Friends First Managed Pension Funds Ltd v Smithwick
| Jurisdiction | Ireland |
| Judge | Mr. Justice Mac Eochaidh |
| Judgment Date | 06 April 2017 |
| Neutral Citation | [2017] IEHC 226 |
| Court | High Court |
| Docket Number | [2013 No. 1648 S.] |
| Date | 06 April 2017 |
[2017] IEHC 226
THE HIGH COURT
JUDICIAL REVIEW
Mac Eochaidh J.
[2013 No. 1648 S.]
Landlord & Tenant – Non-payment of rent – Subletting – S. 7 of the Deasy's Act – Surrender of tenancy by act
Facts: The plaintiff sought an order for summary judgment against the defendant for payment of rent, insurance, interest and service charges in relation to the demised premises against the defendant. The defendant submitted that after vacating the said premises, he allowed the third party to occupy the said premises with consent from the predecessor-in-title of the plaintiff. The key issue arose about the nature of the defendant's tenancy. The plaintiff argued that the defendant made an assignment of the balance term of the lease to the third party while the defendant claimed that it was the surrender of the tenancy.
Mr. Justice Mac Eochaidh dismissed the proceedings filed by the plaintiff. The Court pointed out that the acts of parties would amount to surrender in four situations namely, delivery of possession of the demised premises to the landlord and its acceptance thereof; adoption of position by tenant which was inconsistent with his tenancy; acceptance of a new lease by the tenant; and admission of new tenant made with privity and consent of former tenant. The Court found that in the present case, the defendant vacated his premises and stopped paying the rent and thereafter allowed the third party to occupy the said premises with consent from the prior landlord. The Court held that the defendant surrendered his lease by his conduct, which was endorsed by the prior landlord.
By summary summons of the 21st May, 2013, the plaintiff claimed judgment for monies due in respect of rent, insurance, interest and service charges commencing with an unpaid invoice of the 1st April, 2011. Updated particulars of loss were delivered on the 21st of September, 2016, and the balance said to be due is now €189,736.80.
The plaintiff is the successor in title to Friends Provident Life Office with whom the defendant entered a leasehold agreement for the second floor of Duke House on Duke Lane in Dublin for thirty-five years, commencing on the 27th of May 1987.
A defence was filed on the 8th of May, 2014. The essential element of the defence was that:-
'...in or about 2004 Mr Robert Neil of Duke House Property Limited, the agent of Friends Provident Life Office, being the Plaintiff's predecessor in title, requested that the Defendant permit Mr Thomas Kennedy and/or A.T. Uniform Limited to occupy the demised premises. In consideration of Mr Thomas Kennedy and/or A.T. Uniform Limited taking over the lease of the demised premises for the remaining years of the Lease the Defendant consented to the request. The consent for the aforementioned assignment of the Lease was given on behalf of and with the authority of the Plaintiff's predecessor in title.'
A third party notice was served on A.T. Uniform Ltd. where the defendant stated in the affidavit grounding application for same:-
'...in or about 2004 this deponent was contacted by the then landlords agent, Mr Robert Neil, of Duke House Properties Limited to enquire as to whether I would permit the longstanding tenant of the ground floor and first floor of the building, Mr Thomas Kennedy, a Director of A.T. Uniform Limited, to occupy the second floor of the building. I say that in or about May 2004 this deponent agreed to permit Mr Kennedy to occupy the second floor of the building.'
In reply to the defence, the plaintiff pleads that no valid assignment of the defendant's lease took place, as required by s. 7 of Deasy's Act. Duke House Properties enjoyed the landlord's interest in the lease for many years but surrendered it to the plaintiff in 2009. In the course of that transaction, requisitions on title were raised and Mr. Neill and Duke House Properties were asked who the subtenants were, and Mr. Smithwick was identified as the subtenant of the second floor of the building.
The plaintiff called two witnesses (initially) Ms. Rowena Crowley and Mr. Desmond Denehy, both employed by the plaintiff as portfolio managers. Ms. Crowley gave evidence that she dealt with the 'Duke House' file since Friends First's acquisition of the property. Evidence was given that the plaintiff's predecessor in title surrendered its lease in 2009 and, therefore, any subtenants became Friends First's direct tenants. According to Ms. Crowley, at that time it was Friends First's understanding that they had acquired the 1987 lease with the defendant who became their tenant. In response to questions from the court, Ms. Crowley gave evidence that to the best of her recollection the defendant was served with formal notice of the change in landlord. Thereafter, the plaintiff commenced invoicing the defendant for monthly rent of €3040. On or about April 2011, an issue arose regarding arrears and Ms. Crowley gave evidence that an agent was appointed by Friends First to pursue arrears directly with the defendant. The witness gave evidence that she was not aware of any application by the defendant to assign or underlet the lease, in accordance with clause 2.21 of the lease. At the time when Friends First acquired its interest in the lease, it had no notification of any application to assign having been made by the defendant.
The plaintiff's second witness, Mr. Denehy, gave evidence that Friends First received a copy of all the leases and subleases in respect of Duke House during the acquisition period. To the best of his memory, there were either none or quite minor arrears on the account, and no documentation regarding assignments or subletting were received.
The defendant gave evidence. He repeated the tenor of the defence advanced in the pleadings and on affidavits. He explained that the building was divided into three tenancies. The third floor of the building was occupied by Duke House Properties Ltd. and Mr. Neill. The second floor was occupied by the defendant originally. The basement, ground floor and first floor were occupied by a retail enterprise entitled Alias Tom owned by a corporate entity of the same name. Mr. Kennedy apparently was the principal shareholder of Alias Tom up until the year 2000. Thereafter, he remained as a consultant. Sometime in 2003 the defendant, who is a solicitor, vacated the second floor of the building when he joined a solicitor's practice elsewhere in the city. For approximately a year the premises lay vacant. The defendant's evidence is that he was invited by Mr. Neill to permit Alias Tom Ltd. to occupy the second floor of the premises. Mr. Smithwick's evidence was that he was willing to accommodate this request provided Alias Tom took over all obligations.
The court was concerned to hear this evidence and ultimately permitted the defendant to amend his defence to reflect a claim that there had been a surrender of his tenancy by act or operation of law in accordance with s. 7 of Deasy's Act 1860 rather than an assignment as originally pleaded The court was also concerned as to how the plaintiff came to acquire its predecessor's interest without any notice of an arrangement, to use a neutral phase, whereby Mr. Kennedy and his enterprises was permitted to occupy the second floor.
Having regard to these developments, a further hearing of this case was scheduled and additional evidence was called. Evidence was led about the 'due diligence' process whereby the plaintiff considered the title it was acquiring. Replies to requisitions on title revealed that no notices had been served in relation to any subleases. In addition, correspondence exchanged between Friends First Managed Pension Funds Ltd. and Duke House Properties Ltd. on the 18th of November, 2009, indicated that Paul Smithwick was the tenant on the second floor, and Alias Tom Ltd. was the tenant on the basement, ground floor and first floor.
The plaintiff proved that on the 25th of November, 2004, the defendant and Alias Tom Ltd. entered a sublease for the second floor of the premises from the 26th of November, 2004, to the 24th of June, 2005, together with an option to take an assignment of the defendant's unexpired term - which option was not exercised by Alias Tom Ltd. The court accepts the submission by the plaintiff that this transaction was not any form of surrender by the defendant of his thirty-five year lease for the second floor.
Mr. Kennedy gave evidence and said that a company called A.T. Uniform Ltd., which he controlled, moved into the second floor of the building 'after the six month short-term let to Alias Tom.' Mr. Kennedy said:-
'Alias Tom no longer needed it and I was a director of A.T. Uniform. So A.T. Uniform at that point continued to pay rent to Mr. Neill until Mr. Neill left the premises in 2009.'
In further important evidence given by Mr. Kennedy the court asked:-
'And by the time you had ended your occupation of the premises it was A.T. Uniform in occupation?
Mr. Kennedy: Yes
Judge: Did you ever tell Mr. Smithwick that there had been a change between the occupation by somebody called Alias Tom and changing it to A.T. Uniform?
Mr. Kennedy: I can't recall telling him directly but it was known by all that it was A.T. Uniform. We also wrote to him and that is where the cheques were going from the A.T. Uniform's account to Mr. Smithwick. But Mr. Smithwick would have called by the shop on occasion anyway.
Judge: The cheques were going directly to Mr. Neill?
Mr. Kennedy: At the latter point, sorry. From 2009 Mr. Smithwick would have been very aware but I am sure he was aware before that.
Judge: When did A.T. Uniform start sending money to Mr. Neill?
Mr. Kennedy: In November, I think, 2004.
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