Meagher v Luke J Healy Pharmacy Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Finnegan
• Judgment Date: 16 June 2010
• Neutral Citation: [2010] IESC 40
• Court: Supreme Court
• Docket Number: [S.C. No. 175 of 2005]
• Date: 16 June 2010

[2010] IESC 40

THE SUPREME COURT

Fennelly J.

Finnegan J.

O'Donnell J.

No. 173/2005

Meagher v Luke J. Healy Pharmacy Ltd

BETWEEN:

DENIS MEAGHER AND MIRIAM MEAGHER

PLAINTIFFS/APPELLANTS

and

LUKE J. HEALY PHARMACY LIMITED

DEFENDANT/RESPONDENT

KELLY v CUSSEN 1954 88 ILTR 97

RENT RESTRICTIONS ACT 1946 S40(4)(B)

LANDLORD & TENANT ACT 1931 S56(1)

RENDALL v ROBERTS & STACEY LTD 175 EG 265

LANDLORD & TENANT ACT 1931 S56

LANDLORD & TENANT (AMDT) ACT 1980 S66

TRELOAR v BIGGE 1873-74 9 LR EX 151

LANDLORD & TENANT LAW AMDT ACT IRL 1860 S10

LANDLORD & TENANT (GROUND RENTS) ACT 1967 S35(1)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S14

DEALE THE LAW OF LANDLORD & TENANT 1968 184

IDEAL FILM RENTING CO LTD v NIELSON 1921 1 CH 575

LANDLORD & TENANT ACT 1927 S19(1)(A) (UK)

ROSE & ANOR v GOSSMAN 201 EG 767

LANDLORD & TENANT (AMDT) ACT 1980 S66(1)

BENNION STATUTORY INTERPRETATION: A CODE 2ED 1992 S269

LANDLORD AND TENANT

Lease

Covenants - Damages - Assignment - Express terms - Implied terms - Covenant against assignment without consent of landlord - Refusal of landlord to consent to assignment - Whether action for damages arises where consent unreasonably withheld - Treloar v Bigge (1874) LR 9 Ex 151 approved; Kelly v Cussen (1954) 88 ILTR 97 distinguished - Landlord and Tenant (Amendment) Act 1980 (No 10), s 66 - Plaintiff's appeal allowed (175/2005 - SC - 16/6/2010) [2010] IESC 40

Meagher v Luke J Healy Pharmacy Ltd

Facts: A trial judge had found that the lessors had acted unreasonably in refusing consent to assign a lease and made a declaration to that effect. It was contended on appeal that the learned trial judge was in error in holding that consent to assign had been unreasonably withheld and in awarding damages to the lessee on that basis. The issue arose as to the effects of s. 66 Landlord and Tenant (Amendment) Act 1980 and whether it imposed a statutory duty or regulated covenants freely entered into between a lessor and lesseee.

Held by the Supreme Court per Finnegan J. (Fennelly, O' Donnell JJ.), that the Act of 1980 did not alter the common law by providing an action for damages where none previously existed. Had the Oireachtas intended to confer upon a lessee a cause of action where none had previously existed it would have done so in clear and unambiguous terms. In Irish law the lessee had no right of action for damages by reason of the lessors having unreasonably withheld consent to assign, having regard to the provisions of s. 66 Landlord and Tenant (Amendment) Act 1980. The appeal would be allowed and the judgment of the High Court set aside. It was unnecessary to consider whether the lessors in refusing consent to the assignment of the Lease acted unreasonably.

Reporter: E.F.

1 Judgment of Mr Justice Finnegandelivered on the 16th day of June 2010

2 By Indenture of Lease dated the 14 ^th May 1971 made between Marianne Neumann of the one part and Luke J. Healy Limited of the other part (hereinafter "the Lease") premises at 1 West Street, Drogheda (hereinafter "the premises") were demised to Luke J Healy Limited for the term of thirty five years from the 1 ^st June 1971 subject to the yearly rent thereby reserved and the covenants on the part of the Lessee therein contained. The appellants (hereinafter "the Lessors") are entitled to the Lessors interest and the respondent (hereinafter "the Lessee") to the Lessee's interest in the Lease.

3 The Lease contained the following covenants on the part of the Lessee:-

4 2 "1. During the continuance of this demise to preserve, uphold, support, maintain and keep the demised premises including the roof and exterior walls, the glass in windows, all locks, sash cords, electric, gas and other fittings, mains, pipes and water taps and all sanitary fixtures and fittings therein and all additions made to the said premises in good and proper and sufficient order, repair and condition and at the end of the term hereby granted or the sooner determination of this demise to so leave and yield up the same unto the Lessor.

5 2. Not to assign the said premises or any part thereof without the previous consent in writing of the Lessor first had and obtained.

6 3. To use and occupy the premises solely for the purpose of the Lessee's trade or business as a pharmaceutical chemist to include cosmetics, chiropody and photographic goods and services and not to use any part thereof for residential purposes or for any other trade or business whatsoever without the previous consent in writing of the Lessor first had and obtained."

7 The Lease contained a provision for re-entry and forfeiture in the event of a breach, non-observance or non-performance by the Lessee of the covenants and conditionscontained in the Lease. At all material times the Lessee was in breach of the repairing covenant. Three schedules of dilapidations were served, the first in 1993, the second in 1995 and the third in 1999. The repairs were not carried out and the present proceedings were instituted by the Lessor on the 17 ^th October 1997, the relief sought being an injunction requiring the Lessee to comply with the repairing covenant. The Lessee delivered a defence and counterclaim on the 23 ^rd October 1998. On the 9 ^th December 1997 the Lessee sought consent to assign the Lease to Aidan Fitzpatrick on the basis that Aidan Fitzpatrick would undertake and contract to carry out the agreed schedule of dilapidations within the period of one year of closing the purchase of the Lease. By letter of the 17 ^th December 1977 the Lessor responded as follows:-

"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 client to our clients' satisfaction as the same have been outstanding for a number of years."

8 On the 20 ^th April 1998 the Lessee sought consent to assign the Lease to Cyril Bellew and consent to change of user: this correspondence was not responded to. By letter dated 30 ^th June 1998 the Lessee sought consent to assign the Lease to Cellular World Limited. Protracted correspondence followed but the Lessors neither granted nor refused consent to assign. The counterclaim delivered on the 23 ^rd October 1998sought a declaration that the Lessee is entitled to assign the Lease to Cellular World Limited without the consent of the Lessors and damages for breach of contract, breach of covenant and breach of statute. By letter dated 3 ^rd December 1998 the Lessee sought consent to assign the Lease to Newgrange Crystals Limited. By letter dated 6 ^th January 1999 the Lessee informed the Lessors that it was proposed to carry out the works required by the up-to-date schedule of dilapidations and the works were carried out and completed by September 1999. On the 1 ^st September 1999 the Lessee sought consent to assign the Lease to Sean and Louise O'Sheehan. By letter dated 3 ^rd November 1999 consent to assign to Esat Digifone Limited was sought. By letter dated 18 ^th November 1999 the Lessors consented in principle to an assignment to both Sean and Louise O'Sheehan and to Esat Digifone Limited. Consent to assign to Esat Digifone Limited was ultimately furnished on the 28 ^th July 2000.

9 The action came on for hearing on the 5 ^th, 6 ^th and 7 ^th April 2005 and judgment was delivered on the 15 ^th April 2005. The learned trial judge found that the Lessors had acted unreasonably in refusing consent to assign the Lease to Cellular World Limited and made a declaration to that effect. In addition he awarded the Lessee damages from the 20 ^th October 1998, the date of expiration of a completion notice served on the Lessee by Cellular World Limited, the learned trial judge finding that Cellular World Limited were ready, willing and able to complete the purchase of the Lease on that date. He measured damages at the rent and rates paid by the Lesseefrom the 20 ^th October 1998 to the assumption by Esat Digifone Limited of responsibility for the same together with the selling agent's fees in respect of the sale of the Lease to Esat Digifone Limited.

10 From the learned trial judge's judgment and order the Lessors appeal. In summary it is contended that the learned trial judge was in error in holding that consent to assign had been unreasonably withheld and in awarding damages to the Lessee on that basis. In advance of the hearing in the High Court the Lessor furnished consent to the assignment of the Lease to Esat Digifone Limited and the assignment had taken place. In these circumstances if, as a matter of law, damages cannot be recovered for the unreasonable withholding of consent to assign to Cellular World Limited the declaration sought by the Lessee would be of no practical benefit. Only if the court decides that the Lessee is entitled to damages upon consent to assign to Cellular World Limited being unreasonably withheld will it be necessary to consider whether the Lessors" failure or refusal to grant consent to assign in respect of an assignment to Cellular World Limited was unreasonable.

Submissions of the Parties

11 For the Lessee reliance was placed on Kelly v Cussen and Cussen 88 I.L.T.R. 97 a decision of the Circuit Court. There it was held that a like covenant arising under the Rent Restrictions Act 1946 section 40(4)(b) would entitle a statutory tenant todamages where consent to assign was improperly withheld. The plaintiff in that case also relied on The Landlord and Tenant Act 1931 section 56(1) and while not considered in the judgment that provision, in logic, could also give rise to an entitlement to damages where consent was unreasonably withheld. For the Lessors reliance was placed on Rendall v Roberts and Stacey Limited 175 E.G. 265, [1960] E.G.D. 161, a decision of the Queen's Bench Division...