Gatien Motor Company Ltd v Continental Oil Company of Ireland Ltd

JurisdictionIreland
JudgeKENNYJ.:,GRIFFIN J.
Judgment Date06 April 1979
Neutral Citation1978 WJSC-SC 1495
Date06 April 1979
Docket Number207/1978,[S.C. No. 207 of 1978]
CourtSupreme Court
GATIEN MOTOR COMPANY LIMITED v. CONTINENTAL OIL COMPANY
LANDLORD AND TENANT ACTS 1931/ 1967
BETWEEN/
GATIEN MOTOR COMPANY LIMITED
Applicant

and

CONTINENTAL OIL COMPANY OF IRELANDLIMITED
Respondent

1978 WJSC-SC 1495

Griffin J.

Kenny J.

Parke J.

207/1978

THE SUPREME COURT

1

JUDGMENT delivered on the 6th day of April 1979by GRIFFIN J.

2

Continental Oil Company of Ireland Limited ("Conocc were at all material times the owners of certain garage premises known as Gatien Service Station, Rathfarnham in the city of Dublin, in which premises the well-known brand of petrol known as "Jet" was sold. By a Lease dated the 15th of October, 1970, Conoco let to Leo Gerard Coady the said premises, together with the equipment listed in the third schedule to the saidLease, for the term of three years from the 6th of February, 1970 subject to the rent of £1,500 per annum and to the covenants contained in the said Lease. The term of the Lease was intentionally and specifically limited to the period of three years so as to ensure that the tenant would not acquire a right to a new tenancy under the above Act of 1931 ("the Act"). From the 6th of February, 1970 to the 5th of February, 1973 inclusive, the tenant carried on the business of a service station in the said premises. He was anxious to obtain a new Lease of the premises and, for that purpose, towards the end of 1972 he had discussions with the representatives of Conoco, and his solicitor was in correspondence with the solicitors for Conoco, and it was made quite clear to him and to his solicitors that Conoco would not consider granting a new Lease unless he vacated the premises for the period of one week at the termination of the term of three years.

3

As Conoco were not prepared to agree the termsof any new Lease until after the tenant had vacated the premises, and as the tenant was concerned that the goodwill of the business being carried on by him in the premises would be endangered if he had to vacate the said premises, it was agreed between the parties, at the request of the tenant and his solicitors that at the expiration of the said term the tenant should be permitted to remain on in the premises as a Caretaker only. A Caretaker's Agreement, dated the 6th of February, 1973, but in fact signed by the tenant on the 5th of February, 1973, was duly entered into by the tenant in pursuance of the aforesaid Agreement, and by that Caretaker's Agreement he acknowledged that he had, on the 6th of February, 1973, been put into possession of the said premises as Caretaker by and for Conoco, and that he was in possession of the said premises and equipment solely as such Caretaker of and for Conoco and not under any contract of tenancy; and he further acknowledged that he had undertaken and agreed and he did thereby undertake and agree with Conoco (inter alia) to take care of thesaid premises and equipment for Conoco and to deliver up the possession thereof to Conoco when required so to do. Before entering into the Caretaker's Agreement the tenant knew, and had been so advised by his own solicitors, that he would not be granted a new Lease of the premises unless he entered into that Agreement and that it was being required in order to prevent him from acquiring rights to relief under the provisions of the Act, and he knew that it was not a tenancy and that under it he was merely a Caretaker.

4

The terms of a new Lease were agreed on the 10th of February, 1973, whereby the said premises and equipment were to be let for a period of three years from the 12th of February, 1973. The tenant was anxious to take the Lease in the name of a Company (Gatien Motor Company Limited) then in the process of formation and the shares of which, when formed, were beneficially owned by him. Due to the delay in the formation of the company, the Lease was not formally executed until the 24th of July, 1973. On the 10thof July, 1975, the Company served notice of intention to claim relief, in pursuance of s. 24 of the Act, giving notice of its intention to claim a new tenancy under Part III of the Act.

5

By notice dated the 29th of March, 1976, the Company applied to the Circuit Court, pursuant to s. 25 of the Act, for an order determining its right to a new tenancy in the said premises. This application was successful and Conoco appealed to the High Court.

6

On the hearing of the appeal, it was submitted on behalf of the Company that the Caretaker's Agreement was in reality a contract of tenancy, and that, as Leo Gerard Coady was in possession of the premises for the relevant period, he was a tenant and not a licensee; and further that if the Caretaker's Agreement did not create a tenancy, the Agreement was one made with the intention of depriving the said Leo Gerard Coady of his right to relief under the Acts.

7

At the conclusion of the evidence, Mr. Justice Murnaghan, by whom the appeal was heard, stated a Casefor the opinion of this Court upon the following two questionsnamely:

8

1. Did the said Caretaker's Agreement create a tenancy?

9

2. If the said Caretaker's Agreement did not create a tenancy is the same null and void under the provisions of s. 42 of the Landlord and Tenant Act 1931upon the ground that it indirectly deprived the applicant of its right to relief sought in these proceedings?

10

The central issue on the hearing of this Case is whether the Caretaker's Agreement created a tenancy. Whether or not the Company would be entitled to a new tenancy under Part III of the Act depends on the relevant provisions of s. 19(1)(a) and (2)(b) of the Act. There was clearly no right to a new tenancy on the expiration of the Lease of the 15th of October, 1970. As this was a Lease for a term of not less than one year, the right to any new Lease did not arise under s. 19 unless the tenement was "during the whole of the three years nextprecedingthe termination of such tenancy, bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination,... was held by the tenant thereof under... a Lease... for a term of not less than one year". Under s. 19(2)(b) it is provided that reference in s. 19 to the termination of a tenancy as a point in time shall be construed as referring, in the case of a tenancy terminating by the expiration of a term of years (as in this case) to the day which is three months before the expiration of such term. In other words, user by the tenant for the purpose of carrying on a business for at least three years and three months prior to the day upon which the Lease expires is necessary before there is a right to a new tenancy. As the Lease of the 15th of October, 1970 was for three years certain, there was accordingly no right to a new tenancy when that Lease expired, and indeed, as found by Mr. Justice Murnaghan, that Lease was expressly limited to the period of three years forthat purpose. In the same way, there would be no right to a new tenancy in respect of the Lease dated the 24th of July, 1973 unless it could be established that the premises were used for the purpose of carrying on a business "by the tenant for the time being thereof" for the whole of the period of three years and three months next preceding the 12th of February, 1976. The Company cannot establish this unless Mr. Coady was a tenant between the 6th of February, 1973 and the 12th of February, 1973.

11

As to the first question, it was argued on behalf of the applicant that, for the period during which Mr. Coady occupied the said premises during the currency of the Caretaker's Agreement, he was in fact a tenant under an implied tenancy on the same terms conditions and covenants as applied in the expired Lease, It was submitted that, as he was, as alleged, in exclusive possession of the premises for that period, he could not have been a Caretaker as exclusive possession made him a tenant. It is not necessary for the purpose of this case to consider whetherthe occupation he enjoyed during that period amounted to exclusive possession because, in my view, on the facts of this case, it is immaterial. Whilst exclusive possession is one of the factors to be taken into account in determining whether an implied tenancy exists, it is not a decisive factor. One must look at the transaction as a whole and at any indications that are to be found in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of landlord and tenant - see Shell-Mex v. ManchesterGarages 1971 1 W.L.R. 612, per Lord Denning M.R. at p. 615; Buckley L.J. at p, 618. Under s. 3 of the Landlord and Tenant Act (Ireland) 1860,(Deasy's Act) the relation of landlord and tenant is deemed to be founded on the express or implied contract of the parties and such relation shall be deemed to subsist in all cases in which there shall be agreement by one party to hold land from or under another in consideration of any rent. As there could be no question of an express contract in this case, theapplicant was driven to alleging an implied contract. In my view, it would be doing violence to language to hold that an implied contract could exist on the facts of this case, and the evidence is coercive in establishing that Mr. Coady went into occupation under a Caretaker's Agreement. In relation to implied tenancies, I would adopt what Finlay P. said in Baumann v. Elgin Contractors, 1973 I.R. 169 at p. 177, where he stated:

"As I understand the legal principles applicable, the true origin of an implied tenancy is that the law implies from the conduct of the parties what is, in effect, a silent agreement that their relationship shall be arranged in a certain contractual fashion"

12

On the facts of this case, there is no room whatever for inferring a contrary silent agreement. The parties negotiated at arms length, both were fully legally advised, and the Caretaker's...

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