McMullan Brothers Ltd v McDonagh

JurisdictionIreland
CourtSupreme Court
JudgeMr Justice Charleton
Judgment Date05 March 2015
Neutral Citation[2015] IESC 19

[2015] IESC 19

The Supreme Court

McKechnie J

MacMenamin J

Charleton J

Record number 2431P/2003
Appeal number 45/2008
McMullan Brothers Ltd v McDonagh
An Chúirt Uachtarach

Between

McMullan Brothers Limited
Plaintiff/Respondent

and

Patrick McDonagh
Defendant/Appellant

Liability – Negligence – Lease – Plaintiff seeking a determination of liability – Whether there is basis in law or fact upon which apportionment of liability could be placed with the plaintiff

Facts: Between the defendant/appellant, Mr McDonagh (the lessee), and the plaintiff/respondent, McMullan Brothers Ltd (the lessor and a part of the Maxol group), a lease dated 1st February, 1995 governed their relationship as lessee and lessor. There was an underground leakage of petrol at the Singland service station, situated on the Dublin Road in Limerick City discovered in January, 2003. The result was that the petrol station had to be shut for safety reasons and the restaurant and supermarket on site were also put out of business. Proceedings were initiated to determine where liability lay in respect of the cause of the petrol leakage. The lease was found by the trial judge in 2007 to determine where responsibility lay as between the parties, holding that the covenant to repair in the lease, considered in its proper context, established that the lessee”s responsibility extended to ensuring that the equipment from which the leakage occurred was in good working order and that in failing to check and repair the equipment, the lessee had primary responsibility. Given the nature of the relationship between the parties, the trial judge held, the lessor as supplier of the petrol should have known about the faulty equipment and consequently should have warned the lessee; in failing to do this, liability was reduced on negligence grounds so that the lessee bore 60% of the responsibility while the lessor was liable for the remaining 40%. On appeal to the Supreme Court, the lessee argued three grounds: firstly, that the tenant had no obligation to repair under the lease; secondly, that a letter of 10th May, 2000 represented that a licensee of the lessee who actually operated the petrol sales on the forecourt had any responsibility that might exist for repairs and that consequently the lessor was estopped from resiling from that position; and that, thirdly, on any apportionment much greater blame should attach to the lessor than that found by the trial judge. There was also a cross appeal and there the lessor argued that there was no basis in law or in fact upon which any apportionment of liability could be placed with them as lessor.

Held by Charleton J that, having applied the rules of construction in ICS v West Bromwich BS [1998] 1 WLR 896, it must readily be accepted that the lease left out a description of the equipment which it was the responsibility of the lessee to maintain, repair and replace. Charleton J held that a general obligation of repair and maintenance was cast by the lease on the lessee in unmistakable terms through clauses 3.6 and 4.2. He held that it is not for the courts to recast the agreement of the parties and that it was clear from the terms of the lease that there was a full repairing and maintenance obligation which was derogated from only in respect of particular equipment. He held that the exclusion strengthens the construction that otherwise included all the fixtures, fittings and equipment in the demised premises. Charleton J held that there was no situation that might found an estoppel by convention and nothing in the correspondence or actions of the parties upon which an estoppel based on convention might be found. Having applied Steamship Lines Ltd v The King[1952] AC 192 in considering whether the indemnity clauses were sufficient to exempt the lessor should the lessor be the origin of the wrong, Charleton J held it to be clear that express and clear words are required in that regard and that these were absent. Charleton J held that there was the assumption of the responsibility of the lessee by the lessor; there was a complete absence of communication by the lessor as to what might occur when the relevant equipment began to be upgraded as a matter of general practice from 1991. Charleton J held that unlike the division of responsibilities characterised in clear language in the lease, the lessor had never insisted on repairing and passing on expense to the lessee, nor was the lessee informed of any problem or potential problem.

Charleton J held that there was sufficient evidence upon which the trial judge could have come to the conclusion as to the division of fault which he did and there was therefore no basis upon which that might be reviewed. Charleton J upheld in full the judgment of the trial judge.

Appeal dismissed.

1

This appeal is concerned with an underground leakage of petrol at the Singland service station, which is situated on the Dublin Road in Limerick City. This probably happened over several days, but was discovered on 13 th January, 2003. Since a survey had taken place with the drilling of boreholes on 4 th December, 2002 at the site and had discovered no such leakage, these are the dates within which the incident occurred. The result was that the petrol station had to be shut for safety reasons and the restaurant and supermarket on site were also put out of business. Apart from this appeal, there is also separate litigation between the parties herein and the owners of those businesses. What this judgment is concerned with is not the degree of the resulting harm to those parties but where liability lies in respect of the cause of the petrol leakage.

2

As between the defendant/appellant, the lessee, and the plaintiff/respondent, the lessor and a part of the Maxol group, a lease dated the 1 st February, 1995 ostensibly governed their relationship as lessee and lessor. This lease was found by Smyth J, the trial judge, in his judgment of 18 th October, 2007 to determine where responsibility lay as between these parties. Smyth J held that the covenant to repair in the lease, considered in its proper context, established that the lessee's responsibility extended to ensuring that the equipment from which the leakage occurred was in good working order and that in failing to check and repair the equipment, the lessee had primary responsibility. Given the nature of the relationship between the parties, he held, the lessor as supplier of the petrol should have known about the faulty equipment and consequently should have warned the lessee. In failing to do this, liability was reduced on negligence grounds so that the lessee bore 60% of the responsibility while the lessor was liable for the remaining 40%.

3

Issues which were important at the trial have not been pursued on this appeal. In particular, it had been argued on behalf of the lessee that the coincidence of the lessor drilling boreholes in and around the petrol station about five weeks before the leakage, established that negligence on the part of those conducting this exercise had punctured one of the underground petrol storage tanks. Instead, the trial judge found that as a matter of probability and aluminiiim alloy cap on one of the tanks leading from underground to the petrol pumps on the forecourt of the filling station had corroded. Maxol is the supplier of petrol to this station with which it has, under the name of the plaintiff/respondent, the lessor, a solus agreement under the lease. When Maxol, as lessor, supplies petrol to the station the delivery tanker pumps this into an underground tank which is remote from the tank in question. This tank is connected by a pumping system to another tank closer to the site of the forecourt whereby petrol is moved into this underground tank which is capped by the aluminium cap in question and which, in turn, is connected to a valve to ensure that gravity does not cause the petrol that is in the pipe which runs from the tank and into the petrol pumps on the forecourt to fall backwards through gravity. The cause of the spillage, as determined by Smyth J, was that when the aluminium alloy cap became corroded, it ceased to be airtight with the consequence that the valve did not work and, as a result, that the petrol in the pipe above it was not held hydraulically but leached backwards and spilled out into the surrounding ground. The cap had become broken down by a process of sulphation, probably in consequence of the impact of groundwater and possibly by whatever chemical reaction also resulted from it being specked with concrete. The manhole chamber, through which the valve and cap were accessed, contained water and also debris of cement and timber. In 1994 and 1998 the pumps were replaced by Maxol, as lessor, since they had engaged in preventative maintenance due, it was claimed by them, to the fact that the previous lessee of the premises had allowed the petrol station to become somewhat dilapidated. There was evidence that at that time it might have been expected that this cap would have been replaced with a gunmetal substitute. This did not happen.

4

The primary findings of fact of the trial judge were summarised by Smyth J at the end of his judgment as follows:

1

The obligations set out tinder the lease never left the lessee and he was responsible in accordance with the terms of the lease for all equipment, fixtures, fittings and so forth save such as were excluded by clause 4.2.

2

That the company [Maxol, the lessor] through being aware of debris, timber, residual elements of cement in the chamber and the various visitations to check out the equipment in the 1990s must bear some responsibility also for the events that occurred. While accepting that the primary liability rests upon… the lessee, the company cannot be wholly excused from...

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3 cases
  • DPP v Casey
    • Ireland
    • Supreme Court
    • 21 February 2019
    ...which is relied upon to such a degree as to render it inequitable to allow it to be withdrawn; see McMullan Brothers Limited v McDonagh [2015] IESC 19 and Snell's Equity (32 nd edition, London, 2010) at paragraph 12-009. Thus in United States v Giffen (2006) 473 F 3d 30 (2 nd Cir), the ind......
  • McDonagh v McCann
    • Ireland
    • High Court
    • 16 January 2018
    ...6 The Supreme Court heard the appeal in November, 2014 and on, 5th March, 2015, delivered judgment upholding the judgment of Smyth J: [2015] IESC 19. 7 During the currency of the appeal process and between the delivery of judgment by Smyth J. in October, 2007 and the judgment of the Suprem......
  • Nolan v Allied Irish Banks Plc
    • Ireland
    • High Court
    • 9 June 2016
    ...Insurance [2005] 1 IR 274; ICDL v. European Computer Driving Licence Foundation [2012] 3 IR 327; and McMullan Brothers Ltd. v. McDonagh [2015] IESC 19:- ‘(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background k......

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