Tanat Ltd v Medical Council
| Jurisdiction | Ireland |
| Judge | O'Neill J. |
| Judgment Date | 16 May 2013 |
| Neutral Citation | [2013] IEHC 223 |
| Court | High Court |
| Date | 16 May 2013 |
BETWEEN
AND
[2013] IEHC 223
THE HIGH COURT
LAND LAW
Lease
Application for declaratory relief and damages - Short term lease with put and call option agreement for longer lease - Whether Land and Conveyancing Law Reform Act 2009, s 132 applied to longer lease - Rent review - Legislative prohibition on upward only rent review clauses - Agreement for lease - Legal nature of option agreement - Whether option merely irrevocable offer - Whether option conditional contract - Whether option agreement agreement for such lease within meaning of Act of 2009 - Conditional contract capable of enforcement - Necessity for constitutional interpretation of section - Property rights of parties - Whether defendant estopped from denying put option agreement agreement for such lease - Estoppel by convention - Hamilton v Hamilton [1982] IR 466; United Dominion's Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74; Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444; BNY Trust Company (Ireland) Ltd v Treasury Holdings Ltd [2007] IEHC 271, (Unrep, Clarke J, 5/7/2007); Laybutt v Amoco Australia Pty Ltd [1974] HCA 449; Mark Bain Construction Pty v Barling [2006] QSC 48; Cosmoline Trading Ltd v DH Burke & Son Ltd and DHP Holdings Ltd [2006] IEHC 38, (Unrep, Finnegan P, 8/2/2006); O'Connor v Coady [2004] IESC 54, [2004] 3 IR 371 and Courtney v McCarthy [2007] IESC 58, [2008] 2 IR 376 considered - Reox Holdings plc v Cullen [2012] IEHC 299, (Unrep, Charleton J, 26/7/2012) distinguished - Land and Conveyancing Law Reform Act 2009 (No 27), s 132 - Declarations made (2012/4052P - O'Neill J - 16/5//2013) [2013] IEHC 223
Tanat Limited v The Medical Council
Facts: The plaintiff was a party to a lease and sought three declarations. Firstly, that s. 132 Land and Conveyancing Law Reform Act 2009 did not apply to the lease entered into. Secondly, that the basic rent payable on the lease to be entered into did not constitute a rent review as provided for under that provision and finally that the defendant should have been estopped from advocating that the provision applied to the lease in question. Damages were also claimed.
O”Neill J held that the Put option for a 20 year lease constituted “”an agreement for a such lease”” under s. 132(2), BNY Trust Company (Ireland) Ltd. v. Treasury Holdings Ltd. [2007] IEHC 271 applied. Agreements for a lease which were subject to a condition were covered by the exclusionary subsection; s.132 therefore did not apply to the lease in question. If s. 132 had applied it would have had a retrospective effect and would have adversely interfered with the vested property rights of the parties. The upwards only rent review clause provided in the lease would be unaffected by s.132, Reox Holdings plc. v. Cullen [2012] IEHC 299 distinguished.
The defendant was entitled to make the legal submission of invoking the section and seeking to have it applied, reliance upon s.132 was not unconscionable and there was therefore no basis for estoppel.
LAND & CONVEYANCING LAW REFORM ACT 2009 S132
MEDICAL PRACTITIONERS ACT 2007
MEDICAL PRACTITIONERS ACT 1978
LAND & CONVEYANCING LAW REFORM ACT 2009 S132(3)
HAMILTON v HAMILTON 1982 IR 466
UNITED DOMINIONS TRUST (COMMERCIAL) LTD v EAGLE AIRCRAFT SERVICES LTD 1968 1 WLR 74
SUDBROOK TRADING ESTATE LTD v EGGLETON 1993 1 ACC 444
REOX HOLDINGS PLC v CULLEN UNREP CHARLETON 26.7.2012 2012/39/11855 2012 IEHC 299
BNY TRUST CO (IRL) LTD v TREASURY HOLDINGS LTD UNREP CLARKE 5.7.2007 2007/5/998 2007 IEHC 271
SPIRO v GLENCROWN PROPERTIES LTD & ANOR 1991 CH 537 1991 2 WLR 931 1991 1 AER 600
LAYBUTT v AMOCO AUSTRALIAN PTY LTD 1974 132 CLR 57 1974 4 ALR 482 1974 48 ALJR 492 1974 HCA 49
MARK BAIN CONSTRUCTION PTY v BARLING 2006 QSC 48
LAW OF PROPERTY (MISCELLANEOUS PROVISIONS ) ACT 1989 S2 (UK)
COSMOLINE TRADING LTD v DH BURKE & SONS LTD & DHP HOLDINGS LTD UNREP FINNEGAN 8.2.2006 2006/12/2449 2006 IEHC 38
HALSBURYS LAWS OF ENGLAND 4ED VOL 27(1) PARA 75
O'CONNOR v COADY 2004 3 IR 371
COURTNEY v MCCARTHY 2008 2 IR 376
JUDGMENT of O'Neill J. delivered on the 16th day of May 2013
1. In these proceedings, the plaintiff seeks three declarations and damages. The first of these declarations is to the effect that s. 132 of the Land and Conveyancing Law Reform Act 2009, does not apply to a lease entered into by the parties in respect of premises known as Kingram House, Kingram Place, Dublin 2 for a term of twenty years commencing on 1 st January 2013. The second declaration is to the effect that the establishment of the Basic Rent for the purposes of the lease to be entered into does not constitute a rent review to which the provisions of s. 132 of the Land and Conveyancing Law Reform Act 2009, apply. The plaintiff finally seeks a declaration that the defendant is estopped from contending that s. 132 of the Land and Conveyancing Law Reform Act 2009, applies to the lease in question, and finally, the plaintiff claims damages.
2. Section 132 of the Land and Conveyancing Law Reform Act 2009, is the legislative provision which prohibits "upward only" rent review clauses in leases of premises used for business purposes and reads as follows:
2 "132.-(1) This section applies to a lease of land to be used wholly or partly for the purpose of carrying on a business.
(2) Subsection (1) shall not apply where-
(a) the lease concerned, or
(b) an agreement for such a lease, is entered into prior to the commencement of this section.
(3) A provision in a lease to which this section applies which provides for the review of the rent payable under the lease shall be construed as providing that the rent payable following such review may be fixed at an amount which is less than, greater than or the same as the amount of rent payable immediately prior to the date on which the rent falls to be reviewed."
Section 132 came into effect on 28 th February 2010.
3. From the evidence given in the case, I am satisfied that the following is established as a matter of probability.
4. In 1989, the plaintiff acquired Kingram House. It is and always has been the only asset of the plaintiff company. The shareholders in the plaintiff company are Mr. John Ronan and Mr. Peter Cordon, each of whom has a 50% shareholding. For many years, through the guise of a variety of corporate entities, they have engaged in the business of property development. With regard to those developments in which Mr. Ronan was involved, his preference always was to retain properties which were built by companies in which he had an interest and to let these on long leases, namely, not less than 25-year leases. Thus, 95% of the buildings constructed in which he had an interest were retained in that way.
5. Kingram House is situated at Kingram Place, which is just off Fitzwilliam Place East, Dublin 2. The property, when acquired by the plaintiff, consisted of a small double-fronted Georgian building behind which was a larger old fashioned factory-type building. The Georgian building to the front had been a school which Oscar Wilde attended and the factory premises behind was, in days gone by, used for the manufacture of bandages for the British Army. From the time of its acquisition until about 2006, the premises had been let by the plaintiff. In 2006, the plaintiff set about redeveloping the property into the modern, high quality offices which are there now and which are currently occupied by the defendant as its headquarters. The original Georgian building to the front has been retained and the old factory to the back has been entirely replaced by a modern state-of-the-art office development.
6. In 2006, the defendant was in search of a new headquarters building. Lynn House in Rathmines, which they then occupied, was inadequate for their needs, particularly in light of the coming into effect of the Medical Practitioners Act 2007, which would have required the defendant to conduct public hearings, with all of the necessary accommodation that would be required for that.
7. I am satisfied on the evidence of Mr. Lamont, the then Registrar of the Medical Council, that the defendant was interested in buying a building rather than in leasing one, and through its agents, HT Meagher O'Reilly, were in the process of conducting a comprehensive trawl of the market to find a building suitable to their needs in a location that, likewise, was suitable for them.
8. Partly through this process of searching, and also as a result of a personal contact between Mr. Ronan and Professor Brian Keogh, a member of the then Medical Council, the plaintiff and defendant came into contact with each other. It is obvious that it quickly became apparent that Kingram House met the requirements of the Medical Council, both as to quality of building and location, and I have no doubt the plaintiff was pleased at the prospect of having the Medical Council, either as a purchaser of their building or as a lessee under a long term lease.
9. This was the situation as of late autumn 2006. However, an obstacle emerged, which was, that the plaintiff was unwilling simply to sell the building to the Medical Council, mainly because in so doing they would draw down upon the company a Capital Gains Tax (CGT) liability of approximately €2.7m. In addition, a distribution to the shareholders of the profit on the transaction would lead to a substantial Income Tax liability in the hands of the two shareholders. Whilst this was their obvious and primary objection to proceeding by way of a sale of the building, I am satisfied that there was also a strong in-built bias in the plaintiff company against the sale of a building, preferring instead to hold on to it...
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