Westpark Investments Ltd and Another v Leisureworld Ltd and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Hogan
• Judgment Date: 31 July 2012
• Neutral Citation: [2012] IEHC 343
• Court: High Court
• Date: 31 July 2012

Westpark Investments Ltd & Vencourt Ltd v Leisureworld Ltd & Leisureplex (Tallaght) Ltd

BETWEEN

WESTPARK INVESTMENTS LIMITED AND VENCOURT LIMITED

PLAINTIFFS

AND

LEISUREWORLD LIMITED AND LEISUREPLEX (TALLAGHT) LIMITED

DEFENDANTS

[2012] IEHC 343

[No. 1645 S/2011]

THE HIGH COURT

LANDLORD AND TENANT LAW

Commercial tenancy

Rent arrears - Summary judgment - Breach of contract by plaintiff - Set-off - Equity - Whether relieved from obligation to pay rent - Whether breach of contract by plaintiffs providing defence or counterclaim to defendants - Whether defendants entitled to invoke doctrine of equitable set-off - MacCausland v Carroll (1938) 72 ILTR 158; Prendergast v Biddle (Unrep, SC, 31/71957); Hong Kong Fir Shipping Company v Kawasaki [1962] 2 QB 26; Moohan v SR Motors (Donegal) Ltd [2007] IEHC 435, [2008] 3 IR 650; Parol Ltd v Friends First Pension Funds Ltd [2010] IEHC 498 (Unrep, HC, Clarke J, 8/10/2010) considered - Landlord and Tenant Law Amendment (Ireland) Act 1860 (23 & 24 Vic, c 154), s 48 - Judgment granted for 50% of claim, balance adjourned to plenary hearing (2011/1645S - Hogan J - 31/7/2012) [2012] IEHC 343

Westpark Investments Ltd v Leisureworld Ltd

Facts: The plaintiff companies held a 35 year old lease from 1990 ("1990 lease") with the first defendant company for certain premises that were used as an entertainment centre. A term of the 1990 lease entitled the use of 177 car parking spaces for customers of the first defendant. In 2007, the plaintiff entered into an agreement with a third party to redevelop premises adjoining the car park, said work likely to have temporarily limited the number of parking spaces available to the first defendant. To this end, the first named defendant agreed to vary the 1990 lease reducing the number of communal spaces to 142 in exchange for €550,000 and a rent free period until August 2010. It was also agreed that a pay and display system was to be brought into the car park with customers of the first defendant being refunded by them, who would then in turn be reimbursed by the plaintiff. Due to the economic climate, the redevelopment was not finished and such work that had been completed reduced the number of parking below the agreed level.

Since August 2010, the first defendant had refused to pay rent claiming a breach of contract due to the low number of spaces, the poor appearance of the car park and the failure to complete the redevelopment.

Held by Hogan J that the rent moratorium was intended to compensate the first defendant during the envisaged transitory period until the 31st August 2010. That this period had been extended due to the project being unfinished would not have been expected. However, there was clearly a breach of contract given the evidence before the court. Whilst that breach did impact on the first defendant, it could not justify the complete refusal to pay any rent. As there was still a substantial benefit being derived by them from the contract, the plaintiff was entitled to the payment of rent. Hong Kong Fir Shipping Company v. Kawasaki [1962] 2 QB 26 considered.

In terms of the first defendants counter-claim, s 48 of the Landlord and Tenant (Ireland) Act 1860 provided for deductions and set-offs in a landlord and tenant relationship. In the instant case, the Court considered the doctrine of equitable set-off could be availed of by the first defendant if they could show there was a strong prospect of success of a counter claim. The rent free period agreed by the plaintiff demonstrated that the plaintiff accepted the first defendant was to suffer loss and damage as a result of the changes in the car park. That loss had extended beyond the envisaged period, whilst the rent reduction had not. Clearly, a deduction would be appropriate.

The Court awarded the plaintiff 50% of the rent arrears with the other 50% to be held until the conclusion of a plenary hearing considering, inter alia, the use of the car park by the first defendant and the loss suffered.

HONG KONG FIR SHIPPING CO LTD v KAWASAKI KISEN KAISHA LTD 1962 2 QB 26 1962 2 WLR 474 1962 1 AER 474

IRISH TELEPHONE RENTALS LTD v IRISH CIVIL SERVICE BUILDING SOCIETY LTD 1992 2 IR 525 1991 ILRM 880 1991/4/744

PAROL LTD & CARROLL VILLAGE (RETAIL) MANAGEMENT SERVICES LTD v FRIENDS FIRST PENSION FUNDS LTD UNREP CLARKE 8.10.2010 2011/43/12524 2010 IEHC 498

LANDLORD & TENANT LAW AMDT ACT IRL 1860 S48

MACCAUSLAND & KIMMITT v CARROLL & DOOLEY 1938 72 ILTR 158

RIORDAN & MULLIGAN v CARROLL T/A WYVERN GALLERY 1996 2 ILRM 263 1995/21/5460

HARRISRANGE LTD v DUNCAN 2003 4 IR 1 2002/12/2982

RULES OF THE CIRCUIT COURT OF JUSTICE O.7 r6 (1930)

CCR O.15 r7

FRESCATI ESTATES LTD v WALKER 1975 IR 177

RAINEY v DISTRICT JUSTICE DELAP 1988 IR 470 1988 ILRM 620

DOWLING SET-OFF AGAINST RENT 1988 39(3) NILQ 258

IRISH LIFE ASSURANCE PLC v QUINN UNREP DUNNE 31.3.2009 2009/22/5439 2009 IEHC 153

PJ HEGARTY & SONS LTD v ROYAL LIVER FRIENDLY SOCIETY 1985 IR 524 1985/9/1747

MOOHAN & BRADLEY T/A BRADLEY CONSTRUCTION v S & R MOTORS (DONEGAL) LTD 2008 3 IR 650 2007/42/8816 2007 IEHC 435

PRENDERGAST v BIDDLE (ORSE MORE O'FERRALL) UNREP SUPREME 31.7.1957

LEOPARDSTOWN CLUB LTD v TEMPLEVILLE DEVELOPMENTS LTD & SMYTH UNREP O'SULLIVAN 4.5.2006 2006/34/7208 2006 IEHC 133

1 1. Are there any circumstances in which a tenant is entitled to refuse to pay rent to a landlord who, it is claimed, has failed to perform its contractual obligations for the tenant in such fashion as to deprive the tenant of the essence of the benefit of the contract? That, essentially, is the antecedent question which forms the background to this application for summary judgment on the part of the plaintiff landlord who contends that it is entitled to judgment in the sum of almost €959,600 by way of rent arrears. The issue arises in the following way.

2 2. In November, 1990 the plaintiff companies entered into a 35 year lease with the first defendant, Leisureworld Ltd., whereby the latter company agree to pay the rent prescribed by the lease in respect of certain premises at Tallaght, Dublin 24 "without any deductions." The first plaintiff, Westpark Investments Ltd. ("Westpark") was the landlord and the second plaintiff Vencourt Ltd. ("Vencourt") was the relevant management company. The premises in question are situated in the Village Green Centre, Tallaght, Dublin 24 and they are presently operated by Leisureplex Ltd. as an entertainment centre specialising in diverse activities such as bowling, children's adventure play areas and restaurants. The complex also specialises in birthday parties for younger children and discotheques for young teenagers.

3 3. In the modern era a complex of this nature simply could not operate successfully unless car park access for patrons could be guaranteed. The complex depends heavily for customers in the wider Tallaght and south Dublin region and those customers simply will not frequent the complex unless they can be assured that they will find a secure car parking space. Of course, in the nature of things, patrons frequenting the Leisureplex centre are much more likely to require to park for a significantly longer period of time than, for example, customers visiting other retail outlets in the immediate vicinity.

4 4. The original lease provided that the defendants had the use of some 177 car parking spaces. The car park is immediately adjacent to the complex, but other retail units are also close by. In 2007 the parties held discussions regarding plans of a company called Southside Taverns Ltd. ("Southside") to re-develop premises which it owns on the other side of the car park. (It appears that Southside and Westpark, if not technically sister companies, enjoy a high degree of common ownership.) It was envisaged that an underground car park would be built on the other side of the existing surface car park which would ultimately deliver access to more than 250 car parking spaces in total (albeit including a reduced number of spaces on the existing surface car park).

5 5. To that end the parties agreed to vary the original 1990 lease by deed of variation entered into on the 12 ^th March, 2008. That deed provided that in return for the sum of €550,000, Leisureplex yielded up the its rights under the original deed and in return received access to a "minimum of 142 car parking spaces in common with others." Westpark further agreed by a side letter dated 3 ^rd June 2008 that the Leisureplex would not be required to pay rent during the period from 1 September 2007 to 31 August 2010, with a further agreement to refund rent already paid during this period. This moratorium reflected the fact that during this period of contemplated redevelopment the number of car parking spaces would be reduced and the moratorium was presumably intended to compensate the defendants for that inconvenience.

6 6. A further deed which was also effected in March 2008 also allowed Westworld to install a pay and display parking system and to operate this "in accordance with good estate management." The parties further acknowledged that Leisureplex could refund its patrons the cost of parking fees and that Westworld would in turn reimburse Leisureplex where this was properly vouched. This pay and display system currently operates from 7am to 6pm, Mondays to Fridays only.

7 7. The proposed redevelopment did not, however, proceed. This is, perhaps, not altogether surprising given that many well intentioned plans of this nature were swept aside in the financial and economic tumult which beset the country in the latter half of 2008. As things stand, therefore, the proposed redevelopment remains incomplete and this situation is likely to continue for some time to come.

8 8. All of this has meant that there are less car parking places in the existing car park available for Leisureplex's customers...