Oysters Shuckers Ltd T/A Klaw v Architecture Manufacture Support (EU) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Mark Sanfey
• Judgment Date: 23 October 2020
• Neutral Citation: [2020] IEHC 527
• Docket Number: [No. 2020/4049 P]
• Court: High Court
• Date: 23 October 2020

BETWEEN

OYSTERS SHUCKERS LIMITED T/A KLAW

PLAINTIFF

AND

ARCHITECTURE MANUFACTURE SUPPORT (EU) LIMITED

AND

WOOI HEONG TAN

DEFENDANTS

[2020] IEHC 527

Mark Sanfey

[No. 2020/4049 P]

THE HIGH COURT

Interlocutory application – Injunction – Balance of justice – Plaintiff seeking injunctive relief – Whether the plaintiff had established a fair question to be tried

Facts: The plaintiff, Oysters Shuckers Ltd trading as Klaw, claimed the following substantive reliefs: “(1) A Declaration that [the first defendant, Architecture Manufacture Support (EU) Ltd] executed and entered into a valid, binding and irrevocable lease on 19 November 2018 in respect of the property more particularly described in the schedule hereto (‘the Property’); (3) Further, and/or alternatively, a Declaration that the First Named Defendant is estopped from denying the validity or effect of the lease dated 19 November 2018 or, in the alternative, an Order for the specific performance of the agreement of the First Named Defendant to grant a further lease in respect of the Property; (5) In the alternative, and insofar as is necessary, a Declaration that the Plaintiff is beneficially entitled to the sum of €350,000.00, or such other figure as determined by this Honourable Court, in respect of the share transfer effected in or around 19 November 2018 in favour of [the second defendant, Mr Tan], and/or an Order directing the Second Named Defendant to return such monies to the Plaintiff and/or its related companies and/or, in the alternative, to hold such monies on account for said companies pending the reversal of the share transfer effected in NRW Group Holdings Limited; (6) Damages for breach of contract or, in the alternative, damages for breach of contract for the agreement to create a further lease in respect of the Property; (7) Aggravated or exemplary damages.” This High Court judgment concerned an interlocutory application by notice of motion issued on 5th June, 2020 seeking an injunction “restraining the First Named Defendant, and/or servants or agents, from taking, or seeking to take, possession of the property more particularly described in the schedule hereto (‘the Property’) and/or from disabling any alarm and/or changing any locks or otherwise interfering with the Plaintiff’s use and quiet enjoyment of the Property, pending the determination of the within proceedings”.

Held by Sanfey J that the plaintiff had established a fair question to be tried as to whether the disputed lease was valid, binding and effective. He did not consider that the existence of arrears of rent automatically precludes a plaintiff from obtaining the type of injunction sought in this application; as O’Donnell J remarked in Merck Sharp & Dohme Corporation v Clonmel Healthcare [2019] IESC 65, the application must be “approached with a recognition of the essential flexibility of the remedy and the fundamental objective in seeking to minimise injustice, in circumstances where the legal rights of the parties have yet to be determined”. However, Sanfey J held that the failure to discharge rent in the past and an admitted inability to discharge rent in the future are matters which weigh heavily when assessing the balance of convenience or justice. He found that there was no stateable basis upon which the court could hold that rent was not payable under the disputed lease in respect of periods in which the plaintiff had to close the premises due to circumstances caused by the COVID-19 pandemic. Therefore, he held that there was no basis upon which any future rent should be paid into escrow, rather than directly to the first defendant. He held that the plaintiff had not adduced sufficient or any evidence to persuade the court that irreparable harm would enure to it if an injunction was not granted, or that an award of damages would not fully compensate it. He was not satisfied that there was any substance to the undertaking as to damages offered by the plaintiff.

Sanfey J held that the balance of justice required that the plaintiff’s application be refused.

Application refused.

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 23rd day of October, 2020

Introduction

1 This judgment concerns an interlocutory application by notice of motion issued on 5th June, 2020 seeking an injunction “… restraining the First Named Defendant, and/or servants or agents, from taking, or seeking to take, possession of the property more particularly described in the schedule hereto (‘the Property’) and/or from disabling any alarm and/or changing any locks or otherwise interfering with the Plaintiff's use and quiet enjoyment of the Property, pending the determination of the within proceedings…”.

2 The property in question is a premises at 5A Crown Alley, Temple Bar, Dublin 2, (‘the premises’), which is more commonly known by its trading name of ‘Klaw’. The plaintiff describes the business as a “ small, boutique, award-winning seafood restaurant”. The plaintiff alleges that it is the tenant of the premises in circumstances which I will set out below. The first named defendant is the owner of the premises, and the second named defendant is a director of that company.

3 An application was made on 5th June, 2020 to this Court by the plaintiff for interim relief on foot of an ex parte docket seeking an order in the same terms as the notice of motion. On that date, Humphreys J. made the order sought pending further order of the court. It was fairly conceded by counsel for the plaintiff in the hearing before me that a major factor in the grant of interim relief was the fact that, under the Emergency Measures in the Public Interest (COVID-19) Act, 2020 (‘the 2020 Act’), “… all proposed evictions in all tenancies in the State [S.5(7)]” were prohibited during the operation of that Act.

4 However, the “emergency period” during which that Act was in operation is no longer in force. Counsel before me agreed therefore that the 2020 Act is no longer a factor to be taken into account for the purpose of the interlocutory application, and the matter is to be decided according to the usual principles governing an interlocutory application.

Background

5 There has been an extensive exchange of affidavits between the parties prior to the hearing of the present application. The parties also proffered detailed written submissions in support of their respective positions. All of this material, together with the oral submissions made at the hearing, have been considered by me in coming to my decision. What follows in this judgment is a non-exhaustive summary of the facts and a consideration of the key arguments on both sides.

6 The application is grounded upon the affidavit of Wing Lee, who is a director of the plaintiff company. Mr. Lee avers that, on 11th February, 2016, the plaintiff entered into a lease agreement with the first named defendant for a term of four years and nine months from 1st July, 2015. The lease was subject to yearly payments of €30,000 exclusive of VAT for the first and second years, and €34,000 exclusive of VAT for the remainder of the lease.

7 The plaintiff contends that, on 19th November, 2018, a further lease was executed by the first named defendant in respect of the premises for a term of 15 years from 1st October, 2018 with an annual rent of €40,000 per annum. It is alleged that the lease was executed by the second named defendant for and on behalf of the first named defendant at a meeting at which Mr. Lee was present. Also present were Mr. Patrick Kelly, a solicitor who appears to have advised both sides to the transaction at various times, and Mr. Tadgh Moriarty, the first and second named defendants' accountant.

8 Mr. Lee avers that he did not execute the lease on behalf of the plaintiff at that meeting “… as it was specifically represented to me by Mr. Kelly that both myself and Mr. Niall Sabongi, also a Company Director in the Plaintiff, were required to execute the lease at the same time” [para. 10]. Mr. Lee further avers that Mr. Kelly represented that he would retain a copy of the lease which had been executed by the second named defendant on behalf of the first named defendant until such time as Mr. Lee and Mr. Sabongi could execute the lease. Mr. Lee avers that he is advised “ that a valid, binding and irrevocable lease came into existence on 19 November 2018 in respect of the Property and in favour Plaintiff company, such that the First Named Defendant herein is bound by the said terms therein” of the [para. 11].

9 Mr. Lee also avers that the common seal of the first named defendant was applied to the lease by the second defendant at this meeting. Mr. Lee had in fact been a director of the first named defendant at some time prior to the meeting, and avers that he had “specifically been directed by the First Named Defendant…to bring with me the company seal of the First Named Defendant to be used by the Second Named Defendant… for the purposes of executing the lease on behalf of the First Named Defendant” [para. 12].

10 Mr. Lee avers that, despite repeated requests from the plaintiff, the first named defendant has not delivered a copy of the executed lease to the plaintiff. He also says that the broader context to the execution of the new lease was the “ buy-out” of the second named defendant's shareholding in NRW Holdings Limited (‘NRW’), which company was the 100% shareholder in the plaintiff company as well as a shareholder in a number of other related companies run by Mr. Lee and Mr. Sabongi. It appears that the second named defendant's shareholding in NRW and certain other entities was purchased for the sum of €350,000 pursuant to a heads of agreement dated 17th August, 2018.

11 It is clear from the evidence that there was a falling out between the second named defendant on the one hand and Mr. Lee and Mr. Sabongi on the other, and that the agreement of 17th August, 2018 was part of a general...