Knockacummer Wind Farm Ltd v Cremins

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Haughton
Judgment Date19 February 2016
Neutral Citation[2016] IEHC 95
Docket Number[2015/1651 P (2015) 39 COM]
Date19 February 2016

[2016] IEHC 95

THE HIGH COURT

COMMERCIAL

Haughton Robert J.

[2015/1651 P (2015) 39 COM]

BETWEEN
KNOCKACUMMER WIND FARM LTD.
PLAINTIFF
AND
DENIS CREMINS

AND

SHEILA CREMINS
DEFENDANTS

Property & Conveyancing – Landlord & Tenant Law – Contract – Joint Venture Agreement – Construction of Option Agreement – Whether Option Agreement would be intended to grant a purchase option not exercisable prior to 2040 – Whether the Option Agreement would be susceptible to 'correction by construction'.

Facts: The plaintiff initiated proceedings in the High Court seeking to compel the defendants to perform the 2009 Settlement Agreement. Following claim by the defendants that the Lease Option Notice had been improperly served on the defendants and accordingly would be invalid, the plaintiff now sought determination of the issue and related issues concerning the proper construction of the Option Agreement. The plaintiff asserted that the Option Agreement would be construed as only permitting the service of the Purchase Notice in 2042. The plaintiff sought rectification to bring the language of the agreement into conformity. Therefore, the issue arose whether, or upon the true construction of the Option Agreement, the defendants would be entitled to exercise the Purchase Option prior to 2042.

Mr. Justice Haughton held that an order for determination of the issue and related issues concerning the proper construction of the Option Agreement would be granted. The Court observed that the Option Agreement would be rectified, by insertion of the words 'in 2042' in order to reflect the truemeaning and intent of the Settlement Agreement. The Court stated that the belief that the right would be exercisable 'immediately' lacks credibility. The Court agreed that the Option Agreement as drafted would be intended to grant a Purchase Option that would not be exercisable before 2040. The Court declared that the March 2013 Written Notice served by the defendants in purported compliance with the provisions of the Option Agreement would be null and void. The Court further declared that the Purchase Option would not be exercisable until 2042.

JUDGMENT of Mr. Justice Haughton delivered on the 19th day of February, 2016
Background
1

The plaintiff operates a renewable energy business, including Knockacummer Wind Farm in County Cork ('the Wind Farm'). The defendants were the registered owners of the property described in Folios 112393F, 112441F, 112433F, 59950F, 59951F, 59952F and 70317F, County Cork ('the Lands') comprising approximately 375 acres. In late 2002/early 2003 the Lands and the adjoining lands were identified as being suitable for the development of the Wind Farm. The plaintiff's predecessors SWS Energy Ltd. and SWS Knockacummer Wind Farm Ltd. (collectively 'SWS') entered into a joint venture agreement with the defendants in 2003 to develop the Wind Farm, and planning permission was obtained in 2005. The permission is for a period of twenty years from the date of commissioning of the turbines. As commissioning occurred in December, 2014, the permission is due to expire in 2034. The Wind Farm consists of 29 turbines, 9 of which are located on the Lands.

2

Since 2003 the relationship between the plaintiff/its predecessors and the first named defendant ('Mr. Cremins') has become acrimonious, and this first came to a head in May, 2009, when Mr. Cremins instituted two sets of proceedings – the first by plenary summons under Record No. 2009 4551 P, in which Mr. Cremins sought an equity stake in the Wind Farm, and the second injunction proceedings under s.160 of the Planning and Development Act 2000, Record No. 2009 114 MCA.

3

Both sets of proceedings were compromised by written agreement dated 25th November, 2009 ('the 2009 Settlement Agreement'). Pursuant to the 2009 Settlement Agreement the defendants agreed to execute leases in favour of SWS in respect of the Lands ('the Leases'). In return SWS agreed to pay to the defendants an annual rent in the amount of €200,000.00. The defendants also warranted that they had all the necessary consents to grant the Leases and that there was nothing prohibiting them from doing so. They also agreed that they would not do, or permit to them, anything which could cause damage to or interfere with the development or the operation of the Wind Farm. Also each of the parties agreed with the other that he or it should 'act in good faith in carrying out and performing the terms of this Agreement'.

4

Following the execution of the Leases the defendants were asked to furnish evidence that their mortgagee, Bank of Scotland (Ireland) Ltd. ('B.O.S.I.') had consented to the Leases. When the defendants approached B.O.S.I. they were told that B.O.S.I's. consent was conditional on the defendants assigning the rental payments under the Leases to B.O.S.I. The defendants failed or refused to do this. Accordingly SWS initiated proceedings in the High Court in July, 2011, (Record No. 6468P [2011] No. 65 COM) seeking to compel the defendants to perform the 2009 Settlement Agreement and to specifically secure the B.O.S.I. consent. A trial date was fixed for 13th December, 2011, and the parties agreed to separate the issue of liability and damages. The liability issue was opened to the Court on that day, and in the afternoon a partial settlement was reached pursuant to which on consent an order was made (Dunne J.) that the defendants obtain the consent of B.O.S.I. to the Leases

'by immediate execution and return of the facility letters ... and the immediate execution and return of the assignment in respect of the rent due under the said Leases to B.O.S.I. and to otherwise take all steps and do all things necessary to procure said consent'.

5

The defendants provided the B.O.S.I. consent on the 11th May, 2012. The trial of the remaining issues between the parties commenced on 15th May, 2012, and ran for five days. On the fifth day the parties entered into a Settlement Agreement dated 22nd May, 2012, ('the 2012 Settlement Agreement') which provided inter alia for the payment of €6 million to the defendants for the sale of the Lands to SWS:-

'subject to: (a) a buy-back option after thirty years in favour of the defendants for €1.00 and (b) (should the defendants exercise such buy-back option) an option in favour of SWS for a twenty-five year lease of the Lands'

('the Option Agreement').

The Option Agreement was to be formalised by way of a written agreement. The Option Agreement was executed in June, 2012, and became effective on 31st August, 2012, being the date of completion of the sale of the Lands by the defendants to SWS. The delay in completion was occasioned by title issues involving Mr. Cremins's brother Patrick Cremins. This necessitated the issue of proceedings by SWS against Patrick Cremins, but these were resolved on 8th August, 2012, when Patrick Cremins attested that he had no right, title, estate or interest in the Lands.

6

By notice in writing dated 14th March, 2013, O'Connell & Clarke, solicitors on behalf of Mr. Cremins purported to exercise the defendants' option to buy-back the Lands ('the Purchase Option') pursuant to clause 2 of the Option Agreement. This notice was served on the plaintiff at its registered office in Cork and was stamped as being received on 19th March, 2013. As it was served by post, pursuant to clause 11.5.2 of the Option Agreement if it was a valid Purchase Option Notice it was deemed to have been given 'two Business Days after same shall have been posted', and accordingly was deemed to have been served on 16th March, 2013.

7

If the Purchase Option Notice was valid then under clause 5.3.2. the plaintiff had fourteen days from 16th March, 2013, in which to serve a Lease Option Notice seeking to exercise the Lease Option – to take a twenty-five year leases of the Lands, commencing in 2042. By letter/notice in writing dated 27th March, 2013, addressed to the defendants at 'Meeganarie, Knocknagoshel, Co. Kerry' the plaintiff purported to exercise the Lease Option. It is not disputed that on the afternoon of 27th March, 2013 the envelope containing that notice was hand delivered by Mr. Ulick Devane to the defendants' son Michael Cremins, then fifteen years of age, but it is disputed whether this occurred on the public road close to the defendants' dwelling house, or somewhat further away in the neighbouring farm yard of Mr. Patrick Cremins. In either event the defendants assert that the service was not good in law, and that Michael Cremins mislaid the envelope and it never reached them.

8

In addition to hand delivery, on 28th March, 2013, Messrs. A & L Goodbody solicitors acting on behalf of the plaintiff sent by email and enclosed a copy of the Lease Option Notice to O'Connell & Clarke solicitors for the defendants, with a covering letter stating 'We enclose a copy of the Lease Option Notice served by hand on your client yesterday.'

9

The defendants have since claimed that the Lease Option Notice was not properly served on the defendants and accordingly is invalid. The plaintiff has brought these proceedings to determine that issue and related issues concerning the proper construction of the Option Agreement.

10

The plaintiff asserts that the Option Agreement should be construed as only permitting the service of the Purchase Notice in 2042. In the alternative, they seek rectification to bring it into conformity, they say, with the 2012 Settlement Agreement. By way of permitted amendment of the pleadings the plaintiff also asserts that the Purchase Notice served was not a proper exercise of the buy-back option because it was sent on behalf of Mr. Cremins alone and not jointly on behalf of both defendants. As a further alternative the plaintiff asserts that time was not of the essence of the exercise of the Lease Option. They also assert that the Lease Option Notice was served on the defendants...

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3 cases
  • Knockacummer Wind Farm Ltd v Cremins
    • Ireland
    • Court of Appeal (Ireland)
    • 30 July 2018
    ...option conferred on the parties by that agreement was not operable until the year 2042: see Knockacummer Wind Farm Ltd. v. Cremins [2016] IEHC 95. The defendants (or, perhaps, more strictly, the first defendant) has now appealed to this Court against that decision. 2 I should say at the out......
  • Dublin Port Company v Automation Transport Ltd
    • Ireland
    • High Court
    • 10 July 2019
    ...Ltd v. First Active Plc [2010] IEHC 275 at paras. 3.5 to 3.6 and, more recently, by Haughton J in Knockacummer Wind Farm Ltd. v Cremins [2016] IEHC 95. In Moorview, a guarantee had been executed by Mr. Brian Cunningham in favour of First Active Plc. The relevant guarantee referred to the li......
  • Personal Insolvency Acts 2012-2015 v McNamara (A Debtor)
    • Ireland
    • High Court
    • 2 March 2020
    ...Developments Ltd v. First Active Plc [2010] IEHC 275 at paras. 3.5 to 3.6 and by Haughton J. in Knockacummer Wind Farm Ltd v. Cremins [2016] IEHC 95. ...

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