Meagher v Luke J Healy Pharmacy Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Murphy
• Judgment Date: 15 April 2005
• Neutral Citation: [2005] IEHC 120
• Docket Number: No. 12192 P/1997
• Court: High Court
• Date: 15 April 2005

[2005] IEHC 120

THE HIGH COURT

No. 12192 P/1997

MEAGHER v LUKE J HEALY PHARMACY LTD

BETWEEN/

DENIS MEAGHER & MIRIAM MEAGHER

PLAINTIFFS

AND

LUKE J. HEALY PHARMACY LIMITED

DEFENDANT

WYLIE IRISH LANDLORD & TENANT LAW PARA 15.34

DUBLIN CITY COUNCIL v WRIGHT 2004 1 IR 53 2004 2 ILRM 310

KELLY v CUSSEN 1954 88 ILTR 97

RICE v DUBLIN CORPORATION 1947 IR 435

LANDLORD & TENANT (AMDT) ACT 1980 S66

WYLIE IRIS LANDLORD & TENANT LAW PARA 37.646

LANDLORD & TENANT (AMD) ACT 1980 S67

LANDLORD & TENANT (AMD) ACT 1980 S68

LANDLORD AND TENANT

lease

Terms and conditions - Implied terms - Covenant against assignment without consent of landlord - Refusal of landlord to consent to assignment - Whether implied term that consent to assignment not to be unreasonably withheld - Whether consent to assignment unreasonably withheld - Landlord and Tenant (Amendment) Act 1980 (No 10), s 66 - Kelly v Cussen 88 ILTR 97 considered - Damages awarded to counterclaimant (1997/12192P - Murphy - 15/4/2005) [2005] IEHC 120

MEAGHER v LUKE J HEALY PHARMACY LTD

Mr. Justice Murphy

1 2 1.1 The plaintiffs are successors in title to the landlord's interest in an indenture of lease dated 14th May, 1971 and made between Marian Neumann of the one part and the defendant of the other part, whereby premises known as No. 1 West Street in the parish of St. Peter, town of Drogheda in the county of Louth (hereinafter called the premises) were demised unto the defendant for a term of 35 years from 1st June, 1971, subject to certain covenants and conditions therein contained.

2 By the said lease the defendant covenanted,inter alia, to preserve, uphold, support, maintain and keep the demised premises, including the roof and exterior walls and certain fixtures and fittings and all additions to the said premises in good and proper and sufficient order, repair and condition.

3 The defendant further covenanted not to assign the said premises or any part thereof without the previous consent in writing of the plaintiffs first having been obtained and to use and occupy the premises solely for the purpose of the defendant's trade business as a pharmaceutical chemist and certain ancillary uses.

4 3 1.2 Mr. Patrick Hickey acquired the controlling shareholding interest in the defendant in 1995 at a time when there was outstanding a schedule of dilapidations of 1993.

5 Later in 1995 Messrs. Lisney & Co., on behalf of the plaintiffs, prepared a further schedule of dilapidations which, in turn, was updated in 1999.

6 It is common case that the defendant did not comply with the first and second schedule of dilapidations notwithstanding its intention to do so when Mr. Hickey became shareholder in 1995. While the premises continued to be used as a pharmacy it was Mr. Hickey's evidence, not controverted by the plaintiffs, that it would be necessary to vacate the premises in order to carry out the extensive repairs necessitated by the schedule of dilapidations. To this end Mr. Hickey acquired a freehold interest in No. 9 West Street and, having eventually obtained the consent of the Health Board to transfer the general medical service permit to that premises, vacated No. 1 and sought to assign the defendant's interest to three prospective assignees. The present proceedings were issued on 17th October, 1997.

7 2 2.1 The first of these proposed assignees was a Mr. Austin Fitzpatrick in December, 1997 who was prepared to acquire the lessee's interest for the sum of £10,000 and assume the obligation of the repairing covenant. The proposed closing was 30th January, 1998.

8 The consent of the plaintiff landlords was sought on 9th December, 1997. The landlords were requested to let the lessee/defendant's solicitor know their requirements regarding references.

9 On 17th December, 1997 the solicitor on behalf of the plaintiffs wrote as follows:

"Re: Our Client: Denis and Miriam Meagher

Your Client: Luke J. Healy Pharmacy Limited

Premises 1 West Street, Drogheda, Co. Louth

We refer to the above and yours dated the 9th inst. Our clients will not be consenting to the assignment herein nor will they even consider same until such time as works as set out in the schedule of dilapidations have been completed by your clients to our clients' satisfaction as same has been outstanding for a number of years. The High Court proceedings instituted herein are to proceed and we will be serving statement of claim shortly.

Kindly note that your clients are in clear breach of the covenants contained in the original lease on a number of grounds and unless we receive an undertaking by return that the premises will be immediately reopened as a pharmacy and works as set out in the schedule of dilapidations commenced our clients will,inter alia, retake possession of the property forthwith.

Kindly further note that any attempt to assign or sub-let the premises without our clients' permission will be a further breach and in such an event we have immediate instructions to seek injunctive relief and this letter will be produced in court to ground our clients' application for costs of same."

10 Further correspondence ensued in relation to the compliance with the agreed schedule of dilapidations by the defendant and a suggestion that the building might be modernised to suit a prospective assignee rather than complying with the schedule of dilapidations. The defendant notified the plaintiff that it would be willing to consider a financial settlement with the plaintiff in lieu of those works, enabling the plaintiff landlord to develop the building in whatever way would best suit.

11 No reply was received to that letter of 19th February, 1998.

12 3 2.2 On 20th April, 1998 the defendant requested the landlord's consent to a sub-letting to a Cyril Bellew on a short-term sub-letting while sewerage works were being carried out in Shop Street, Dundalk. Further reminders followed. On 30th April, 1998 the defendant's solicitor referred to the correspondence being ignored and to what was termed "premature proceedings" to have the defendant complete an out of date schedule of dilapidations. The defendant had paid Lisneys for the schedule to be updated but the schedule was being deliberately withheld from it thus preventing it from complying with the schedule. The plaintiffs were asked if they were refusing to give their solicitor instructions and if they were instructing Lisneys not to make a copy of the schedule of dilapidations available to the defendant and, if so, to confirm the reason. That letter concluded as follows:

"It appears to us that your client has no agenda in this matter other than to damage our client."

13 By two letters dated 8th May, 1998 solicitors for the plaintiff served the interim schedule of dilapidations and want of repair notice on the defendant and reserved their right to re-visit and re-inspect the premises when all the fixtures and fittings had been removed.

14 The second letter stated that:

"It is ridiculous to suggest that our clients are in any way attempting to damage your client financially or otherwise and we would respectively(sic) refer you to correspondence that has passed herein since your clients purchased the leasehold interest in No. 1 West Street, Drogheda, Co. Louth. It is your client's refusal to deal with the schedule of dilapidations over the past number of years that has put them in the position they are, if at all.…

We understand that your client seeks consent to sub-letting of the premises to one Cyril Bellew and in this regard we await the usual bank and trade references together with a copy of proposed agreement to enable us to obtain out client's further instructions herein."

15 4 2.3 A third request for consent was made on 30th June, 1998 together with references from AIB in respect of C.W. Ltd. A further reference from Esat Digiphone on 18th September named the proposed assignee as Cellular World Ltd. with whom Esat Digiphone had entered into a strategic alliance. There were further references from Ericsson and from Sigma Wireless Communications Ltd. The latter had mistakenly stated that Cellular World Ltd., the proposed assignee, had traded with them for ten years.

16 Solicitors for the plaintiff on 30th June asked why it had taken eight years for the defendant to respond to the schedule of dilapidations originally served and asked whether the defendant had removed all fixtures and fittings as their client wished to inspect the unit with a view to updating the interim schedule of dilapidations.

17 The defendant replied on 27th July saying that the reason why the respondent had failed to respond to the original schedule of dilapidations was because of a breach of contract by the vendors (the transferor of the shares in the defendant) who was not in funds to carry out the schedule of dilapidations and also because it made no sense for him to carry out the works that the defendant would require and, thirdly, that the defendant had received no notices. Rent was being paid and the plaintiff was suffering no loss.

18 The plaintiffs replied that non-compliance (of the repairing covenant) was clearly a breach of the lease and that the landlord's investment was a risk by the defendant not attending to the schedule of dilapidations.

19 On 9th September, 1998 the defendants enclosed copy contract and bank and trade references in relation to Cellular World in which Cellular World intended to trade from the premises and to complete the schedule of dilapidations within one year from closing. The landlord's consent was requested.

20 5 2.4 Meanwhile, on 15th September, 1998 the plaintiff requested the filing of the defendant's defence immediately and indicated that they had instructions to serve a motion for judgment. On 21st September, 1998 the plaintiffs wrote expressing their surprise at the letter of 17th...