Judgment Title: Edward Lee & Co (1974) Ltd -v- N1 Property Developments Ltd
Neutral Citation:  IEHC 162
High Court Record Number: 2011 11692 P
Date of Delivery: 12/03/2013
Court: High Court
Composition of Court:
Judgment by: Charleton J.
Status of Judgment: Approved
Neutral Citation  IEHC 162
The High Court
Record number 2011 11692P
Edward Lee and Co.  Limited
N1 Property Developments Limited
Judgment of Mr. Justice Charleton delivered on the 12th day of March, 2013.
This judgment is supplemental to that of the 12th November, 2012. It has been argued that the prior judgment has effectively decided the proper approach of the Court in the issue now before it. A full reading of the judgment indicates that this is not so. In that judgment, the Court held that the plaintiff tenant was entitled to relief in equity against a situation where the 36 year lease, on which it held a Dunnes Stores Clothing shop in the defendant landlord’s premises known as the Northside Shopping Centre, provided for an automatic extension at the same excessive rent for a further 36 years unless notice was served 6 months before that lease was due to expire in late January, 2011. Clause 4.03 VII of the lease was in issue in that judgment. Four days before the lease expired, and not six months as the lease required, a notice was sent by the plaintiff tenant stating that the lease would be surrendered on its expiry. The window of opportunity to do this had ceased, however, because that window operated only from the 1st February, 2010, to the 31st July, 2010. Relief in equity was granted to the plaintiff tenant against being locked into another 36 year lease by holding that the notice should operate to determine the automatic 36 year extension of the lease. In the context of the entire judgment, paragraph 35 makes that decision explicit:
Facts and figures
That calculation is interesting. As noted in the prior judgement, as of the last relevant rent review, in 2005, the annual rent had become €336,840 per annum. In this communication, the tenant was calculating an open market rent as mesne rates on the basis of 50% of that sum. They were tendering, as well, a reduced service charge payment, a reduced insurance payment and a reduced promotion payment; all of which would be due under the lease. In this regard, given that the plaintiff tenant is part of the Dunnes Stores group, which holds multiple properties throughout Ireland, it is hard to take seriously that the rent argued for during this hearing amounted to an equivalent of €113,000 per annum taking into account a rent-free period of two years on a 10 year lease with a five-year break clause. Notwithstanding that observation, I have adjudicated on the valuation evidence on its own merits. On the 25th November, 2011, the tenant, acting under protest, paid the landlord €485,017.90; which would be the full sum due under the lease up to that time, should it operate to fix the appropriate payment. Proceedings issued on the 16th December, 2011. The judgment of the High Court on the automatic extension of the tenancy question and on equitable relief was given on the 12th November, 2012.
A number of things are clear from the correspondence. Firstly, the tenant was late in surrendering the tenancy. Secondly, the tenant threatened more than once to leave the premises but did not do so. It may be argued that this failure to hand back vacant possession of the premises was due to the threat that if the 36 year lease had been extended without relief in equity into a 72 year lease, the tenant was better off staying in the premises and attempting to trade as profitably as it could. As against that, strong arguments were available that relief in equity was applicable and that is ultimately how the legal situation transpired in the prior judgment of this Court. Thirdly, it is clear that by staying in the premises and trading the tenant was, at the least, putting itself under an obligation to pay a reasonable sum in lieu of rent. Given the length of the lease, it is also clear, fourthly, that any tenant would make substantial investment in any shop premises that was going to be held over the span of a generation. From the point of view of the landlord, a reasonable period of notice would be required in the context of that timespan in order to make arrangements for the advertisement of the premises with a view to securing a new tenant and for refurbishment. It happens that the period of notice fixed by the lease was six months and that such a term of notice seems reasonable in that context. In giving relief against the mistaken extension of the 36 year lease into double that term, account should be taken of that factor as a relevant circumstance.
Prima facie a yearly tenancy created by continuance in possession with the landlord’s consent, after the expiration of a lease, is subject to the same terms as were contained in the lease itself so far as they are applicable to a yearly tenancy. But it is always a question of fact what was the precise character of the tenant’s possession, and whether the new tenancy is upon the same terms as the expired lease (See Kelly v. Patterson, L.R. 9, C.P. 681; Caulfield v. Farr I.R. 7, C.L. 469.) It is open to either party to show that certain terms of the old lease have been varied or waived, either expressly or by implication, or are inconsistent with or inapplicable to the new tenancy. (Meath v. Megan (1897), 2 I.R., at 479.)
“No writing is needed to create this tenancy, which arises by implication of law, whenever a person remains, or is placed, in possession of premises, with the understanding, express or implied, of paying an annual rent with reference to a yearly tenancy; but this payment of rent is only evidence of the contract of tenancy and may be rebutted. The italics are the author’s.”
One of the authorities cited by De Moleyns in support of this proposition is the judgment of Parke B. in Braythwayte v. Hitchcock 10 M.&W. at p.497. In that case, Parke B. said:
“Payment of rent, indeed, must be understood to mean a payment with reference to a yearly holding for in Richardson v.- Langridge (1811), 4 Taunt. 178 a party who had paid rent under an agreement of this description; but had not paid it with reference to a year, or any aliquot part of a year, was held nevertheless to be a tenant at will only.”
In the present case, it is clear that the lease of 14th June, 1944 did not demise the premises by reference to a yearly holding or by reference to a yearly rent or even a rent for any aliquot part of a year; and it seems to me, therefore, that the necessary foundation, according to the passages just cited, for presuming an agreement for a yearly tenancy is missing.
In the context of the correspondence quoted, an implication of a new tenancy as contended by the defendant landlord cannot arise. There is no basis in law for applying any inference of, much less legal presumption of, a new tenancy from year to year on the facts of this case. The circumstances are clear in raising an inference to the contrary. From January, 2011 the plaintiff tenant was protesting that the lease had come to an end by efflux of time. The plaintiff tenant, by proffering various sums of money that were less than the rent and other charges fixed by the lease was making it clear throughout that year that whatever it was obliged to pay, that sum was different from and was less than that specified under the lease. The defendant landlord was demanding the full sums due and was also claiming that a new 36 year tenancy had, through the terms of the lease, come into automatic operation. Nothing about this case suggests the kind of typical situation that is canvassed in the cited cases whereby a cosy arrangement is continued over a substantial time between landlord and tenant, through consensus or sheer lassitude, or because the existing arrangements suit both parties. Nothing, in fact, could be further from this case.
I therefore hold that a new tenancy from year to year was not created through the actions of the parties.
Section 46 of Deasy’s Act sets forth a rule equivalent to the doctrine in contract of quantum meruit. This is the entitlement of a person who provides services to another in the implied expectation of a reward to receive reasonable remuneration where no payment has been specified by contract. In those circumstances, a worker is entitled to the value of his or her work. The rule as to remuneration as between landlord and tenant is, by statute, similar:
As a matter of fact, once the judgement of the court was given on the 12th November, 2012, the defendant landlord demanded payment of sums equivalent to those due under the lease that had expired. For its part, the plaintiff tenant by letter dated the 26th November, 2012, notified the defendant landlord that it would not be seeking a new lease pursuant to the statutory scheme set out in the previous judgement in this case but would instead be vacating the premises. On the 3rd December, 2012, the plaintiff tenant wrote to the defendant landlord stating starkly "we ... will be gone on or before 10 December 2012." How was anyone to know where this dispute was going prior to this time? From my view the correspondence, as emerges in the prior judgment, it seemed to me that what was in issue was the level of the rent. I have been shown nothing otherwise; though there was a statement made by counsel to a witness during the hearing that for some years the plaintiff tenant was trying to get out of “this shopping centre”. As a question, that is fine. It is not, however, evidence. There is nothing in the correspondence to back that up. If that was the attitude, a tenant would be studying their lease with a view to getting a determination of the tenancy. There is nothing to suggest that. The impression created by all of the correspondence was a move towards a new tenancy at a probably much lower rent under the Landlord and Tenant (Amendment) Act 1980. The now entrenched attitude of both parties is clear.
In Dean and Chapter of the Cathedral and Metropolitan Church of Christ Canterbury v. Whitbread PLC  1 E.G.L.R. 82, Judge Cooke gave a summary of the principles applied to this kind of assessment for overholding from the former authorities in England and Wales at p.85:
How one approaches the assessment of the figure and what principles one applies are, however, somewhat more complex to explain.
(a) There is no need for the landlord to show that he could or would have let the premises to somebody else at the material time: see Swordheath Properties Ltd v Tabet  1 WLR 285 following the well known “wayleave” case of Whitwham v Westminster Brymbo Coal & Coke Co  2 Ch 538.
(b) There are alternative and mutually exclusive bases of claim: (1) loss actually suffered; and (2) value of benefit which the occupier has received. The letter is a restitutionary claim and there has to be election before judgment: see Ministry of Defence v Ashman (1993) 66 P&CR 195, at p 201, Hoffmann LJ… The restitutionary claim is, in effect, the same as the Whitwham claim.
(c) The ordinary measure is a proper letting value of the property for the relevant period, there being in the ordinary case in a free market the value to the trespassers of its use; see Swordheath.
Two distinguished valuers gave evidence and I am grateful to both. Having regard to all of the evidence, the manner in which the evidence of each was given and my assessment of their approach to testimony, I clearly prefer the evidence given on behalf of the defendant landlord. It was more objective and was also based on long experience of this shopping centre. I do not, in particular, accept evidence from the plaintiff tenant that this is a shopping centre that is “on its knees”. Rather, it is clearly a good and pleasant place for general shopping and has an excellent catchment area.
The unit formerly occupied by Dunnes Stores Clothing, the plaintiff tenant, is over three floors with a central staircase and a goods lift. The ground floor has ample space of 520 m², with slightly more on the first floor and slightly less in the basement. It is an extremely practical trading space, at ground floor level particularly, and has dual frontage totalling 29.5 m. It was reasonable to draw a comparison with a recently rented unit in the centre, as shown in the lower part of the diagram. It also seems to me to be objectively reasonable to conclude that there are advantages to the former Dunnes Stores. The unit is fitted out with floors and ceilings, though any trader taking over the space will need to do more. There is good configuration within the store, it has good frontage, it is in a very good location and the premises can be used as storage either above or below the ground floor, if desired. There is no basis on which a discount of 25% might be rationally applied and the indications are strong that the desirable elements of the unit should attract a good price. As mentioned earlier, as of the last relevant rent review, in 2005, the annual rent had become €336,840 per annum. Retail rents are down considerably since that time. Commencing the rental period in January, 2011 the evidence suggests a probability that an annual rental of €250,000 should be achievable on a ten year lease with a five year break clause. On the evidence, I do not accept that a rent-free holiday of two years is appropriate for an incoming tenant for every five years. I do, however, accept that some period of settling in on a rent free basis should be initially allowed for; in the light of all of the evidence, a year seems reasonable. That would be assessed by ordinary bargaining between the landlord and the tenant. Here, in setting the figure I have regard to the evidence of both valuers. On that basis, doing the best that I can, given that these figures are likely to be the result of negotiation, the rent is therefore reduced to €200,000 per annum on an averaged basis. In addition, my view is that under the lease, a promotional levy and service charge would continue to be payable, as would insurance contribution. Since the premises were occupied during 2012, the sum chargeable would be calculated as of that date. For 2011 and 2012 there were also promotion charges, insurance for those two years and service charge as well. I do not regard it as reasonable that for a period of notice where the tenant is not in occupation that anything other than rent is payable.
My figures indicate a total sum due of €358,447. Fortunately these figures are agreed as to calculation.