Fennell v Mc Donagh

JurisdictionIreland
JudgeMr. Justice Eagar
Judgment Date20 February 2017
Neutral Citation[2017] IEHC 98
CourtHigh Court
Docket Number[2015 No. 2034 S]
Date20 February 2017

[2017] IEHC 98

THE HIGH COURT

Eagar J.

[2015 No. 2034 S]

BETWEEN
KEN FENNELL

AND

DAVID VAN DESSEL (ACTING IN THEIR CAPACITY AS JOINT RECEIVERS OVER CERTAIN ASSETS OF DAVID COLEMAN AND MICHAEL LAVELLE)
PLAINTIFFS
AND
PAT MCDONAGH
DEFENDANT

Landlord & Tenant – Arrears of rent – Summary judgment – Deed of surrender – Nature of lease – Lack of bona fide defence

Facts: The plaintiffs, being the joint receivers, sought an order for summary judgment against the defendant for arrears of rent payable to the plaintiffs on certain leases. The defendant asserted that the leases were not standalone and operated in conjunction with the management agreement whereby the rent was being payable from the income generated from carparking charges. The defendant contended that since he did not receive any income from carpark management, he had no option but to serve the deed of surrender.

Mr. Justice Eagar granted an order for summary judgment to the plaintiffs. The Court held that the defendant had failed to establish bona fide defence in the present case. The Court held that the defendant's objection in relation to the shareholding of the plaintiffs in the car parking management had no bearing on the present case as the plaintiffs and the company were different legal entities. The Court found that the defendant did not take any legal steps against the carpark management for its failure to pay the income generated from carpark to the defendant.

JUDGMENT of Mr. Justice Eagar delivered on the 20th day of February, 2017
1

The plaintiffs seek summary judgment in the sum of €432,917.43, this being the arrears of rent payable to the plaintiffs by the defendant on the leases up to and including 2016.

2

The plaintiffs are the joint receivers appointed on 11th October, 2013 over certain assets of David Coleman and Michael Lavelle. Included in the assets was the landlord's interest in forty leases dated 29th July, 1996 which was granted for a period of thirty-five years over forty carpark spaces in Union Quay Carpark, Union Quay, Cork.

3

Forty substantially identical indentures of lease between Union Quay Carparks Ltd. demised unto Belgrove Investment Ltd. comprising of forty carpark spaces for a term of thirty-five years. These carpark spaces were situated on the 5th Floor of the Union Quay Carpark, Union Quay, Cork.

4

On 10th April, 1997 the interest of Union Quay Carparks Ltd. in the leases became vested in David Coleman and Michael Lavelle.

5

By memorandum of agreement made on 19th December, 1997, the defendant Pat McDonagh purchased the interest of Belgrove Investment Ltd. in the said spaces.

6

Pursuant to the said leases, the defendant covenanted that the defendant would pay an annual rent in respect of the forty carpark spaces of varying amounts yearly for fifteen years in advance on the 1st November in each year. If the defendant failed to pay the rent reserve pursuant to the lease within seven days of the date prescribed, interest would accrue from the sum unpaid from the date on which it fell due.

7

It is common case between the parties that pursuant to a surrender agreement dated 29th July, 1996, the defendant was granted a ‘brake option’ whereby he would be entitled to surrender his interest in the leases by serving not less than three months' notice in writing to the landlord prior to any of the required surrender dates being the 30th July 2006, the 30th July 2011, the 30th July 2016, the 30th July 2021 and the 30th July 2026.

8

On 27th June, 2011 the defendant gave notice of surrender to the landlords and executed deeds of surrender in respect of each of the leases.

9

The affidavit of Michael Lavelle states that in March, 2010 Mr. Coleman and Mr. Lavelle brought Circuit Court proceedings against the defendant in Galway Circuit Court in respect of arrears in the amount of €15,998.70 in relation to the leases, and that judgment in default of appearance in that amount together with costs was obtained by Mr. Coleman and Mr. Lavelle. The defendant subsequently fully satisfied the judgment in respect of arrears of rent and in respect of the brake clause. Mr. Lavelle states that both he and Mr. Coleman proceeded on the basis that the break option had clearly not been exercised, as the provisions governing the exercise of the break option of three months, as set out in the leases, had not been complied with.

10

The defendant sought to exercise his entitlement to surrender the leases by giving written notice in advance of the prescribed date of 30th July, 2016 and on this occasion the defendant gave the required three months' notice and the plaintiff accepted the surrender of the leases with effect from the 30th July, 2016.

11

The document giving slightly more than one months' notice of his intention to surrender the leases can be effective, because the relevant written agreement contains a requirement for not less than three months' prior notice in writing of the surrender.

12

This Court accepts that it is well established that parties are required to comply strictly with the conditions for the exercise of an option prescribed in a lease. In particular, parties must comply strictly with time limits for the service of notices in order for such notices to be effective.

13

Counsel for the plaintiffs cited the...

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