Hemani v Ulster Bank (Ireland) Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 20 December 2019
• Neutral Citation: [2019] IECA 331
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2017/307
• Date: 20 December 2019

BETWEEN/

MICHAEL HEMANI

PLAINTIFF/APPELLANT

- AND -

ULSTER BANK (IRELAND) LIMITED

DEFENDANT/RESPONDENT

[2019] IECA 331

Record Number: 2017/307

THE COURT OF APPEAL

Breach of covenants – Damages – Economic loss – Appellant seeking damages – Whether the appellant was entitled to pursue a claim for reliefs for breach of covenants

Facts: The High Court, by judgment and order dated the 18th May, 2017, dismissed the claims of the appellant, Mr Hemani, against his landlord, the respondent, Ulster Bank (Ireland) Ltd, save for the claim that he suffered direct economic loss consequential upon the respondent’s alleged failure to maintain premises which he occupied in Sligo town on foot of an oral periodic tenancy. The orders to strike out or in the alternative to dismiss the appellant’s proceedings, were sought by the respondent primarily pursuant to the inherent jurisdiction of the Court and alternatively under the rule in Henderson v Henderson. The appellant’s notice of appeal encompassed the following grounds: (i) that the respondent misled and confused the Court on the 4th May, 2017 by its reference to the appellant’s affidavit on damages dated the 22nd April 2014, to support its claim of res judicata, implying that the claim on damages had been part of previous proceedings, where in fact damages were specifically excluded from the High Court’s jurisdiction, as demonstrated by the judgment of White J of the 14th May, 2015 and supplemented by the Court transcript; (ii) that the affidavit of the respondent’s solicitor, dated the 16th November, 2016 misled the Court in terms of res judicata as it included irrelevant points on the state of repair of the premises and respective obligations in circumstances where the respondent’s failure to maintain the premises, making it a source of danger and causing damage to the appellant’s business, was never addressed; (iii) that the claim for damages could not have been brought in the Sligo County Circuit Court proceedings as the extent of damage caused to the premises was not fully known at this time and, per the appellant’s statement of claim, the amount claimed in damages would have exceeded Circuit Court margins – the Court in these proceedings was not aware that the appellant was renting a premises that was not fire compliant or that the premises would be condemned as potentially dangerous by the Fire Safety Authority shortly after the proceedings meaning the claim for damages cannot be viewed as falling within the ambit of Henderson v Henderson; (iv) that, by confining the order to direct economic loss only, Barrett J failed to address the ultimate damage incurred – damage to the appellant’s reputation, the loss of opportunity and consequential losses, loss of future earnings, mental distress, depression, inconvenience and interference with the quiet enjoyment of the appellant’s business and its ultimate destruction.

Held by the Court of Appeal (Whelan J) that the appellant would succeed to a limited extent only in his appeal. Whelan J held that the appellant was entitled to pursue – in addition to the claim permitted by the High Court judge – a claim for reliefs, including damages, for breach of express or implied covenants; this includes the covenant to repair. Further, Whelan J held that the appellant was entitled to pursue his claim for damages for breach of covenant for quiet enjoyment of the premises. Whelan J held that the appellant must confine these claims to the period prior to the date White J determined that it was reasonable for him to go back into possession, the 7th January, 2015. Whelan J directed that the appellant deliver an amended statement of claim confining his claim to the specific grounds identified above in addition to the ground that he suffered direct economic loss as a consequence of the respondent’s alleged failure to maintain the premises. Whelan J held that the amended statement of claim should be served within 28 days of the perfecting of the order of the Court of Appeal and should comply with the rules of the Superior Courts and not be unduly prolix.

Whelan J held that she would dismiss all other grounds of appeal.

Appeal allowed in part.

JUDGMENT of Ms. Justice Máire Whelan delivered on the 20th day of December 2019

Introduction

1 This appeal arises from the judgment and order of the High Court dated the 18th May, 2017 which dismissed the appellant's claims against his landlord, the respondent, save for the claim that he suffered direct economic loss consequential upon the respondent's alleged failure to maintain premises which he occupied in Sligo town on foot of an oral periodic tenancy. The orders to strike out or in the alternative to dismiss the appellant's proceedings, were sought by the respondent primarily pursuant to the inherent jurisdiction of the Court and alternatively under the rule in Henderson v. Henderson.

Factual and procedural background

2 The appellant, a litigant in person, was granted an oral periodic tenancy in or about May 1978 by the respondent's predecessor over part of the 2nd Floor in a building situate at the corner of O'Connell and Grattan Street known as 52 O'Connell Street, Sligo (“the premises”). He occupied the said premises for the purpose of carrying on a printing business. Ownership of the premises subsequently passed to First Active plc. The respondent, having taken over from First Active plc, became owner of the premises in or around 1990 and thereafter the relationship of landlord and tenant subsisted between the parties.

3 The appellant alleges that since 2006, the respondent has failed to carry out essential repairs to the premises and that this failure impacted negatively on his printing business while the respondent claims that the appellant acted unreasonably by preventing access to the property, frustrating necessary repairs including those necessitated by the terms of a Fire Safety Notice.

4 An initial notice to quit was served on the appellant in 2003. A subsequent notice to quit was served on or about the 28th March, 2006. An Ejectment Civil Bill for Overholding was issued by the respondent on or about the 1st August, 2006 returnable before Sligo Circuit Court.

5 The appellant served on the respondent a Notice of Intention to Claim Relief pursuant to the provisions of the Landlord and Tenant (Amendment) Act, 1980, as amended, on the 27th November, 2006 and issued a Landlord and Tenant Civil Bill on the 5th December, 2006 seeking, inter alia, that the Court fix the terms of a new statutory tenancy under Part II of that Act. That action was ultimately heard by Judge Flanagan at the Circuit Court in Sligo on the 15th March, 2013 whereupon an order was made granting the appellant a new lease and fixing the terms of the said tenancy pursuant to the provisions of the 1980 Act for a term of 17 years from the 16th May, 2006 at a yearly rent of €6,100 together with a direction that the tenant be responsible for internal repairs and the landlord be responsible for external repairs and granting the appellant 50% of his costs.

6 The appellant appealed the Circuit Court order by notice of appeal dated the 25th March, 2013.

7 Subsequently, pending hearing of the appeal, a Fire Safety Notice pursuant to s. 20 of the Fire Safety Act, 1981 was served on the respondent on the 4th July, 2013 by the Fire Safety Authority, Sligo Fire Service, in relation to the entire premises. The notice identified the premises as a potentially dangerous building as defined by s. 19 of the 1981 Act and directed the respondent, as owner, to carry out essential works to fulfil the Fire Safety Authority's requirements including provision of a safe and effective means of escape. The execution of these repairs appears to have exacerbated tensions between the parties.

8 It is clear that there was some urgency attached by the Fire Safety Authority to the works being carried out. At one point the respondent had indicated the 7th January, 2014 as the likely start-date for the said works with an anticipated completion date of February, 2014. The relationship between the parties was characterised then – as now – by a high degree of mistrust with inevitable attendant mutual misunderstandings. The appellant sought that structural repairs, which he considered were necessitated by the damage caused to his demise from ingress of water from leaking of the building roof over the years, were also required to be carried out in addition to the works necessitated by conditions in the Fire Safety Notice.

9 The appellant's Circuit appeal came before the High Court on Circuit in Sligo on the 9th May, 2014, when Mr. Justice Barry White accepted an undertaking given by the respondent that it would carry out structural repairs, that the appellant would move out of the premises, that certain pieces of large equipment, the property of the appellant and in use in connection with his printing works, would be stored safely in the premises during the carrying out of the works and that any rent due during the construction phase would be suspended. Further, the appellant was to be paid compensation during this period while he was out of the premises, together with certain other removal and advertising costs. The Court note stated: “Landlord will do the works needed.” Counsel for the respondent is noted as having stated: “[Plaintiff] will be compensated for loss”. The Court note continues: “Undertakings given by both sides (not sworn) … Works will take 3-4 weeks to start & 6-8 weeks to complete”.

10 The appellant moved out and works were commenced around 24th June, 2014 and carried out to the premises. A dispute subsequently arose between the parties as to whether and when the premises were ready and fit for re-occupation by the appellant. The appellant further alleged that damage had been caused to his fixtures/equipment stored in the premises during the refurbishment works.

11 The...