Jason Investments Unlimited Company v C&S Jewellery Ltd
| Jurisdiction | Ireland |
| Judge | Ms. Justice Reynolds |
| Judgment Date | 27 February 2020 |
| Neutral Citation | [2020] IEHC 230 |
| Docket Number | [2019 No. 3385 P.] |
| Court | High Court |
| Date | 27 February 2020 |
AND
[2020] IEHC 230
Reynolds J.
[2019 No. 3385 P.]
THE HIGH COURT
Possession of property – Failure to pay rent – Break option – Plaintiff seeking possession of property – Whether the plaintiff had made out a prima facie case for possession
Facts: The plaintiff, Jason Investments, was an unlimited company and the owner of a premises known as 7 Castle Market and 43 Drury Street, Dublin 2 (the property). The plaintiff acquired the property on 23 January 2018 subject to a lease in favour of the first defendant, C&S Jewellery Ltd. The first defendant was in occupation of the property pursuant to a lease granted by the plaintiff’s predecessors in title, the term of which ran from 10 July 2014. The first defendant ran a jewellery shop from the property. The second and third defendants, Mr Cullen and Ms Gilhooly, were the guarantors under that lease. The plaintiff sought possession of the property on two grounds: (a) the failure of the first defendant to pay rent due and owing; and (b) the plaintiff’s exercise of a break option contained in the lease. In June 2019, the plaintiff issued a motion seeking interlocutory injunctive relief.
Held by the High Court (Reynolds J) that in any application for injunctive relief, there is a duty on the parties to make full and frank disclosure to the court and to come before the court with “clean hands”. Reynolds J noted that the plaintiff failed to disclose that it had a subsidiary company which traded as “Weir & Sons” jewellers in the vicinity of the property. Whilst the plaintiff’s grounding affidavit made reference to a desire on its part to expand its existing business, it did not disclose that it proposed to replace the first defendant’s jewellery business with its own comparable business. In addition, the plaintiff failed to disclose the ongoing issues in relation to the condition of the property which remain unresolved and in respect of which the first defendant sought to claim a set-off and/or counterclaim against rent. Further, Reynolds J concluded from the approach adopted by the plaintiff in its pursuit of interlocutory relief where all arrears of rent had been discharged and undertakings in place in respect of future rent, that its true motivation in seeking possession of the property was with a view to undermining and frustrating the intended application by the first defendant to seek a new tenancy under the provisions of the Landlord and Tenant (Amendment) Act 1980. In all the circumstances, Reynolds J was not satisfied that the plaintiff had made out a prima facie case for possession. Reynolds J held that the balance of convenience lay in favour of refusing the relief in circumstances where the arrears of rent had been discharged and undertakings furnished in respect of future rents and where the first defendant was entitled to pursue its claim for a new tenancy in the Circuit Court. Reynolds J held that the plaintiff had failed to establish, as a matter of probability, that damages would not be an adequate remedy.
Reynolds J held that the status quo should be preserved pending the determination of the first defendant’s application. She refused the reliefs sought.
Reliefs refused.
The plaintiff is an unlimited company and the owner of a premises known as 7 Castle Market and 43 Drury Street, Dublin 2 (‘the property’). The plaintiff acquired the property on 23 January 2018 subject to a lease in favour of the first named defendant.
The first named defendant is in occupation of the property pursuant to a lease granted by the plaintiff's predecessors in title, the term of which runs from 10 July 2014. The first named defendant runs a jewellery shop from the property.
The second and third named defendants are the guarantors under that lease.
In the within proceedings, the plaintiff seeks possession of the property on two grounds:
(a) The failure of the first named defendant to pay rent due and owing, and
(b) the plaintiff's exercise of a break option contained in the lease.
Pursuant to the terms of the lease granted by the plaintiff's predecessor in title, rent was fixed at €65,000 per annum payable quarterly in advance.
Further, the lease contains a break option entitling the landlord to determine the lease at the end of the fifth year by giving not less than six calendar months’ prior notice thereof.
By letter dated 22 November 2018, the plaintiff gave notice of its intention to determine the lease.
It is common case that between 16 January 2019 and 7 June 2019, the first named defendant failed to pay any rent to the plaintiff.
By letter dated 22 May 2019, the first named defendant served a Notice of Intention to Claim Relief pursuant to s.20 of the Landlord and Tenant (Amendment) Act 1980.
Proceedings were commenced by the plaintiff in April 2019 by way of plenary summons seeking, inter alia, a declaration that the plaintiff had by letter dated 22 November 2018 validly exercised the break option contained in Clause 9 of the lease together with an order requiring the first named defendant to deliver up vacant possession of the property to the plaintiff in accordance with the terms of the lease.
In June 2019, the plaintiff issued a motion seeking interlocutory injunctive relief.
Prior to the hearing of the motion, all rent arrears were discharged. Further, by letter dated 5 July 2019 the first named defendant undertook to discharge the rent payable monthly in advance to the plaintiff and comply with all covenants in the lease pending the determination of the within application.
Clauses 1 and 3 of the lease fixed the initial rent at €65,000.00 per annum payable quarterly in advance.
Clause 6 of the lease further provides as follows:
“FORFEITURE
Without prejudice to any other right, remedy, or power herein contained or otherwise available to the Landlord: -
(a) If the rents or any other sums reserved by this Lease or any part or parts thereof shall be unpaid for twenty-one (21) days after becoming payable (whether formally demanded or not) …
THEN, and in any such case, the Landlord may at any time thereafter re-enter the Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely cease and determine but without prejudice to any rights or remedies which may then have accrued to the Landlord against the Tenant in respect of any antecedent breach of any of the covenants or conditions contained in this Lease”.
During the period January 2019 to June 2019, the first named defendant failed to pay any rent to the plaintiff with arrears for that period totalling €19,987.51. At the time the interlocutory application was issued, the balance due and owing in respect of rental arrears was €40,128.85.
By letter dated 15 March 2019, the plaintiff's property manager wrote to the first named defendant advising that rent remained due and owing and further that failure to discharge same within seven days would result in court proceedings.
By letter dated 11 April 2019, the plaintiff's solicitors wrote to the first, second and third named defendants demanding payment of all rent outstanding and enclosing draft proceedings which it advised would issue unless all rent arrears were discharged.
By reply dated 12 April 2019, the defendants’ solicitors acknowledged that the rent remained due and owing and advised that it would discharge same.
However, it is clear that the arrears of rent were not discharged until 7 June 2019 and the defendants accept the default in that regard.
Clause 9 of the lease provides as follows:
“LANDLORDS BREAK OPTION
The landlord shall have the right to determine this Lease at the end of the fifth year only of the term (the ‘Break Option’) subject to the following conditions:-
(i) If the Landlord wishes to exercise his Break Option, he shall serve on the Tenant not less than six calendar months prior to the expiry of the fifth year of the Term written notice of the exercise of the Break Option and immediately on the expiration of such notice the said term hereby created shall thereupon cease but without prejudice to the remedies of either party and together in respect of any antecedent claim or breach of covenants.
(ii) The Tenant shall give vacant possession of the entire of the Demised Premises to the Landlord freed and discharged from all encumbrances and all rights of the third parties affecting same”.
By letter dated 22 November 2018, the plaintiff wrote to the first named defendant enclosing a notice seeking to exercise its break option under the lease and advised that the lease would “determine on 10 July 2019”.
Solicitors for the defendants in their letter dated 12 April 2019 indicated that as their clients had not executed any deed of renunciation in relation to the tenancy, their clients had acquired statutory rights. It was further indicated that they were happy to discharge arrears of rent and further called upon the plaintiff to carry out repairs to the property which had been overdue since September 2018.
On 22 May 2019, the first defendant served a Notice of Intention to Claim Relief under the Landlord and Tenant (Amendment) Act 1980 claiming a new tenancy under Part II on determination of the existing lease.
In the circumstances, the defendants claim an entitlement to a set-off and/or counterclaim against rent and asserts that the counterclaim/set-off may be relevant in assessing an entitlement to and terms of relief against forfeiture.
The plaintiff is eager to take possession of the property to expand its existing business and asserts that it will suffer a substantial...
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Hafeez v CPM Consulting Ltd
...29, (Unreported, High Court, 17 January 2012) and, most recently, by Reynolds J in Jason Investments Unltd. Co. v C & S Jewellery Ltd. [2020] IEHC 230, (Unreported, High Court, 27 February 2020). The Chancery Division of the Northern Ireland High Court (Burgess J) reached the same conclusio......