Star Marina Ltd v Minister for Justice
| Jurisdiction | Ireland |
| Judge | Mr. Justice Birmingham |
| Judgment Date | 07 March 2014 |
| Neutral Citation | [2014] IEHC 112 |
| Court | High Court |
| Date | 07 March 2014 |
[2014] IEHC 112
THE HIGH COURT
BETWEEN
AND
GLENCAR EXPLORATION v MAYO CO COUNCIL 2002 2 IR 84
LETT & CO LTD v WEXFORD CORPORATION & ORS UNREP CLARKE 23.5.2007 2007/34/7055 2007 IEHC 195
CURRAN v MIN FOR EDUCATION 2009 4 IR 300
MCCARTHY v MIN FOR EDUCATION & SKILLS UNREP HEDIGAN 25.4.2012 2012/30/8851 2012 IEHC 200
WILEY v REVENUE COMMISSIONERS 1994 2 IR 160
Construction - Grant - Funding - Terms and conditions - Planning requirements - Foreshore licence - Decision not to pay second moiety - Damages - Breach of legitimate expectation - Breach of contract - Counterclaim - Limitation period
Facts: The plaintiff was a limited company that brought proceedings against the defendant as a result of its decision not to pay to the plaintiff the second moiety of a grant it had been allocated in respect of a development at Derreenacallaha, Kenmare, Co. Kerry. The plaintiff claimed loss was suffered because it proceeded with the project on the basis that the promised grant would be forthcoming and, therefore, sought damages for breach of legitimate expectation and/or damages for breach of contract.
The defendant argued that it had been justified in refusing to pay the second moiety of the grant because the plaintiff had constructed a very different facility to the one that had been originally approved, had failed to acquire the necessary foreshore licence in breach of the conditions of the grant, and had failed to comply with planning requirements. It was also said that the first moiety had been spent on an illegal development that had to be demolished. For these same reasons, the defendant counterclaimed for the value of the first moiety that had been paid to the plaintiff.
Held by Birmingham J. that it was clear that the acquisition of a foreshore licence was a necessary condition of the decision to give the plaintiff the grant and that prior to the funding being withdrawn, the defendant had informed the plaintiff that it was willing to consider any forthcoming foreshore application. In those circumstances, it was said that it would have been proper for the defendant to withhold any final decision to cease funding until after a foreshore application was determined.
It was further held, however, that the project that the plaintiff embarked upon was barely recognisable by reference to what was originally proposed in the plaintiff”s application for the grant. In doing so, there were also clear breaches of the planning requirements. Given the fact that there was a departure from what was approved for grant aid, it was held that the defendant was justified in withholding the second moiety of the grant. The plaintiff”s claim for this moiety, therefore, failed.
It was also held that the defendant”s counterclaim failed because it was statute barred. The first moiety had been paid on the 5th December 2001, and the counterclaim had been delivered on the 8 th October 2010. The defendant had claimed that they did not gain knowledge of the cause of action until well after the payment was made, but it was held that the plaintiff”s breaches of planning requirements were clear from the end of 2002 at the latest. As a result, it was said that the counterclaim was delivered outside the limitation period.
Claim dismissed. Counterclaim dismissed.
JUDGMENT of Mr. Justice Birmingham delivered on the 7th day of March, 2014
1. In these proceedings the plaintiff is seeking damages for breach of legitimate expectation and/or in the alternative damages for breach of contract arising from a decisions taken by the defendant in February, 2006 not to pay to the plaintiff the second moiety of a grant it had been allocated in respect of the development of an integrated marina, training centre and associated facilities at Derreenacallaha, Kenmare, Co. Kerry. The project had received approval for grant aid in the amount of €752,549.63, subject to conditions, the plaintiff having been notified by letter from the defendant dated 24 th January, 2001, that approval for grant aid in the amount of IR£592,681.00 had been given.
2. On 3 rd December, 2001, the first instalment, in the amount of €332,3 12.00 was paid. That first instalment was in fact the only payment that would be made and indeed the defendant by way of counterclaim now seeks its repayment.
3. The case on behalf of the plaintiff is a straightforward one - that it applied for a grant, that it was approved for a grant, that it was told that it was getting a grant in the amount of €752,549.63 (now expressed in euro equivalent), that it proceeded with the project on the basis that the promised grant would be forthcoming but that the second moiety has been improperly and, indeed, unlawfully been withheld.
4. The case for the defendant is that the second phase of the grant was properly withheld and indeed that the amount actually paid over should be refunded in circumstances where it is contended that:-
(a) that the plaintiff had constructed a very different facility to the one that had been originally approved, with the result that, ultimately, a fresh foreshore application, with a full public consultation process, was deemed necessary and still remained outstanding,
(b) that the plaintiff at no time had been in substantial compliance with planning requirements and that substantial planning breaches persisted, and
(c) that state grant monies had been expended on matters that went beyond the scope of the original application and had been expended on an illegal development that later required demolition, and
(d) on the grounds that the funding constituted legal state aid as a matter of EU law.
This last point has been raised in correspondence but has not featured as an issue during the course of the hearing before me.
5. The reference to a foreshore application arises from the fact that the development straddles a public road with a substantial two storey structure on the land side and a slip or pier on the shore side, largely located on the foreshore. The proposed development, therefore, required both planning permission and a foreshore lease.
6. The plaintiff and its principal shareholder, Mr. Daniel McCarthy, applied for grant aid under a scheme for Marine Tourism and Development in the sum of IR£525,000.00 (subsequently revised upwards to IR£592,681.00) by a letter from its accountant dated 7 th November, 2000. The letter stated that the project was expected to cost IR£1.6m and would consist of a Marina, training centre and associated facilities. The courses to be offered would consist of sailing, windsurfing, canoeing and rowing. The letter added that the Marina would also offer language classes in conjunction with the listed activities. Students would spend half the day learning to sail and the other half practising their English. Qualified teachers of English as a foreign language were to be employed.
7. Mr. Frank Fahey T.D., then Minister for the Marine and Natural Resources, replied by letter dated 5 th December, 2000. The letter set out the criteria that governed projects of this nature. The letter then commented that the initial examination indicated that the proposal which had been submitted, scored highly on these points, that the department was reviewing the papers submitted with the application letter and would be in touch seeking further information. The letter then commented that as a general rule any public grant aid to an infrastructural project had to be based on clear and precise information within a preset framework with a clear indication of specific items such as exact details of costs of each specific element of the overall plan, exact details of all funding sources, detailed building plans, legal and planning requirements, details of operational aspects etc.
8. The letter then concluded that the necessary funds were being made available subject to satisfactory responses to the additional information sought. Mr. Fahey said that he agreed that the project would be grant aided and would go ahead subject to the balance of funding being made available by the promoters.
9. Confirmation that the project had been approved for a grant of not more than IR£592,681.00 came by way of letter dated 24 th January, 2001, from Mr. Kieran Grace, Head of the Marine Leisure and Research division at the Department of the Marine and Natural Resources.
10. The letter stated that the decision to grant aid was subject to conditions which were then set out. The first of these is the one of most direct relevance to the current controversy. It was in these terms:-
"All relevant foreshore and planning requirements shall have been granted by the relevant authorities and shall be in place, and copies shall have been supplied to the Department of the Marine and Natural Resources."
11. On 10 th May, 2001, a letter from Mr. Patrick O'Donnell of the Coastal Zone Administration Division informed the plaintiff's engineer that the Minister had approved the granting of a foreshore lease. The letter stated that subject to strict adherence to site specific conditions which were attached that there was no objection to work commencing on the foreshore in advance of the lease being finalised. Attached were seventeen site specific conditions.
12. Conditions 1 and 3 are those most in point. They are in these terms:-
2 "1. (a) The lessee shall use that part of the foreshore, the subject matter of this lease for a the purpose of constructing, using and maintaining the aforementioned Marine Leisure Facility and for no other purpose whatsoever.
For the purpose of this Lease, Marine Leisure Facility, herein referred to as...
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