Irish Shell Ltd v Costello Ltd

• Jurisdiction: Ireland
• Judge: O'HIGGINS C.J.,Henchy J.,McCARTHY J.
• Judgment Date: 01 January 1985
• Neutral Citation: 1985 WJSC-SC 389
• Docket Number: [1974 No. 4045P]
• Court: Supreme Court
• Date: 01 January 1985

IRISH SHELL v. COSTELLO LTD.

IRISH SHELL & B.P. LIMITED

v.

JOHN COSTELLO LIMITED

1985 WJSC-SC 389

O'Higgins C.J.

Henchy J.

McCarthy J.

336 & 369/83

THE SUPREME COURT

Synopsis:

LANDLORD & TENANT

Tenancy

Termination - Notice to quit - Overholding by former tenant - Payment and receipt of "rent" for four months - Negotiations for new tenancy - Failure of negotiations - Demand of possession - Nature of occupant's interest during overholding - Whether a licensee or trespasser - Plaintiff entitled to possession - Decision of Doyle J. (3/10/83) affirmed - (336, 369/83 - Supreme Court - 21/12/84).

Irish Shell v. Costello Ltd.

LICENCE

Termination

Trespasser - Overholding by former tenant - Payment and receipt of "rent" for four months - Negotiations for new tenancy - Failure of negotiations - Demand of possession - Nature of occupant's interest during overholding - Whether a licensee or trespasser - Plaintiff entitled to possession - Decision of Doyle J. (3/10/83) affirmed - (336, 369/83 - Supreme Court - 21/12/84).

Irish Shell v. Costello Ltd.

Citations:

BELLEW V BELLEW 1982 IR 447

HESLOP V BURNS 1974 3 AER 406

IRISH SHELL V COSTELLO LTD 1981 ILRM 66

LANDLORD & TENANT (AMDT) ACT 1980

LANDLORD & TENANT (AMDT) ACT 1980 S29

LANDLORD & TENANT LAW AMDT ACT (IRL) 1860 S3

LANDLORD & TENANT ACT 1931

MARCROFT WAGONS LTD V SMITH 1951 2 KB 496

1 JUDGMENT delivered the 21st day of December1984by O'HIGGINS C.J.

2 The question which arises for determination on this appeal is whether the Defendants have any rights, and if so, what rights, in relation to a petrol service station known as Friarsland Service Station, Roebuck Road, Dublin, the property of the Plaintiffs. This station has been occupied by John Costelloe, and later by the Defendants, for the purpose of carrying on a petrol service and general garage business therein under a succession of Agreements made with the Plaintiffs, commencing in 1967 and ending in 1974. The 1974 Agreement was made on the 14th February of that year and was for a period of six months from the 1st January 1974. This Agreement was followed by discussions and negotiations between the parties which, if successful,would have led to the conclusion of a further Agreement. In fact these negotiations broke down in relation to Sunday opening hours and no further Agreement was concluded. On the 5th November 1974 the Plaintiffs gave notice to the Defendants that they required possession of the premises by the 14th November 1974. Possession having been refused the Plaintiffs have brought these proceedings claiming possession and mesnerates.

3 The nature and effect of the Agreement of 1974 has already been the subject of examination in this Court. This took place at a previous stage in these proceedings and the result appears in the Irish Law Reports Monthly 1981, page 66. The Court's decision was pronounced in the judgment of Griffin J. (with whom I agreed) and it was to the effect that the Agreement of 1974, although expressed to confer on the Defendants a mere licence to use the premises for the purpose of their business, in fact created a relationship of landlord and tenant between them and the Plaintiffs. The Court was notasked to, and did not, decide what relationship, if any, existed between the parties following the termination of the 1974 Agreement on the 30th June. It is that issue which must now be decided.

4 It appears that, following the expiration of the 1974 Agreement, the Defendants stayed on in occupation of the petrol station paying the monthly payments which had been provided for in the expired Agreement. They did so while discussions and negotiations as to the terms of the new Agreement were proceeding. It is clear that they continued to occupy the premises with the concurrence of the Plaintiffs. Their occupation was the same as that of the previous six months under the expired Agreement and the payments they made were similar. The reason that they so continued in occupation was the fact that negotiations for a new Agreement were proceeding. If in the previous six months they held under a tenancy it is difficult to accept that their continued occupation, with the Plaintiffs concurrence, changed in character from that ofa tenancy into a mere licence, as the Plaintiffs now contend. In my view the Defendants continued in occupation in a landlord and tenant relationship, but their tenancy was merely a tenancy at will. I think this had to be so, during the period of transition between the expiration of the previous Agreement and the conclusion of a fresh one. While tenancies at will are not inferred as frequently now as formerly was the case, I believe that they should readily be inferred where there is continued exclusive possession during such a transition as appeared to exist in this case. In this regard I think it well to recall the clear words of Scarman L.J. in Heslop v. Burns 1974 A.E.R.3 406, when he said at p.416:

"It may be that the tenancy at will can now serve only one legal purpose, and that is to protect the interests of an occupier during a period of transition. If one looks to the classic cases in which tenancies at will continue to be inferred, namely, the case of someone who goes into possession prior to a contract of purchase, or of someone who, with the consent of the landlord, holdsover after the expiry of his lease, one sees that in each there is a transitional period during which negotiations are being conducted touching the estate or interest in the land that has to be protected, and the tenancy at will is an apt legal mechanism to protect the occupier during such a period of transition; he is there and can keep out trespassers; he is there with the consent of the landlord and can keep out the landlord as long as that consent is maintained."

5 In my view, this is what happened in this case. The Defendants held on as tenants at will for so long and no longer, as the Plaintiffs consented and agreed. In my view, the letter of the 5th November 1974 was effective to withdraw the Plaintiffs" consent to the continued occupation of the premises by the Defendants and accordingly the tenancy at will terminated. Following the failure to give such possession the Defendants have been trespassers of the Plaintiffs and are liable for mesne rates. I would agree with Mr. Justice Henchy, whose judgment I have read, that the proper figure for mesne rates is £1,500 peryear.

6 I would order accordingly.

7 Judgment of Henchy J.delivered the 21 December 1984

8 These proceedings were begun in the High Court in December 1974. Now, ten years later, they are still wending their way through the courts. What should have been a reasonably straightforward ejectment action has developed into a marathon. It would be pointless to attempt at this stage to apportion blame for the delays that have dragged out this litigation. It is perhaps enough to say that those delays seem to have been largely unnecessary.

9 The action concerns a petrol service station known as Friarsland Service Station, situate at Roebuck Road, Dublin. By an agreement of the 14 February 1974 the plaintiffs purported to hire to the defendants certain garage equipment and to license the defendants to occupy Friarsland Service Station for the use thereof that equipment. The agreement was for the period of six months from the 1st January 1974, the defendants agreeing to pay the plaintiffs for the hire of the equipment the sum of £625 by monthly instalments of £111.20 (inclusive of VAT) payable on the first day of eachmonth.

10 This agreement was subjected to detailed analysis in this Court in 1981 after the High Court had held in favour of the plaintiffs" claim to be entitled to possession and after an appeal had been taken by the defendants from that order. In the High Court it had been held that the agreement of February 1974 created only a licence to use the premises for six months from 1st January 1974 and that the licence had been terminated by a demand for possession made on the 14 November 1974. Allowing the defendants" appeal, this Court held ( 1981 I.L.R.M.66) that the true construction of the February 1974 agreement was that it created the relationship of landlord and tenant and not that of licensor and licensee - that in effect it gave the defendants a lease of the premises for six months from the 1st January 1974.

11 The parties were then allowed by this Court to amend their pleadings in the light of that decision and the matter was remittedto the High Court for determination on the basis of the amended pleadings. After a full rehearing in the High Court, it has now been ruled that the tenancy created by the February 1974 agreement had been terminated before the coming into operation of the Landlord and Tenant (Amendment) Act, 1980and that there was due from the defendants to the plaintiffs mesne profits from the 5 November 1974 to the 8 September 1980 at the rate of£1,750 per annum. Both parties have now appealed, on different grounds, against that order.

12 As I have stated, this Court held in effect in 1981 that the February 1974 agreement gave the defendants a lease of the premises for six months from the 1st January 1974 at the specified rent. The plaintiffs, of course, were under the impression that all they had granted was a licence to occupy the premises for those six months. When that period of six months expired on the 30 June 1974, the plaintiffs offered the defendants a "licence" for a further term on specified conditions, and a letter of the 19 August 1974 offering that lease stated that if those conditions were not accepted within fourteen days immediate possession would be required.

13 In the event, no new agreement was negotiated. On the5 November 1974 the plaintiffs wrote to the defendants withdrawing what they considered to be a licence and stating that their representative would call on the 14 November to take over the service...