Gradual Investments Ltd v Grant

• Jurisdiction: Ireland
• Judge: Mr. Justice Mark Heslin
• Judgment Date: 02 July 2024
• Neutral Citation: [2024] IEHC 398
• Court: High Court
• Docket Number: RECORD NO. 2020/215S

Between

Gradual Investments Limited

Plaintiff

and

Fiona Grant

Defendant

[2024] IEHC 398

RECORD NO. 2020/215S

THE HIGH COURT

Judgment ofMr. Justice Mark Heslindelivered on the 2nd day of July 2024

Introduction

1 . This case involves a claim by a landlord against a tenant. The proceedings commenced by way of a summary summons which issued on 10 August 2020. Following the plaintiff's application for summary judgment, Bolger J delivered a decision on 25 July 2022 directing that the matter should proceed to plenary hearing. The summary judgment application ran for two days and was determined in accordance with principles derived from a range of well-known authorities (including Aer Rianta CPT v Ryanair Limited[2001] 4 I.R. 607; and Harrisrange Limited v Duncan[2003] 4 I.R. 1).

2 . At para. 24 of Bolger J's decision she stated: “Given my findings about the need for the plaintiff's claim for historic unpaid rent to go to plenary hearing, it is not necessary for me to determine whether the plaintiff's claim for ongoing arrears of rent beyond July 2020 is properly made out in the summary summons”. Matters have since moved on, in that a statement of claim has been delivered; particulars raised and replied to; discovery made; a defence delivered and submissions exchanged.

3 . During the hearing before me, Mr. Buckley S.C. represented the plaintiff and Mr. McGarry S.C. represented the defendant. I want to express my thanks to both learned counsel for the clarity of their submissions, oral and written, all of which I have carefully considered.

4 . As counsel for the plaintiff submitted when opening the case, it is the legal implications of the facts rather than significant factual disputes which give rise to the need for a determination by this court.

5 . Having carefully considered all the evidence before the court (comprising of sworn affidavits; the exhibits thereto; oral testimony; and documents either admitted without formal proof or proved by the relevant author) the following chronology emerges.

The Lease

6 . A commercial unit known as “Unit 3, The Village, Stepaside, Dublin 18” (“Unit 3” or “the Property”) was demised to the defendant for a 35 year term commencing 27 July 2009, by means of a lease dated 14 October 2009 made between Richmond Properties Ireland Limited (“Richmond”) of the one part and the defendant of the other (“the Lease” or “the 2009 Lease”).

7 . In the manner I will presently come to, the landlord's interest in the Lease was subsequently assigned to the plaintiff on 6 March 2014. On the front page of the Lease, a line has been drawn through the words “upwards only” and it reads:

“LEASE

— of —

COMMERICAL UNIT NUMBER 3 (DOCTOR'S SURGERY), THE VILLAGE, STEPASIDE, CO. DUBLIN

Term: 35 years from 27th day of July 2009

Rent Review: Every five years from ( upwards only) 27th July 2014

Initial Rent: €50,000.00 plus VAT per annum”

8 . At this juncture, it is useful to note certain provisions in the Lease, beginning with clause 1.15 which defines the “Initial Rent” as meaning €50,000.00 plus VAT per annum.

9 . Clause 1.35 defines “Quarterly Gale Days” as meaning the 1 ^st of January, the 1 ^st of April, the 1 ^st of July and the 1 ^st of October in every year of the term.

10 . Clause 3 on internal page 11 of the Lease begins as follows:-

“3. DEMISED AND RENTS

The Landlord in consideration of the rent herein reserved (including the increases thereof which may arise as hereinafter provided) and the covenants on the part of the Tenant herein after contained HEREBY DEMISES unto the Tenant the Demised Premises TOGETHER WITH the ancillary right and easements specified in the Second Schedule but excepting and reserving the rights and easements specified in the Third Schedule TO HOLD the Demised Premises unto the Tenant from and including the Term Commencement Date for the Term SUBJECT TO all rights, easements, privileges, covenants, restrictions and stipulations of whatsoever nature now affecting the Demised Premises YIELDING AND PAYING unto the landlord during the term:

3.1 Yearly and proportionately from the Rent Commencement Date the Initial Rent and from and including each Review Date (as defined in the Fourth Schedule), suchyearly rent as becomes payable under the Fourth Schedule, or if higher the rent payable during the preceding period increased by a factor equal to the increase in the Consumer Price Index published by the Central Statistics Office (or if there shall be no index of that name or nature at that time, the newest equivalent index) over the preceding period and in every case the same is to be paid in the manner notified from time to time by the Landlord by equal quarterly payments in advance on the Quarterly Gale Days…”

11 . It is common case that the Lease which this court has been asked to interpret is one in which clause 2 of the Fourth Schedule contains typed wording through which lines have been drawn (i.e. ‘struck out’). In addition, the word “ No” has been added, in manuscript, opposite the following:-

“The rent first reserved by this Lease shall be reviewed at each Review Date in accordance with the provisions of this Schedule and, from and including each Review Date, the rent shall equal the higher of either the rent contractually payable immediately before the Relevant Review Date or the Open Market Rent on the Relevant Review Date, as agreed or determined pursuant to the provisions of this schedule.”

12. Mr. Dualta Moore is the owner and a director of the plaintiff, his wife also being a director. He gave uncontested evidence that the plaintiff company was set up in 2014. He and his wife put in all their personal savings. They obtained bank borrowings and purchased a number of commercial units in Stepaside, including Unit 3. It is common case that Mr. Moore had no involvement in the property or the Lease, as of 2009.

13 . In cross examination, Mr. Moore was asked about the foregoing wording and his evidence was to say “I don't know who struck it out” adding that “I wasn't there for the event”. This is uncontested evidence.

Pre-Lease negotiations

14 . Exhibit “CC1” to the affidavit sworn by the defendant on 25 July 2021 comprises (i) a copy letter dated 24 July 2009 which was sent by her solicitors, Messrs. O'Brien Lynam, to the solicitors for Richmond Properties; and (ii) a 27 July 2009 response by email. Both communications are headed “Subject to Lease/Lease Denied”. The 24 July 2009 letter states that arrangements had been made for the execution of the Lease the following Monday. Leaving aside the fact that the author of neither communication gave evidence to prove their contents, it is uncontroversial to say that this communication comprises of negotiations which took place prior to any Lease being executed.

15 . When these documents were raised with Mr. Moore in cross examination, counsel for the plaintiff made clear that it is not accepted that documents comprising of negotiations are admissible in construing the Lease. Counsel for the defendant took no issue with that submission.

Parol evidence rule

16 . The foregoing would seem to reflect the ‘parol evidence rule’ which, notwithstanding its many exceptions, means that extrinsic evidence is not admissible for the purposes of varying, contradicting or subtracting from the terms of a document [see Contract Law Paul A. McDermott; Tottel Publishing 2006; para. [9.10], p. 354].

17 . Keeping the foregoing in mind, the 24 July 2009 letter indicated inter alia that the tenant wanted the upward only rent review clause to be deleted, whereas the 27 July 2009 response “ noted” this. Leaving aside the significant issue of the absence of the authors, it seems to me that this court's task is to ascertain the objective meaning of the Lease in front of it. In other words, even if the authors of the foregoing exchange had given evidence regarding what was said, be that orally or in writing, prior to the execution of the Lease in 2009, the contract which this court must interpret is the Lease in which:-

• (i) a single clause has been ‘struck out’, namely, what had originally been clause 2 of the Fourth Schedule (internal page 53);

• (ii) a single word “ No” has been added opposite the clause ‘struck out’; and

• (iii) no other words have been added; and

• (iv) no other words have been ‘struck out’ (apart from the words “upwards only” on the title page of the Lease).

18 . Not only is it the case that this court has not had oral evidence from anyone involved in the (i) negotiation; (ii) amendment; and/or (iii) execution of the Lease, even if it had heard such oral evidence, the task would be the same, i.e. to ascertain the meaning of the Lease. At the risk of stating the obvious, this involves the court looking at all the words in the Lease which have not been ‘struck out’ and considering them in the context of the entire document.

19 . Remaining with the Fourth Schedule, the “struck out” wording is immediately followed by a clause which states:-

“3.Agreement or determination of the reviewed rent

The Open Mark Rent at any Review Date may be agreed in writing at any time between the Landlord and the Tenant but if, for any reason, they have not so agreed, either party may (whether before or after the Relevant Review Date) by notice in writing to the other require the open market rent to be determined by the surveyor.” (emphasis added)

2009 Side Letter

20 . It appears that when the defendant took on the Lease in 2009, a side letter (comprising an enclosure in a 5 October 2009 letter from O'Brien Lynam Solicitors to the defendant) stated inter alia:-

“1. The rent for the first five years will be abated/payable as follows:-

Year 1 €35,000 plus VAT;

Year 2 €40,000 plus VAT;

Year 3 €45,000 plus VAT;

Year 4 €45,000 plus VAT;

Year 5 €50,000 plus VAT”

21 . Bearing in mind that the commencement date was 27 July...