Frances Hyland v Dundalk Racing (1999) Ltd (No.2)

• Jurisdiction: Ireland
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 09 January 2015
• Neutral Citation: [2015] IEHC 57
• Court: High Court
• Date: 09 January 2015

[2015] IEHC 57

THE HIGH COURT

[No. 907P/2008]

Hyland v Dundalk Racing (1999) Ltd (No.2)

BETWEEN

FRANCES HYLAND

PLAINTIFF

AND

DUNDALK RACING (1999) LIMITED (NO.2)

DEFENDANT

Breach of contract – Quantum of damages – Mitigation of loss – Plaintiff seeking damages for breach of contract – Whether contract was legally binding

Facts: The plaintiff, Mr Hyland, is a licensed bookmaker and chairman of the Irish National Bookmakers” Association. Mr Hyland held an established seniority to trade from a particular bookmaking pitch at Dundalk Racecourse. That racecourse closed in 2001 and re-opened in August 2007 as an all-weather track following an enormous investment. The defendant, Dundalk Racing (1999) Ltd, sought a capital contribution of some €8,000 from each bookmaker holding a pitch at the racecourse. The plaintiff claimed that this amounted to a breach of the Racecourse Executives” Seniority and Pitch Rules and, hence, to a breach of contract. In the first judgment in this case which was delivered by the High Court in February 2014 ([2014] IEHC 60) Hogan J held that the Pitch Rules amounted to a legally binding contract and that the defendant had breached these Rules by seeking a payment of this kind. The essence of the decision was that the re-opened Dundalk Stadium did not amount to a new stadium, at least for the purposes of the Pitch Rules, so that a payment of this kind could not be lawfully exacted from bookmakers (such as the plaintiff) holding an established seniority at Dundalk. This present supplementary judgment of the High Court dealt solely with questions of mitigation of loss and quantum of damages arising from the first judgment.

Held by Hogan J that the most obvious method of mitigation would have been for the plaintiffs to have paid the €8,000 capital contribution sought by Dundalk Racing on a without prejudice basis, while simultaneously commencing proceedings by which a declaration was sought to the effect that no such sum was actually due. Hogan J held it to be clear from McCord v Electricity Supply Board[1980] ILRM 153 that, having regard to the provisions of s. 34(1) of the Civil Liability Act 1961, damages for breach of contract may be reduced where the plaintiff has been guilty of fault or contributory negligence. On the facts of the case Hogan J concluded that, viewed objectively, it became unreasonable after a certain point for the plaintiff to refuse to take up a pitch offered by Dundalk, especially once it became clear that the protests had been ineffective, that the dispute was not going to be quickly resolved and that the issue would have to be judicially determined; this had become clear by early 2008, which was precisely the time that the present proceedings were commenced. The next issue concerned the actual capital valuation of Mr Hyland”s pitch which was lost as a result of the re-draw based on seniority of permit holder. The expert witness, Mr Keegan, enumerated a range of factors which might affect the general valuation of a pitch, including the proximity to the parade ring, the status and standing of the racecourse in question and other factors such as the layout of the betting ring itself. Hogan J held that the valuation of Mr Hyland”s pitch was much closer to that suggested by Mr Keegan, but that some deduction must also be made to reflect the fact that even six months of the re-draw (and, hence, the loss of the pitch) there was considerable excess and unused capacity, demonstrating that a more conservative view must be taken of any pre-August 2007 valuation.

Hogan J held that he would allow the plaintiff to recover 100% of the losses he sustained in the first 12 months from August 2007 to August 2008. So far as subsequent years were concerned, then in line with the reasoning in McCord, he would abate these damages by a factor of 80%, reflecting the extent to which the failure by the plaintiff to mitigate his loss objectively amounted to such fault for the purposes of s. 34(1) as would justify the reduction of damages by this amount. Hogan J allowed Mr Hyland the figure of €15,000 in respect of the loss of the particular pitch. Mr Hyland claimed a figure of €28,411 for a seven year period, an average of €4,059 per year. Hogan J would allow a full claim of €4,059 for the first year and allow 20% of the remaining claim of €24,352 (representing the claims from August 2008 to 2013 onwards) giving a figure of €4,870. It followed that Hogan J would allow Mr Hyland the sum of €8,929 by way of damages for loss of profits. With the €15,000 damages in respect of the claim for the loss of pitch, the total sum in respect of the damages suffered by Mr Hyland came to €23,929. There was accordingly a decree of €23,929 by way of damages in favour of Mr Hyland.

Application granted.

1 Mr. Justice Gerard Hogan delivered on 9th January 2015

Part I: Introduction

2 1. In these proceedings the plaintiff, Mr. Hyland, is a licensed bookmaker who at all material times has been chairman of the Irish National Bookmakers' Association ("INBA"), the representative body for bookmakers. Mr. Hyland held an established seniority to trade from a particular bookmaking pitch at Dundalk Racecourse. That racecourse closed in 2001 and re-opened in August 2007 as an all-weather track following an enormous investment. The defendant ("Dundalk") sought a capital contribution of some €8,000 from each bookmaker holding a pitch at the racecourse. The plaintiff claimed that this amounted to a breach of what are known as the Racecourse Executives' Seniority and Pitch Rules ("the Pitch Rules") and, hence, to a breach of contract.

3 2. In the first judgment in this case which was delivered by me on 19th February 2014 ( Hyland v. Dundalk Racing (1999) Ltd. [2014] IEHC 60) I held that the Pitch Rules amounted to a legally binding contract and that the defendant had breached these Rules by seeking a payment of this kind. The essence of the decision was that the re-opened Dundalk Stadium did not amount to a new stadium, at least for the purposes of the Pitch Rules, so that a payment of this kind could not be lawfully exacted from bookmakers (such as the plaintiff) holding an established seniority at Dundalk. The nature and purpose of the Pitch Rules and the background to this dispute are all fully set out in that judgment. As I explained in that judgment, the Pitch Rules amounted to a detailed set of rules governing the allocation of pitches at the racecourse betting ring to bookmakers.

4 3. The present judgment deals solely with questions of mitigation of loss and quantum of damages arising from that first judgment. This judgment is really in the nature of a supplementary judgment to that judgment and it pre-supposes some familiarity with that first judgment.

Part II: Mitigation of Loss

5 4. The first question which immediately arises from the finding that there was a breach of contract is the question of mitigation of loss. No matter how the egregious the breach of contract on the part of the defendants, the plaintiffs were nonetheless under a clear duty to mitigate their losses. The most obvious method of mitigation would have been for the plaintiffs to have paid the €8,000 capital contribution sought by Dundalk Racing on a without prejudice basis, while simultaneously commencing proceedings by which a declaration was sought to the effect that no such sum was actually due.

6 5. In assessing whether this would have been reasonable, it is necessary to rehearse again from this perspective the events of July and August 2007. While much of this evidence was given in the liability hearing, this evidence was supplemented in the course of the damages hearing by the testimony of two new witnesses, Ms. Caroline Grey and Mr. Paddy Walsh, the Chief Executive of the Association of Irish Racecourses Ltd. ("AIR"), neither of whom were called to give oral evidence at the first hearing. In view of this additional evidence and the important clarification provided by the Pitch Tribunal at the request of this Court at a relatively late stage of the liability hearing, the reasonableness of the plaintiffs' conduct so far as the mitigation of damages question can be further assessed.

7 6. The general background to these events is by now well known to the parties. Dundalk Racing had made a large scale investment of some €35m. in the development of a new all-weather track. The course had closed in August 2001 and it was scheduled to re-open in August 2007. Dundalk Racing were anxious to recoup some of its capital contribution by levying a charge of €8,000 on each bookmaker who elected to stand at Dundalk. It was clear that such a payment was not provided for by the Pitch Rules, so that such a payment could only be levied where the racecourse in question was a new racecourse. (Since these events occurred the Pitch Rules have themselves been subsequently amended in order to provide that they now also expressly apply to new racecourses and not simply to existing racecourses). Dundalk Racing maintained that the racecourse was a new racecourse for this purpose, something which the bookmakers steadfastly denied.

8 7. By the summer of 2007 it was clear that an impasse had been reached between the parties regarding the entitlement of Dundalk Racing to impose such a levy. The racecourse was scheduled to re-open on Sunday August 26th, 2007 and no agreement had yet been reached regarding the allocation of pitches for bookmakers. So far as Dundalk Racing was concerned, it was imperative that an agreement was quickly reached.

9 8. It was in that vein that Mr. Jim Martin, the Chief Executive Officer of Dundalk Racing, wrote to Mr. Walsh on 9th July 2007 to request him to seek a determination from the Pitch Tribunal as to whether Dundalk was in fact a new racecourse. In his letter Mr. Martin observed:

"…we believe...