Irish Shell and B. P. Ltd v John Costello Ltd

JurisdictionIreland
JudgeGRIFFIN J. (O'Higgens),KENNY J.:
Judgment Date10 April 1981
Neutral Citation1981 WJSC-SC 751
CourtSupreme Court
Docket Number(170/1980)
Date10 April 1981
IRISH SHELL & B.P. LTD. v. JOHN COSTELLO LTD.
IRISH SHELL AND B.P. LIMITED
v.
JOHN COSTELLO LIMITED
High - 18.3.80

1981 WJSC-SC 751

O'Higgins C.J.

Griffin J.

Kenny J.

(170/1980)

THE SUPREME COURT

1

JUDGMENT delivered on the 10th day of April 1981by GRIFFIN J. (O'Higgens)

2

The plaintiffs are and were at all material times the owners of the premises known as the Friarsland Service Station at Roebuck Road, Clonskeagh, Dublin. In the said premises, the defendants and their predecessor John Costello have since 1967 carried on the business of garage proprietors engaging in the sale, repair and service of motor vehicles, and the sale of petrol, oil, tyres, batteries and such other motor accessories as are usually available for sale in garages. John Costello and the defendants occupied the premises under successive agreements made with the plaintiffs in 1967, 1968, 1970, 1971, 1973 and 1974. This appeal isconcerned with the nature of these agreements, and in particular with that made in 1974.

3

The first agreement between the parties was made in 1967. No copy of that agreement is now available, but it is agreed that it was in similar terms to that of the 18th of July 1968. By that agreement, the plaintiff (called "the Company") agreed to let and John Costello (called "the Hirer") agreed to hire the (petrol) tanks and pumps, and the machinery goods and articles described and set out in the schedule to the agreement (called "the said equipment") for one year from the 1st of July 1968, subject to the provisions and conditions for determination of the agreement thereinafter set out. The Hirer agreed to pay the sum of £375 for the hire of the said equipment for the said period of one year by equal quarterly payments of£93.15.0 each.

4

By clause 3, the Company licensed and authorised the Hirer during the said period of one year "free of any payment by the Hirers to the Company to enter upon (the said premises) for the purpose only of theHirerpersonally using so much of the said premises as may be required by the Hirer for using thereon the said equipment and for carrying on personally thereon the business of the reception, storage, sale and distribution of the products marketed by the Company and any business ancillary thereto in accordance with the covenants in that behalf by the Hirer hereinafter contained".

5

Under clause 4, "in consideration of the said Agreement and Licence" the Hirer agreed with the Company during the said period to comply with the provisions of 28 sub-clauses or covenants, many or most of which would be found in a lease or tenancy agreement. I propose to refer only to those which are of particular relevance in thisappeal.

6

Under clause 4 (e), the Hirer covenanted to permit the Company or its servants or agents at all reasonable times to inspect the said equipment for the purpose of viewing the state thereof or for any other reasonablepurpose.

7

Under clause 4 (g), there was a covenant to use thesaid equipment and so much of the said premises as shall be required solely for the reception, storage, sale and distribution personally by the Hirer of products supplied by the Company to the Hirer and for other purposes ancillary thereto and to use his best endeavours to develop and extend the said business and the sale of the Company's products in such manner as the Company should from time to time direct.

8

Clause 4 (i), provided that the Hirer covenanted not without the previous written consent of the Company to carry on or permit or suffer to be carried on in or upon the said premises or any part thereof any trade or business whatsoever other than that to be personally carried on by the Hirer of a petrol filling station, motor engineer, motor garage, dealer in motor tyres, batteries and accessories. Under this covenant, the Hirer was not prohibited from carrying on the business usually carried on by garage proprietors, but under clause 3 he was licensed only to use so much of the premises as might be required for using theequipmenthired to him and for the sale of the plaintiffs" petrol and oils and any business "ancillary", i.e. subservient or subordinate, thereto. The sale of petrol and oil is ancillary to a motor garage business, but it does not appear to me that carrying on a full garage business could be described as being ancillary to the sale of petrol and oil.

9

Under clause 4 (q), the Hirer covenanted not to assign or charge the benefit of the Agreement or part with the possession of the said equipment or any part thereof or the right of entry on and user of the said premises. Clause 4 (r) contained a covenant not to mal any alterations or erect any buildings or facilities on the said premises without the consent in writing of the Company. Clause 4 (x) was a covenant not to interfere in any way with the possession and user by the Company of the said premises. This clause was an express recognition by the Hirer that the Company retained possession of the premises. Clause 4 (aa) was a covenant to pay the Company cash on delivery for allpetroleum products delivered by the Company to the premises. When the petrol was delivered, and paid for, it became the property of the operator of the site to be used in connection with his business and not with the Company's business.

10

Under clause 5, the plaintiffs covenanted to insure the equipment and premises, to pay all rent, rates and outgoings, and to keep the premises and equipment in repair.

11

Because of the important part clause 6 played in the argument, I propose to quote it in full. It is in the following terms.

"PROVIDED ALWAIS and it is HEHEBY agree and declared that if any of the said quarterly payments or any part thereof shall remain unpaid for fourteen days after any of the days when the same ought to be paid or if the Hirer shall commit any breach of any of the Agreemen on his part herein contained or if the Hirer shall die or commit an act of bankruptcy or become a bankrupt or shall make any arrangement or composition with his creditors or suffer anyexecution to be levied on his goods or if the Hirer being a Company shall enter into liquidation whether compulsory or voluntary or have a Receiver appointed over its assets then and in any such case this Agreement shall thereupon absolutely determine (but without prejudice to the rights of action of either party by reason of any antecedent breach of any of the Agreements herein contained) and thereupon the Hirer or his personal representative shall forthwith permit the Company to resume possession of the said equipment and shall forthwith cease to enter upon or use the said premises or any part thereof and the Licence hereinbefore in that behalf contained shall be revoked"

12

This proviso is effectively the proviso to be found in a lease providing for re-entry.

13

Clause 8 contained another proviso which in my view is very important. It is as follows:-

"PROVIDED ALSO and it is HEREBY FURTHER AGREED by and between the parties hereto that nothing herein contained shall be deemed to confer upon the Hirer the right toexclusive possession of the said premises or to create the relationship of Landlord and Tenant or of Partners between the Company and theHirer".

14

On the expiration of the term of one year provided for in that Agreement, John Costello continued in occupation on the same terms (save as to the amount of the payments) as those contained in the 1968 Agreement, and so continued until the end of the year 1971. In the meantime, significant changes had taken place. The business carried on by Mr. Costello had prospered to the mutual benefit of himself and the plaintiffs. At his request, the plaintiffs during the year 1971 erected on the premises and equipped an extensive workshop which included twin hoists or lifts, a quick oil changer, a tyre changer, and greasing equipment. John Costello had formed a company, John Costello Ltd., in February 1971, the only shareholders being himself and his wife. On the 29th of November 1971 the plaintiffs entered into an agreement with this Company. This agreement wasexpressed to be for the hire of the equipment in the schedule for one year from the 1st of January 1972, the Hirer agreeing to pay for the hire the sum of £1,000,by monthly instalments on the first day of each month. This Agreement differed in several material respects from those earlier entered into with John Costello. By clause 3, the plaintiffs simply licensed the Hirer for the duration of the Agreement to use the Service/Filling Station (called "the Site") "for the use thereon of the said equipment". It is to be...

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