Gerard Gannon v Parkfly Ltd and Last Bus Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 15 January 2021 |
| Neutral Citation | [2021] IEHC 36 |
| Docket Number | 2020/250 S |
| Court | High Court |
| Date | 15 January 2021 |
[2021] IEHC 36
2020/250 S
THE HIGH COURT
JUDGMENT of Mr. Justice Quinn delivered on the 15th day of January, 2021
The plaintiff's claim is for possession of premises at Turnapin Great, Swords Road, Santry, County Dublin, and for judgment against the first named defendant in the amount of €2,185,204.91 for rent payable by the first named defendant pursuant to a lease of the premises, and for mesne rates. The defendants have consented to orders for possession. This judgment relates to the plaintiff's application for summary judgment in respect of rent.
The first named defendant opposes the application on two grounds:-
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(1) That the calculation of the rent, part of which is referable to turnover in accordance with a formula contained in the lease, is erroneous and that, if anything, it has overpaid rent to the plaintiff.
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(2) That the matter of the calculation of the rent is now in dispute between the parties and ought to be referred to an independent expert in accordance with the provisions of a clause in the lease providing for such a referral.
I have concluded that the plaintiff is entitled to judgment for the amount claimed of €2,185,204.91.
For a term from 1 July, 2013, to 4 October, 2018, the plaintiff granted to the first defendant a lease of the carpark premises, referred to as “The 2014 Lease”.
On 17 May, 2019, the plaintiff executed a lease of the premises to the first named defendant for a period of twelve months from 5 October, 2018, to 4 October, 2019. This lease is referred to as “The 2019 Lease” or “The Lease” and was on terms broadly similar to the 2014 Lease.
The leased lands were used by the first named defendant to operate the business of a car park used principally by persons using Dublin Airport.
I shall return later to the relevant terms of the lease itself.
On 17 May, 2019, the parties also entered into a Deed of Renunciation with a view to eliminating, says the plaintiff, any doubts concerning the defendant's potential rights of possession or renewal in respect of previous leases.
There was also entered into on 17 May, 2019, a Licence Agreement whereby the plaintiff licensed to the second defendant a property adjoining the leased premises consisting of a bungalow which was used by the second named defendant as an office. A Deed of Renunciation was also entered into in respect of the bungalow premises.
The second named defendant is under the same ownership and control as the first defendant, and operates a bus service between the car park and the airport.
The lease was stated to be for a term of twelve months from 5 October, 2018, to 4 October, 2019.
The “ Permitted User” was defined as “ the use of the Demised Premises as a carpark”.
The rent payable was described in detail in the Fourth Schedule to the Lease.
The Fourth Schedule contained a formula whereby the rent payable was a combination of a Base Rent of €1.5 million per annum payable monthly in advance and a Turnover Rent.
The Turnover Rent was an amount equating to 35% “of the turnover in a turnover period together with VAT thereon less the Base Rent”. The Fourth Schedule contained also a worked example of a calculation of Turnover Rent.
The definition of term “ Turnover” is of central importance in the proceedings:-
“Means the gross aggregate of all sums of money or other consideration received or receivable from the user of the Demised Premises including but not by way of exception:
(i) for all goods and products sold, leased, hired or otherwise disposed of in at or from the Demised Premises; and/or
(ii) from all services performed, sold or rendered by the Tenant and from all business of any nature whatsoever conducted in, at or from the Demised Premises; and
(iii) all sums received or receivable by the Tenant for the use and/or occupation of the Demised Premises or any part thereof by any other person or concessionaire subject to the covenants and conditions in this Lease.
(iv) And Without Prejudice to the generality of the foregoing shall also include:-
(a) all amounts received or receivable from orders which originated or were received or accepted and performed at or from the Demised Premises notwithstanding that payment is made to a person other than the Tenant
(b) …
(c) all amounts received or receivable from sales and services which the Tenant in the normal and customary course of the Tenant's operations would or should credit or attribute to the Tenant's business on the Demised Premises
(d) ….”
The term “ Turnover Certificate” is defined as follows:-
“Means a Certificate from the Tenant's Auditors in a format to be approved by the Landlord (acting reasonably) certifying the Turnover for the turnover period.”
The Fourth Schedule contained provisions for the payment of Interim Turnover Rent based on Interim Turnover Certificates, payment of the Turnover Rent itself within 28 days of the expiry of Turnover Periods, obligations on the tenant to maintain accounts and records to be accessible for inspection by the landlord and obligations to furnish such information and assistance to the landlord as may be reasonably required for the purpose of “ verifying the veracity of the Turnover Certificates.”
Paragraph 1.6 of the Fourth Schedule is a provision for referral of a dispute to an expert. I refer to it in more detail at paragraph 108.
On 27 August, 2019, the plaintiff's solicitors, Smith Foy & Partners, wrote to the first defendant reminding it that the 2019 Lease terminated on 4 October, 2019. They informed the defendant that as of 6 August, 2019, there were arrears of rent due and owing in the sum of €1,927,984.17.
They also stated that their client would be making contact in the weeks prior to the expiry date of the Lease with a view to carrying out an inspection of the property and identifying any breaches of covenant and conditions and, if necessary, preparing a schedule of dilapidations.
On the same day Smith Foy wrote also to the second named defendant reminding it that the licence agreement for the bungalow terminated on 4 October, 2019 and that the premises must be vacated on or before that date.
On 6 September, 2019, Mason Hayes & Curran replied to Smith Foy on behalf of the first named defendant.
In this letter, Mason Hayes & Curran denied that there were any arrears of rent due in respect of the 2019 Lease. They stated that arrears of rent in the amount of €1,927,984.17 referred to in the letter of Smith Foy related to the first named defendant's occupancy of the property in respect of periods prior to 5 October, 2018, and would be dealt with in due course.
Mason Hayes & Curran also expressed their client's surprise at the reference to a schedule of dilapidations and stated that their client had been proceeding on the basis that the plaintiff would enter into a new tenancy with it. They gave as reasons for this expectation, representations which they claim had been made in a course of dealing over a period of fifteen years that its tenancy would be renewed, that the first named defendant had worked over a long number of years to build up a successful and profitable carpark business at the property, which it would not have made sense for them to do if the plaintiff could simply terminate the lease and potentially takeover that business.
Mason Hayes & Curran then indicated that if the plaintiff were to refuse to renew the tenancy, this would lead to reduced parking capacity at Dublin Airport and the elimination of effective competition which they stated would raise issues for the plaintiff “and his lenders” under the Competition Act, 2002.
They also stated that they had continued to take bookings beyond 4 October, 2019, and that if the tenancy was not renewed approximately 60 jobs would be lost through redundancies. They then requested the draft of a new lease and stated that any refusal by the plaintiff to enter into a new tenancy would be challenged by them “ through court proceedings if necessary”. No such proceedings were issued.
On 9 October, 2019, Smith Foy replied to Mason Hayes & Curran refuting the claims made.
On 3 April, 2020, Smith Foy wrote to Mason Hayes & Curran notifying them that they were instructed that the amount due in respect of the 2019 Lease, now expired, was €2,185,204.91 and a statement was attached.
On 17 April, 2020, Mason Hayes & Curran replied, expressing their client's surprise at the claim for arrears and stating that this was incorrect. They continued:-
“Our client's clear position is that not only are there no arrears of rent due pursuant to the terms of the lease dated 17th May 2019 up to the end of October 2019 but rather, our client has in fact overpaid in the sum of approximately €400,000.”
No basis for this estimate of an overpayment was stated in that letter.
On 30 April, 2020, Smith Foy replied stating that they had been instructed to issue proceedings for recovery of the outstanding monies due.
On 10 July, 2020, Smith Foy wrote again noting that the defendants remained in occupation of the premises without making any continuing payments. They referred also to details of the turnover rent pursuant to the Fourth Schedule of the Lease furnished to their client on 27 March, 2020. This was a reference to a Turnover Certificate signed by the defendant's auditor, BDO, on 23 March, 2020.
On 24 July, 2020, Mason Hayes & Curran replied stating that their client was surprised at the threat of proceedings and making a number of further points which can be summarised as follows:-
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(1) Alleging that the plaintiff was “deliberately and opportunistically taking advantage of the COVID-19...
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