and Tenancy – s.17(1)(a) of the Landlord and Tenant Act – S.47 of the Civil Law (Miscellaneous Provisions) Act, 2008 – Renunciation of Tenancy – Termination of Lease – Effluxion of time – Deed of assignment – Balance of convenience

Facts: The plaintiff/tenant sought an order for interlocutory injunction prohibiting the defendant/assignee from trespassing into the lands comprising a retail service station. The plaintiff contended that the sub-lease assigned by the plaintiff's sub-tenant to the defendant was without the consent of the plaintiff. The plaintiff also contended that since its lease had terminated by effluxion of time, it also terminated the terms of the sub-lease under which the defendant had been granted premises by the plaintiff's sub-tenant though without the knowledge of the plaintiff. The defendant contended that they were entitled to renew of their business tenancy. The plaintiff claimed that it was at a loss as it had to pay a monthly rental to the landlord until it was in a position to give up the vacant possession in accordance with the terms of the lease.

Mr. Justice McDermott granted the injunction but placed a stay on the order on two conditions: Firstly, that the defendant would pay a monthly amount of rent equivalent to the amount payable by the plaintiff to the landlord. Secondly, a payment of additional amount to be paid by the defendant in two months in order to establish its claim for a new tenancy pursuant to s.28 of the Landlord and Tenant (Amendment) Act, 1980. The Court held that on the failure of the defendant to follow the two conditions, the injunction order would apply immediately. The Court considered the aspect of adequacy of damages in the present case and held that the plaintiff was in a position to compensate the defendant if the plaintiff was unable to prove his case at the trial.

JUDGMENT of Mr. Justice McDermott delivered on the 18th day of August, 2017

1 This is an application for an interlocutory injunction prohibiting the defendant, its servants or agents from trespassing on lands comprising a retail service station at Lock Quay, Clare Street, Limerick.

2 Under a lease dated the 26th July, 2011, John Lyons and Patrick Murray (the landlords) granted a five year tenancy to the plaintiff commencing on 1st August, 2011 at an annual rent of €46,224.00 per annum. Under Clause 3.20 of the lease the plaintiff agreed that on its expiration it would peacefully surrender and yield up the premises to the landlord. Clause 5.3 provided that should the tenancy continue beyond that term it would be deemed to be a tenancy determinable by one month's notice in writing to be given to the other party in the absence of any new agreement.

3 The plaintiff granted a temporary sublease to Gavin Fernando (the sub-tenant) on the 26th July, 2011 for a term of four years and nine months also commencing on 1st August, 2011 for an annual rent of €46,224.00. The sub-tenant executed a Deed of Renunciation in respect of this sub-letting renouncing all rights of entitlement which he may have under the Landlord and Tenant Acts to a new tenancy in the premises at the termination of the tenancy.

4 The original lease between the landlord and the plaintiff, the sub-lease between the plaintiff and Gavin Fernando and the Deed of Renunciation by Mr. Fernando were all executed on the 26th July, 2011.

5 By Deed of Assignment dated 12th August, 2014, the sub-tenant assigned his interest to the defendant Oil Rig Supplies Ltd. subject to the covenants and conditions contained in the original lease dated the 26th July, 2011.

6 It is clear from the affidavits that there was a longer and more extensive business relationship between the plaintiff and the defendant than the connection evidenced by the sub-lease taken by the defendant from Mr. Fernando in August 2014 who was the sub-tenant of the plaintiff. By agreement made 18th December, 2012 between Great Gas Petroleum (Ireland) Ltd. (now trading as EMO Oil) and the defendant, Great Gas Petroleum Ltd. agreed to supply the defendant with motor fuels and the defendant agreed to exclusively purchase motor fuel from it. The plaintiff effectively ceased to supply fuel to the defendant on 17th October, 2015 in circumstances where it is said the defendant fell into arrears and also commenced to source his fuel from an alternative source.

7 The plaintiff claims that its lease on the premises terminated by effluxion of time on 31st July, 2016. On the expiration of the lease the plaintiff continued in possession of the premises pursuant to the terms of Clause 5.3 which states:-

‘That if the tenancy hereby created should continue beyond the Term it shall in the absence of a new Agreement be deemed to be a tenancy determinable by 1 Month notice in writing to be given by either party to the other and expiring on any day not necessarily being a gale day.’

8 The plaintiff claims that the sub-lease terminated by effluxion of time on 30th April, 2016. Clause 5.4 states that if the tenancy should continue beyond the term of the sub-lease it would be deemed to be a tenancy determinable by one month's notice in writing to be given by either party to the other and expiring on any day not necessarily being a gale day. The sub-lease between the plaintiff and Mr. Fernando also provided that the subtenant would not assign sublet or part with or share the possession of the premises or any part thereof or permit any other person or company to occupy the same as a licensee or otherwise.

9 The history of the business relationship between the plaintiff, Mr. Fernando and the defendant is somewhat unclear. Mr. Sikka in affidavits sworn on behalf of the defendant states that Mr. Fernando was a tenant of the premises which were demised by lease made in or around 2008. He states that Mr. Fernando was in continuous occupation of the premises since that time without any break in the tenancy until he assigned his interests in the premises to the defendant in April 2011. Furthermore, Mr. Sikka claims that the plaintiff began to supply the defendant with fuel for sale in or around April 2011 pursuant to an agency agreement. He states that to the best of his knowledge the plaintiff was aware at all times that the defendant was in possession of the premises since April 2011. He also states that the defendant paid rent to the plaintiff and purchased fuel from it throughout this period. However, he also states that the rent was initially paid to the plaintiff through Mr. Fernando. It is then claimed that the terms of this “tenancy” were reduced to writing in 2014 under the Deed of Assignment dated the 12th August. Though it was initially claimed that bank statements exhibited indicated rent paid by the defendant to the plaintiff from the 30th March, 2011, it is clear that no such payments of rent appear in the bank statements exhibited at Exhibit ‘NS 3’ in Mr. Sikka's affidavit.

10 Mr. Hurley on behalf of the plaintiff states that there is no evidence that the defendant was assigned any interest in the premises in April 2011 and that whatever informal arrangement the defendant had with Mr. Fernando prior to 12th August, 2014 and/or under a Deed of Assignment did not bind the plaintiff in any way. He comments that since Mr. Sikka states that rent was paid through Mr. Fernando, Mr. Sikka held the premises on the basis of some informal letting agreement with Mr. Fernando and not as a purported assignee. He denies that this tenancy was reduced to writing in 2014. Mr. Hurley states that the sub-lease created on 26th July, 2011 was thereafter assigned to the defendant ‘without seeking the consent of the plaintiff as legally required in 2014’. While the plaintiff had extensive business dealings with the defendant since April 2011 as evidenced in accounts produced and exhibited in the affidavits and while the defendant may have been “sub-letting” the premises from Mr. Fernando, the plaintiff claims to be a stranger to this arrangement and to have been unaware of its existence. Thus the plaintiff claimed that firstly, the Deed of Assignment was made without its knowledge; secondly, the term of the sub-lease has now expired by the effluxion of time and thirdly, any claim made by the defendant that it is entitled to a new tenancy by reason of the length of time for which it and its predecessors in title had been in possession of the premises as tenants is unsustainable because of the Deed of Renunciation entered into by Mr. Fernando at the time of taking the sub-lease. It is further submitted that Mr. Fernando has given up any possible right to a new tenancy (if it existed) by virtue of the provisions of s. 17(1)(a) of the Landlord and Tenant Act as amended by the substitution made pursuant to s. 47 of the Civil Law (Miscellaneous Provisions) Act 2008, whereby that right may be renounced and was renounced by him.

11 The plaintiff also states that upon the determination of the sub-lease the defendant paid ‘a fee for its [the premises] further occupation until July 2016’. Mr. Hurley states that by agreement with the plaintiff the defendant has not paid any sum for its occupation of the premises since July 2016. It is said that discussions took place between the plaintiff and the defendant relating to a new agency agreement between the parties. An interim agreement was proposed subject to renewal of the plaintiff's lease with its landlord. The interim agreement proposed was withdrawn because no response was received from the defendant. The defendant was invited to indicate whether he wished to proceed with the arrangement but did not respond.

12 The Plaintiff claims that on Friday 29th July, 2016 it reached an agreement with Mr. Sikka...