Spiritus Ltd v Conway

• Jurisdiction: Ireland
• Judge: Mr. Justice Holland
• Judgment Date: 28 June 2022
• Neutral Citation: [2022] IEHC 390
• Court: High Court
• Docket Number: 2019/7048P

Between

Spiritus Limited

Plaintiff

and

Frank Conway

and

Peig Sayers Hotel Partnership

and by Order

Sheelagh Conway

Defendants

[2022] IEHC 390

2019/7048P

The High Court

Interpretation – Agreement – Possession – Plaintiff seeking to recover possession of a hotel from the defendants – Whether, as a matter of interpretation of an agreement between the first defendant and the third defendant, it prohibited the first defendant from terminating the second defendant’s management agreement with the plaintiff and from excluding the plaintiff from the hotel, both without the written consent of the third defendant

Facts: The plaintiff, Spiritus Ltd, sought to recover possession, or at least occupation, of the Riverhouse Hotel at Eustace St. Dublin from the first defendant, Mr Conway, and arguably from the other defendants, the Peig Sayers Hotel Partnership and Ms Conway, and claimed declarations and injunctions accordingly. It asserted a tenancy and claimed relief against forfeiture. Spiritus Ltd also sought damages for, inter alia breach of contract, and essentially restitutionary reliefs in respect of other monetary transactions. Mr Conway’s defence was full and counterclaimed various declarations and damages. The matter came on before the High Court (Holland J) for trial having been called on for four days. On part-reading the papers in advance of trial Holland J had become concerned that the trial would take appreciably longer. He expressed that concern when the case started and his concern was amplified when Spiritus Ltd objected to the representation of the Peig Sayers Hotel Partnership by the same legal team as represented Mr Conway. Ms Conway joined in that objection. The legal team for Mr Conway and the Peig Sayers Hotel Partnership maintained their entitlement to represent the Peig Sayers Hotel Partnership. It was thereupon apparent that the trial could not finish in the time available. Holland J understood that this was not its first listing for trial. While no procedural solution was entirely attractive, in an attempt to make at least some progress he decided to hear and determine two issues only. Those took three days to hear and that proved possible only given resolution of one issue by consent on the second day. Those facts confirmed his view that the many other issues in dispute could not have been disposed of in the time available. The two issues he decided to determine were: whether the legal team for Mr Conway and the Peig Sayers Hotel Partnership could represent both of them; and an issue as to the interpretation of §3.1.6 of the agreement between Ms Conway and Mr Conway of 21 February 2017.

Held by Holland J that the issue whether the legal team acting for Mr Conway could act also for the Peig Sayers Hotel Partnership was ultimately resolved by the agreement of that legal team that it would not do so and they agreed to come off record in that respect.

Holland J held that, as a matter only of interpretation of the agreement between Mr Conway and Ms Conway made on 21 February 2017, it prohibited Mr Conway from terminating the Peig Sayers Hotel Partnership’s management agreement with Spiritus Ltd dated 31 March 2017 and from excluding Spiritus Ltd from the Riverhouse Hotel, both without the written consent of Ms Conway.

Issue of interpretation decided in favour of plaintiff.

JUDGMENT of Mr. Justice Holland delivered electronically on 28, June 2022

Contents

JUDGMENT of Mr. Justice Holland delivered electronically on 28, June 2022	1
Introduction	2
Background & Evidence	5
Peig Sayers Hotel Partnership & Respective Roles of Sheelagh Conway and Frank Conway	5
Sheelagh Conway's concerns in early 2017	7
The events of early 2017	9
The Representation Issue	10
The Interpretation Issue & the Law	14
Identification of the Issue	14
Principles of Interpretation	15
The Agreement for Interpretation	18
The Recitals	18
§2, 3 & 4 of the Agreement of 21 February 2017	21
§3.1.6 of the Agreement	21
Other Terms of the Agreement of 21 February 2017	25
Agreement Exhausted?	27
Conclusion on the Interpretation Issue	31

Introduction

1 This action relates to intractable and unfortunate commercial disputes between Frank Conway, his long-estranged wife Sheelagh Conway, and their son, Nicholas Conway. Nicholas Conway is the majority shareholder and sole director of the Plaintiff, Spiritus Limited (“Spiritus”). Despite their personal estrangement and separation over 20 years ago, the assets and financial and commercial affairs of Sheelagh Conway and Frank Conway remain intertwined and the affairs of both remain intertwined with those of Nicholas Conway and Spiritus. While some issues are in dispute between Sheelagh Conway and Nicholas Conway, more broadly Sheelagh Conway and Nicholas Conway are united in dispute with Frank Conway. Mediation has failed. The Conways' disputes centre around control of the Riverhouse Hotel at Eustace St. Dublin, from which all, in greater or lesser degree, have for many years derived, or expected to derive, a great portion or all of their respective incomes and wealth. The Hotel complex includes the hotel proper, bar/nightclub facilities and apartments. I will refer to all collectively as “the Hotel”.

2 The history of this matter is lengthy and complex. The affairs of the Conways and their Hotel have been difficult for many years. Overarching their disputes is the long-standing and considerable indebtedness of the enterprise. The Hotel has at times traded while lacking a liquor licence. While I must deprecate such an alarming and unacceptable situation, the causes of it and responsibilities for it are disputed and it does not now fall to me to address it or attribute responsibility for it or consequences flowing from it. I am informed that the Hotel has held a liquor licence since October 2019.

3 Simplifying matters very considerably, Sheelagh Conway and John Harty, as trustees for the Peig Sayers Hotel Partnership (“the Partnership”), of which they were also the promoting partners, acquired the Hotel in or about 1993. The acquisition was part-funded by a loan from Anglo Irish Bank. Until about 2016/2017 Frank Conway had managed the Hotel. Nicholas Conway had been working in the Hotel for many years. In or about 2016/2017 and in view of Frank Conway's approaching retirement age, the Conways agreed that Nicholas Conway should run the Hotel (initially in part, latterly the entire). For that purpose Spiritus was incorporated or acquired in February 2016. In or about March 2016 Spiritus, on foot of a Management Agreement between the Partnership and Spiritus executed 1 by all three Conways (the “1st Management Agreement”), began to run part of the Hotel – essentially the bar/nightclub element, termed the “Operator Areas”. Frank Conway and Sheelagh Conway executed the 1st Management Agreement for the Partnership. Nicholas Conway did so for Spiritus. It provided that it was to last for 3 years from 1 March 2016 and Spiritus was entitled to “ the exclusive operation of the Operator Areas 2”. Spiritus was to lodge the income from alcohol sales (presumably the largest revenue stream from the Operator Areas) in an account in the name of the Partnership but Spiritus was to have access to and control of that account. Spiritus was to pay a monthly management fee of €28,000 plus VAT to the Partnership and was to levy a monthly management charge “ to effectively extract the gross profit” of the business it was to operate. While Spiritus was not to jeopardise the liquor licence, the Partnership was to maintain it — save that Spiritus was to deal with late exemptions. This is a brief account of a quite lengthy agreement.

4 The 1st Management Agreement was superseded by an undated Management Agreement between the Partnership and Spiritus – again executed by all three Conways, last by Sheelagh Conway on 31 March 2017 (“the Management Agreement of 31 March 2017”). This gave Spiritus exclusive management of the entire Hotel from 1 April 2017 to 1 April 2020. Spiritus was to pay for its rights by a series of payments to third party creditors of the Partnership, including Pepper 3, and €1,000 per week to Sheelagh Conway. Again, this is a brief account of a lengthy agreement.

5 Over time thereafter, and for reasons stated but which I need not now interrogate, Frank Conway came to regret the arrangement with Nicholas Conway/Spiritus and to consider that he should resume control of the Hotel. Sheelagh Conway and Nicholas Conway have always remained of the view that the latter should run the Hotel. That is the crux of their present dispute.

6 On 10 September 2019 Frank Conway, in what Counsel for Spiritus described as a “dawn raid”, purported to terminate the Management Agreement of 31 March 2017, took possession and control of the hotel by physical re-entry and excluded Spiritus and Nicholas Conway from its occupation and control (“the Termination”). It is not in dispute that Frank Conway did so and did so without prior notice to, or authority of, Sheelagh Conway. Amongst the cases Sheelagh Conway and Nicholas Conway make is that Frank Conway was not entitled to effect the Termination without the prior authority of Sheelagh Conway. They rely to that effect, inter alia, on their interpretation of an agreement of 21 February 2017 4 between Sheelagh Conway and Frank Conway – an agreement also pleaded by Frank Conway as authorising his actions. This judgment is concerned with the interpretation of that agreement.

7 On 10 September 2019 Spiritus obtained an ex parte injunction in these proceedings restoring its occupation and control of the Hotel. The proceedings have taken an eventful course thereafter. Inter alia, in the context of a motion to attach and commit him for alleged breach of certain undertakings to the Court,...