Thomas Thompson Holdings Ltd v Musgrave Group Plc

• Jurisdiction: Ireland
• Judge: Mr. Justice Hedigan
• Judgment Date: 22 January 2016
• Neutral Citation: [2016] IEHC 28
• Docket Number: [2015 No. 10686 P.]
• Court: High Court
• Date: 22 January 2016

[2016] IEHC 28

THE HIGH COURT

Hedigan J.

[2015 No. 10686 P.]

BETWEEN

THOMAS THOMPSON HOLDINGS LIMITED,

MONTAYA DEVELOPMENTS LIMITED AND

CARLOW CENTRE MANAGEMENT LIMITED

PLAINTIFFS

AND

MUSGRAVE GROUP PLC,

MUSGRAVE RETAIL PARTNERS IRELAND LIMITED AND

MUSGRAVE OPERATING PARTNERS IRELAND LIMITED

DEFENDANTS

Contract – Breach of contract – Mandatory injunction – Adequacy of damages – Balance of Convenience

Facts: The plaintiffs sought an injunction against the defendants for prohibiting them from closing the store in the shopping centre before the expiry of the term of the lease. The first named plaintiff being the owner of the shopping centre and the second named plaintiff being the landlord in the lease of the concerned unit in the centre alleged that the closure of the business in the shopping centre would lead to decrease in the rent roll and the diminution of the asset value of the centre. The defendants alleged that if the operation of the concerned business was allowed to continue, they would suffer huge trade losses.

Mr. Justice Hedigan refused to grant the injunction to the plaintiffs. The Court held that before granting an injunction, the Court must see the nature of the order sought, that is, whether it was prohibitory or mandatory. The Court observed that where the prohibitory order was sought, the level of threshold required to be met was low and the plaintiff had to establish that there was a bona fide question to be tried; however, in case of mandatory injunction, the plaintiff had to establish a very strong likelihood of succeeding in the case coupled with the undertaking to pay damages. The Court opined that it would not be appropriate for the defendants to continue to suffer losses till the expiry of the lease and the plaintiffs could be compensated by way of damages.

DECISION of Mr. Justice Hedigan delivered on the 22nd day of January, 2016

1 The first named plaintiff is the owner of Carlow Shopping Centre. The first and second named plaintiffs are the landlord in the lease dated 30th September, 1994, of the property that is known as the anchor unit in the centre. The third named plaintiff is the management company of the centre.

2 The third named defendant was assigned to the lessee's interest under the lease in 2011 pursuant to the sale and purchase of the Superquinn Group. The first and second named defendant respectively own and operate the Supervalu grocery store which has been trading from the anchor unit since 2011.

3 On 2nd December, 2015, the defendants announced the intention in the national media to close the store located in this centre on Friday, 22nd January, 2016, which, in fact, is today.

4 The plaintiff claims that this unilateral proposed breach of contract on the part of the defendants, if allowed to proceed unchecked, will cause irrevocable and irreparable damage to the plaintiffs and to third party businesses currently located in the centre. They say the plaintiffs will experience significant interference with its rent roll and the management of the centre and an immediate diminution in value in the asset value of the centre.

5 Moreover, the threatened closure of the Supervalu store presents an existential crisis they say to the continuation of the plaintiffs business. The third party businesses located in the centre and the centre itself will also be badly affected by the sudden departure of the core attractive force provided by the defendants. There will be a serious decline in the footfall of customers in the centre. It is in those circumstances that the plaintiffs seek an order by way of interlocutory injunction restraining the defendants from closing the Supervalu store in clear breach of the ‘keep open’ covenant in order to maintain the status quo ante pending a full trial of the proceedings. The defendants claim that, if compelled to abide by the terms of their lease with the plaintiff and to keep open their premises, they will suffer continuing trading losses until the end of the term of the lease in September 2018.

6 The principles to be applied are very helpfully set out by Clarke J. in Okunade v. Minister for Justice [2012] 3 I.R. 152 I summarise them under eight headings, as follows:-

(i) Is there a fair or bona fide question to be tried or a strong likelihood of success at trial depending on the nature of the order sought.

(ii) If so, would damages be an adequate remedy and is it likely that the defendants could pay damages.

(iii) If not, will the plaintiffs undertaking as to damages adequately compensate the defendant if he is successful at trial.

(iv) If so, will the plaintiff be in a position to meet his undertaking if it is called in.

(v) If damages would not adequately compensate either party then the court must consider where the balance of convenience lies. It should ask itself, where will the least harm be done. It should compare the consequences of deciding either way.

(vi) If all matters are equally balanced, the court should attempt to preserve the status quo.

(vii) It should attempt to minimise the risk of injustice.

(viii) The risk of injustice from not acting must be greater than that of acting in order to justify the court's departing from the status quo.

7 In terms of the criteria concerning the likelihood of success at trial versus a serious issue to be tried, the court must first ascertain the nature of the order sought. This is because where a prohibitory order is sought, the question for the court is simply whether the plaintiff raises a fair, serious or bona fide question to be tried. This is a relatively low hurdle. On the other hand, where the order sought is a mandatory one, then the court must refrain from acting unless the plaintiff has established ‘a strong case that is likely to succeed at...