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Cite as: [2019] IECA 233

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Irvine J.

Whelan J.

Baker J.

BETWEEN/

THE COURT OF APPEAL

Neutral Citation Number: [2019] IECA 233

Record Numbers: 2017 468 &

2017 602

POINT VILLAGE DEVELOPMENT LIMITED

(IN RECEIVERSHIP)

PLAINTIFF/RESPONDENT

- AND -

DUNNES STORES

DEFENDANT/APPELLANT

JUDGMENT of Ms. Justice Máire Whelan delivered on the 30th day of July 2019

Introduction

1. Writing extrajudicially in 1984 on the role of judges in construing commercial contracts, Lord Goff of Chieveley stated: -

“We are there to help businessmen, not to hinder them; we are there to give effect to their transactions, not to frustrate

them; we are there to oil the wheels of commerce, not to put a spanner in the works, or even grit in the oil.”

2. Twenty years later Lord Steyn in “Democracy through Law: Selected Speeches and Judgments” (2004) pp. 225-226 wrote: -

“A thread runs through our contract law that effect must be given to the reasonable expectations of honest men… The

function of the law of contract is to provide an effective and fair framework for contractual dealings.”

Lord Bingham’s paper “A new thing under the sun? The interpretation of contracts and the ICS decision” Edin LR Vol 12, 374-390,

considered that problems only arise when one tries to give practical effect to these laudable aims.

Background

3. This is firstly an appeal from the judgment of Costello J. delivered on the 14th November, 2017 on foot of which orders were made

in the High Court on the 24th November, 2017 and perfected on the 8th December, 2017 directing that: -

(1) The appellant (Dunnes) was obliged forthwith to release the sum of €15,000,000 (plus accrued interest to the date of

release) from a nominated account for the benefit of the respondent (Point Village).

(2) That Dunnes take all such steps necessary to release the said sum of €15,000,000 (plus accrued interest to the date

of release) from the nominated account to Point Village including, if necessary, procuring that Dunnes’ former solicitors

assign an instruction to Allied Irish Banks Plc (AIB) releasing the said sums.

The appeal’s scope is limited primarily to the parts of the decision of the High Court which interpreted and construed Clause 11(c) of

the Terms of Settlement concluded between the parties on 7th July, 2010 compromising High Court proceedings 2009/5004P. The High

Court determined (para. 123) that Point Village had complied with its obligations pursuant thereto such that Dunnes was required to

release forthwith the said sum to Point Village.

Inspection Motion

4. Secondly, there is an appeal against an order of Mr. Justice Twomey made on the 15th September, 2017 refusing Dunnes’

application for an order pursuant to O.31 r.18(1) of the Rules of the Superior Courts (“RSC”), as amended, directing Point Village to

produce for inspection copies of documents identified in a notice to produce delivered on behalf of Dunnes on the 3rd July, 2017. The

said documents were also specified in para. 7.14 of an affidavit of Stephen Tennant sworn on the 6th April, 2016 and comprise

agreements for lease exchanged between Point Village and specified corporate entities.

arrangement, as would appear in a grammar, is part of the material which we use to understand a speaker’s utterance.

But it is only a part; another part is our knowledge of the background against which the utterance was made. It is that

background which enables us not only to choose the intended meaning when a word has more than one dictionary

meaning but also, in the ways I have explained, to understand the speaker’s meaning, often without ambiguity when he

has used the wrong words.’”

64. The authors further note at 10.122 that –

“There remain cases where a more restricted, technical approach should properly be maintained. In Mannai Investments

Lord Hoffmann said;

‘There are documents where the need for certainty is paramount and in which admissible background is restricted to avoid

the possibility that the same document may have different meanings for different people according to their different

knowledge of the background documents. Documents required by bankers, commercial credits fall within this category.’”

Dunnes do not allege mistake. Neither do they seek rectification of the Terms of Settlement.

Intention

65. Lord Hoffmann in I.C.S. had also relied on the decision of Lord Wilberforce in Reardon Smith Line Limited v. Yngvar Hansen-

Tangen. In the latter judgment Lord Wilberforce had cited Wickman Machine Tool Sales Limited v. L. Schuler AG [1974] AC 235

stating: -

“When one speaks of the intention of the parties to the contract, one is speaking objectively – the parties cannot

themselves give direct evidence of what their intention was – and what must be ascertained is what is to be taken as the

intention which reasonable people would have had if placed in the situation of the parties. Similarly, when one is speaking

of aim, or object or commercial purpose, one is speaking objectively of what reasonable persons would have in mind in the

situation of the parties…”

In Bank of Credit and Commerce International S.A. v. Ali [2002] 1 AC 251 the House of Lords stated at para. 8 that: -

“In construing this provision, as any other contractual provision, the object of the Court is to give effect to what the

contracting parties intended. To ascertain the intention of the parties the Court reads the terms of the contract as a

whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship

and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions

the Court does not of course enquire into the parties’ subjective states of mind but makes an objective judgment based

on the materials already identified.”

66. As is clear from the jurisprudence in this jurisdiction, including the Law Society of Ireland v. MIBI [2017] IESC 31, the operative

principles governing construction are those set out in the judgment of Lord Hoffmann. Referring to the I.C.S. decision of Lord

Hoffmann, O’Donnell J. noted at para. 8: -

“These principles represent a significant staging point in the development of what might be described as a modern

approach to the interpretation of contracts, a development which, as the principles recognise, has not necessarily

reached its terminus.”

O’Donnell J. cautioned at para. 8 that it was: -

“…necessary to be aware of the significance of this development for the overall approach to the interpretation of

agreements, and not to simply mix and match authorities drawn from different eras and contexts, as if they were a body

of coherent rules produced by a single author.”

67. The third of Lord Hoffmann’s five principles in I.C.S. unequivocally states that the law excludes from the admissible background

the previous negotiations of the parties and declarations of subjective intent.

The importance of language

68. In cases where the language of the relevant clause is unambiguous, recent authorities make clear there must be greater emphasis

on the text. In Rainy Sky S.A. v. Kookmin Bank Lord Clarke observed at para. 23 that –“… Where the parties have used unambiguous

language, the court must apply it.”

69. In Arnold v. Britton the majority of the UK Supreme Court held that the language of the clauses in the leases under consideration

was clear and ought to be given effect to, even if the result was highly unsatisfactory for the lessees. Lord Neuberger identified

seven factors to be considered regarding interpretation of an agreement. Of note is the first, cited at para. 17 of the judgment: -

“First, the reliance placed in some cases on commercial common sense and surrounding circumstances… should not be

invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of

interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save

perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike

commercial common sense and the surrounding circumstances, the parties have control over the language they use in a

contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue

covered by the provision when agreeing the wording of that provision.”

70. That dictum is particularly apposite in the instant case in my view. The Development Agreement and the Terms of Settlement

which amended it comprise a commercial contract which was negotiated on an arm’s length basis with the benefit of extensive legal

and expert advice by two highly experienced counterparties in the context of a commercial transaction and the compromise of

subsequent litigation.

Analog Devices and the words the parties used

71. In Fitzpatrick v. the Board of Management of St. Mary’s Touraneena National School and Anor. [2013] IESC 62 McKechnie J.

considered the operative principles of contractual interpretation in this jurisdiction citing the key principle from Analog Devices at

p.294, that –

“Insofar as Irish law is concerned, the contract is to be interpreted objectively in accordance with the meaning of the

words the parties have used.”

He continued –

“The opinion of Lord Hoffman in Investors Compensation Scheme Limited v. West Bromwich Building Society v. Hopkins

and Sons (a Firm) and Ors. [1998] 1 WLR 896 is to the same effect.” (para. 39)

72. Hence, in light of the jurisprudence from the Supreme Court and until such time as the principle is revisited, it is established law in

this jurisdiction that in order to determine the common intention of the parties to an agreement which has been reduced to writing,

same must be construed by reference to the document itself. Extrinsic evidence of what may or may not have been in the minds of

the parties at the time of the agreement is not admissible for such a purpose.

Construction of a Compromise

73. The Terms of Settlement is a contract and, as such, its provisions fall to be construed in accordance with the general rules

governing the interpretation of contracts.

74. In Danske Bank v. Hegarty [2012] IESC 30 Clarke J. observed at 7.7 –

“It is well established in law that the subjective views of the parties to a written agreement are not properly taken into

account in its interpretation. This principle applies equally to settlements. See Dattani v. Trio Supermarkets Ltd. [1998]

I.R.L.R. 23 CA and Rees v. West Glamorgan County Council [1994] P.I.Q.R. 37. When parties choose to reduce their

Settlement Agreement to a written form then both sides are kept to that written form. It follows that [the defendant’s]

view as to what the settlement means is no more relevant than the view of [the plaintiff]. It is for the court to interpret

the settlement objectively in accordance with its terms but in context.”

It is clear therefore that any subjective understanding on the part of one party as to the effect of words used in the Terms of

Settlement or compromise is neither relevant nor admissible in the absence of any plea of mistake or a claim for rectification.

75. There is no suggestion by Dunnes that a construction of the disputed provisions of the Terms of Settlement, particularly Clause

11(c) in accordance with the plain meaning of the words would give rise to an absurd result. There is no specific error contended for

such as would engage the principles governing the equitable remedy of rectification in the manner outlined by Lord Neuberger in

Arnold. Dunnes does not contend that the text itself is ambiguous. Rather it is argued that for the matrix of fact to be considered in

construing a contract, it is not necessary to first raise an ambiguity on the express words of a contract.

Matrix of fact

76. Lord Steyn in R. v. National Asylum Support Service stated that: -

“… Lord Hoffmann made crystal clear that an ambiguity need not be established before the surrounding circumstances

may be taken into account.”

However, where the text itself is plain and unambiguous and admits of one clear meaning and then, absent anything untoward in the

context which militates against the plain language of the text itself, there is a coincidence between both text and context and the

Court ought to give effect to the plain language of the text.

McDermott and McDermott in Contract Law ,opus cit.at 10.08 observe –

“There are two basic approaches to the interpretation of contracts. The plain meaning rule and the factual matrix

approach. The best explanation of the two approaches is to be found in the following quote from United Pukekohe Limited

v. Grantley [1996] 3 N.Z.L.R. 762 where Baragwanath J. stated: -

‘[There are] two quite different judicial philosophies: one focusing closely on the black letter of the language used and

denying efficacy to anything more unless the strict necessity test for imputing a term that is not there is met; the other

taking a wider view in seeking to deduce a contractual intention applying Lord Wilberforce’s ‘factual matrix” approach for

inferring something to be treated as already there.’”

Purpose

77. No contract is concluded in a vacuum. There is always a setting and a context in which it takes place. In a commercial

agreement it is material that the Court should have regard to and an understanding of the commercial purpose of the contract and

that in turn presupposes an understanding of the background which framed the transaction, its context and the material

circumstances which led to its conclusion.

The Preamble

78. The Terms of Settlement in this case are to be construed having due regard to the existing contractual documents referred to

and as effecting an amendment to the Development Agreement but in a context where the parties expressly conferred primacy on the

language of the Terms of Settlement itself as set out in its preamble: -

“The parties agree to settle the above proceedings and all issues raised therein on the terms set out below, which terms

amend their obligations under the Development Agreement, the contract for sale and the lease (‘the existing contracts’).

In the event of any inconsistency between the terms of the existing contracts and this agreement, this agreement shall

prevail.”

That is a clear declaration of intent. The Terms of Settlement encompass the core matrix of fact in the instant case.

79. It is to be expected that parties to a compromise of litigation before the Commercial Court, in light of the conflicts which led to

the institution of High Court proceedings in 2009 in the first place, would make clear what represent fundamental terms of the

compromise agreement and the particular measures required to be undertaken to effect a valid compliance with same. As is clear from

the authorities and the texts, including Foskett, The Law and Practice of Compromise (Sweet & Maxwell,6th Edition,2005), in the

event that a dispute arises as to meaning or effect, the task is to ascertain the common intention of the parties by construing the

agreement. In the succinct words of McDermott & McDermott in Contract Law at para. 10.15: “The document comes first.”

Terms of Settlement

80. In Delany and McGrath on Civil Procedure, 4th Edition,the authors outline the approach of the courts to the interpretation of

Settlement Agreements, illustrating that similar principles apply as to the interpretation of contracts in general at 20.12:

“… A settlement agreement is a contract and, in Bank of Credit and Commerce International v. Ali [2002] 1 AC 251 the

House of Lords confirmed that the general principles of contractual construction apply to settlement agreements and

rejected the proposition that any special rules of construction were to be applied in construing the meaning of a release

contained in such an agreement. Applying those principles of contractual interpretation, where a question arises as to the

meaning of a provision in a written Settlement Agreement, then as explained by Keane J. in Kramer v. Arnold; ‘…the task

of the Court is to decide what the intention of the parties was, having regard to the language used in the contract itself

and the surrounding circumstances’. While it is open to a court to imply a term in a settlement agreement this can only be

done if the requirements for doing so are satisfied.”

81. The task of the Court is to ascertain, having due regard to all the relevant objective evidence, the intention of the parties at the

time they entered into the contract. Notwithstanding the importance of context, the text must be the primary source of consideration

for the Court.

Principles

82. The proper approach to construing a written compromise or contract was summarised by Lord Bingham of Cornhill in Dairy

Containers Limited v Tasman Orient C.V. [2005] 1 WLR 215 at para. 12: -

“The contract should be given the meaning it would convey to a reasonable person having all the background knowledge

which is reasonably available to the person or class of persons to whom the document is addressed.”

The ramifications of that approach have been considered in detail in many cases including in particular by the Supreme Court in this

jurisdiction. They have also been considered in the English context in Rainy Sky S.A. v. Kookmin Bank, Arnold v. Britton and Wood v.

Capita Insurance Services Limited [2017] UKSC 24. In Arnold v. Britton the UK Supreme Court cautioned that commercial common

sense is only relevant to the extent of how matters would or could have been perceived by the parties or by reasonable people in the

position of the parties as at the date that the contract was made. Lord Neuberger stated at para. 15: -

“When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to

‘what a reasonable person having all the background knowledge which would have been available to the parties would

have understood them to be using the language in the contract to mean’, to quote Lord Hoffmann in Chartbrook Ltd v

Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focussing on the meaning of the

relevant words…in their documentary, factual and commercial context. That meaning has to be assessed in the light of;

(i) the natural and ordinary meaning of the clause, (ii); any other relevant provisions of the lease, (iii) the overall purpose

of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the

document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s

intentions. In this connection, see …Bank of Credit and Commerce International SA (in liquidation) v Ali [2002] 1 AC 251,

para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30.”

Text and Context

83. Lord Hodge in Wood v. Capita Insurance Services Limited observed at paras. 10-13: -

“[10] … When in his celebrated judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society

[1998] 1 WLR 896 Lord Hoffmann (pp 912-913) reformulated the principles of contractual interpretation, some saw his

second principle, which allowed consideration of the whole relevant factual background available to the parties at the

time of the contract, as signalling a break with the past. But Lord Bingham in an extra-judicial writing, ‘A new thing under

the sun? The interpretation of contracts and the ICS decision’ Edin LR Vol 12, 374-390, persuasively demonstrated that

the idea of the court putting itself in the shoes of the contracting parties had a long pedigree.

[11] Lord Clarke elegantly summarised the approach to construction in Rainy Sky at para 21f. In Arnold all of the

judgments confirmed the approach in Rainy Sky

(Lord Neuberger paras 13-14; Lord Hodge para 76; and Lord Carnwath para 108). Interpretation is, as Lord Clarke stated

in Rainy Sky (para 21), a unitary exercise;

where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as

to which construction is more consistent with

business common sense. But, in striking a balance between the indications given by the language and the implications of

the competing constructions the court must

consider the quality of drafting of the clause… and it must also be alive to the possibility that one side may have agreed

to something which with hindsight did not serve his interest… Similarly, the court must not lose sight of the possibility

that a provision may be a negotiated compromise or that the negotiators were not able to

agree more precise terms.

[12] This unitary exercise involves an iterative process by which each suggested interpretation is checked against the

provisions of the contract and its commercial consequences are investigated: … To my mind, once one has read the

language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more

detailed analysis commences with the factual background and the implications of rival constructions or a close

examination of the relevant language in the contract, so long as the court balances the indications given by each.

[13] Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of

contractual interpretation. Rather, the lawyer

and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language

which the parties have chosen to express their

agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the

particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for

example because of their sophistication and complexity and because they have been negotiated and prepared with the

assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis

on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance.

But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example,

the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the

parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally

drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by

considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process,

of which Lord Mance spoke in Sigma Finance Corpn … assists the lawyer or judge to ascertain the objective meaning of

disputed provisions.”

84. In Jackie Greene Construction Limited v. Irish Bank Resolution Corporation in Special Liquidation [2019] IESC 2, Clarke C.J.

observed, having cited from Delany and McGrath on Civil Procedure, (4th ed., Round Hall, 2018) that: -

“[5.12] The more recent authorities in this area suggest that the detailed rules for the proper approach to the

construction of contractual documents all derive in substance from the approach which can be encapsulated in the

phrase ‘text in context’….

[5.13]… in The Law Society of Ireland v. The Motor Insurers” Bureau of Ireland [2017] IESC 31, I described the ‘text in

context’ method of construction in the following terms: -

‘The modern approach has sometimes been described as the “text in context” method of interpretation. It might be said

that the older approach in the common law world placed a very high emphasis indeed on textual analysis without

sometimes paying sufficient regard to the context or circumstances in which the document in question came into

existence. On the other hand, it is important not to lose sight of the fact that the document whose interpretation is at

issue forms the basis on which legal rights and obligations have been established. That is so whether the document in

question is a statute, a contract, the rules of an organisation, a patent or, indeed, any other form of document which is

designed, whether by agreement or unilaterally, to impose legal rights and obligations on either specific parties or more

generally. To fail to have sufficient regard to the text of such a document is to give insufficient weight to the fact that it

is in the form of the document in question that legal rights and obligations have been determined. However, an over

dependence on purely textual analysis runs the risk of ignoring the fact that almost all text requires some degree of

context for its proper interpretation. Phrases or terminology rarely exist in the abstract. Rather the understanding which

reasonable and informed persons would give to any text will be informed by the context in which the document concerned

has come into existence.

Perhaps it is fair to say that the main underlying principle is that a document governing legal rights and obligations should

be interpreted by the courts in the same way that it would be interpreted by a reasonable and informed member of the

public who understands the context of the document in question. Such a person would, necessarily, pay a lot of attention

to the text but would also interpret that text in its proper context.’”

I adopt this approach as relevant to a determination of the issues in this appeal.

85. McDermott and McDermott in Contract Law at 10.10 offer a comprehensive and compelling analysis of the recent evolutionary

trajectory of this aspect of the law: -

“In his dissenting judgment in BCCI v. Ali Lord Hoffmann explained the traditional approach that it was now sought to

move away from:

‘in the pursuit of certainty the courts, of both common law and equity, evolved what were called ‘rules of construction’,

by which certain words or expressions were treated, in the absence of contrary language, as having certain meanings.

These rules no doubt reflected what in most cases the parties would have intended by using such language. And in the

case of documents drawn up by lawyers, the skilled draftsman would be aware of the rules of construction and navigate

their reefs and shoals to give effect to the intention of the parties, settlor or testator. But the generality with which they

were expressed and their insensitivity to context, as opposed to the particular words which had been used, made them

rigid and often productive of injustice...’”

86. In distilling Irish Supreme Court thinking as of the date of publication of their text in 2017 the authors state at 10.14: -

“The recent decision of the Supreme Court in The Law Society of Ireland v. The Motor Insurers’Bureau of Ireland

suggests that for the moment, contextualism has decisively won out over textualism in this jurisdiction. The radical scope

of what the majority decided is evident from the following words of O’Donnell J.: ‘It is clear from the principles set out in

Investors Compensation Scheme Limited v. West Bromwich Building Society, that if the ordinary meaning of the words

would lead to a conclusion contrary to the intention which emerged from the rest of the Agreement on the relevant

background, then those ordinary words must give way.’”

The authors reiterate at 10.42 –

“Agreements are concluded against a background of facts which were known to, or which should have been known to,

the parties as reasonable people, at the time when they concluded their agreement. Literal interpretation divorced from

this background has fallen out of favour with the courts.”

At 10.58 they emphasise that: -

“… The factual matrix test is an objective one. The actual intention of the parties are irrelevant and direct evidence of

these intentions is inadmissible. Thus, evidence of what the parties said to each other in their pre-contractual

negotiations is normally inadmissible for the purposes of interpreting the contract.”

I adopt the above excerpts as offering a crystalline statement of the relevant legal principles.

Application of the aforementioned principles to the issues arising in this appeal

87. In reaching a determination as to whether the trial judge erred in her conclusion that the confirmation provided by Point Village’s

solicitors on the 29th February, 2016 that “binding agreements for lease” had been exchanged with tenants in respect of the units

was valid complied with the terms of Clause 11(c) what must be considered first and foremost is the certificate together with the

covering letter enclosed with same. The contention that the certificate itself omitted use of the word “binding” is not outcome

determinative. The agreement did not prescribe certification for valid compliance with Clause 11(c) to be effected but rather

“confirmation” of same. The letter itself is unambiguous. It is expressly confirmatory in nature, stating: -

“In accordance with Clause 11(c) of the Terms of Settlement we hereby confirm that binding agreements for lease/leases

have been exchanged with tenants in respect of nine of the ground floor units marked ‘X’ on the ground floor plan

annexed to the Terms of Settlement, at least four of which are internal units.”

88. The communication comprising the said two documents, the letter of 29th February, 2016 and the certificate, when considered

together could not be clearer. I am satisfied that the trial judge correctly identified that the certificate had been enclosed merely for

the purposes of good order and to ensure certainty as to which units were the subject of binding agreements for lease/leases within

Clause 11(c). No cogent basis has been identified for interfering with that determination.

Alleged Manifest Error & Dissolution of Ducas Hospitality Management Ltd

89. Dunnes contended that the certification which issued on the 29th February, 2016 was invalid by reason, inter alia, that almost 20

months after execution of an agreement for lease, Ducas, was dissolved and struck off the Register of Companies. Thereafter, Point

Village identified a prospective tenant “Freshii” to replace Ducas. By a letter of the 27th June, 2017 Point Village informed Dunnes that

it proposed to enter into an agreement for lease with Freshii as replacement tenant and invited Dunnes to discuss this proposed

change to the tenant mix. Dunnes contended that the requirement to replace Ducas demonstrated that there never had been a

binding agreement for lease with that company in the first place, and as such the confirmation furnished on 29th February, 2016

pursuant to Clause 11(c) of the Terms of Settlement had never been valid. Dunnes argued that the failure of the receivers to

“categorically swear on affidavit that the agreements for lease are, in fact and law, ‘binding’” raises serious issues as to the

construction by the receivers’ solicitors of the requirements in Clause 11(c).

90. I am satisfied that this objection is not soundly based. All that is contemplated by Clause 11(c) is that Dunnes’ solicitors be

furnished with confirmation from Point Village’s solicitors that binding agreements for leases have been exchanged with tenants in

respect of at least seven of the ground floor units as therein specified. Had the parties contemplated a different form or more

comprehensive format to the confirmation, the Terms of Settlement negotiated and executed by them on the 7th July, 2010 in

commercial litigation 2009/5004P would have said so. That Ducas Hospitality Management Limited was dissolved over a year following

its concluding such a contract for lease with Point Village has no bearing or relevance whatsoever as to whether its agreement for

lease was binding or not in the first place. The ambit and intention of the parties, as is manifest from Clause 11(c) and the

unambiguous language therein contained, was that Dunnes would not and could not go behind confirmation that binding agreements

for lease had been exchanged in a manner as therein specified.

91. For a legal instrument to be vitiated by manifest error, such error must have existed at the date when the instrument was

executed. Dunnes have failed to identify any such error subsisting either at the date of execution by Ducas Hospitality Management

Limited of their agreement for lease, or at the date of confirmation that binding agreements for leases had been exchanged with

tenants pursuant to Clause 11(c) of the Terms of Settlement, which letter and certificate were dated the 29th February, 2016. The

subsequent dissolution of the company neither trenches on nor undermines the validity of the binding agreement concluded between

Ducas and Point Village at the date of its execution, and the consequent validity of the certificate and the correspondence annexed

thereto dated the 29th February, 2016.

Rossport Retail Services Limited (Kix) and Long Stop Date Issue

92. Dunnes further contended that matters were compounded by the terms of a letter from McCann Fitzgerald of the 21st

September, 2017 concerning the purported termination by Rossport Retail Services Limited (Kix) of its agreement for lease concluded

with Point Village. It is contended that on receipt of that letter Dunnes became aware that Clause 2.1 of the Kix agreement for lease

provided, “This agreement is conditional upon the anchor tenant commencing its fit-out of the anchor unit on or before the Long-Stop

Date”. It was argued on behalf of Dunnes that this represents a condition precedent, which rendered the Kix agreement for lease

rather than the grant of the subsequent lease conditional on Dunnes commencing the fit-out of its store. Clause 11(c), it was said,

did not permit the inclusion of any other such conditions subsequent, or indeed conditions precedent to an agreement for lease. It

was contended that the trial judge had failed to address this argument and thus fell into error. However, the latter part of Clause

11(c) encompasses distinct considerations and does not assist Dunnes’ argument.

93. Under Clause 2.2. of the Kix agreement for lease, in the event that Dunnes had not commenced the fit-out of the anchor store by

the long-stop date, which was two years from the date of execution of the agreement, both parties were “at liberty to rescind” the

agreement, whereupon the agreement “shall be null and void and of no further force or effect but without prejudice to any

antecedent breach…” Ultimately, Kix availed of Clause 2.2. to rescind the agreement.

94. From considering Clause 11(c) in its totality, it clearly deals with conditions precedent only, making no reference to conditions

subsequent. I am satisfied that the High Court judge’s characterisation of Clause 2 of the Kix agreement for lease as being “fairly

standard” is correct from a conveyancing perspective. The Kix agreement for lease was binding from its inception as a matter of law.

A condition subsequent is defined in J.C.W. Wylie, Irish Land Law (5th Ed., Bloomsbury, 2013) at 4.49 as: “…a condition which may

result in forfeiture of an estate already vested in the grantee.”

Binding agreements for lease or leases

95. Contrary to Dunnes’ contention, Clause 2.1 of the Kix agreement for lease is not a condition precedent. As was stated by

Stephenson L.J. in Wickman Machine Tool Sales Limited v. L. Schuler AG, [1972] 1 W.L.R. 840: -

“If the condition is one to be fulfilled before the agreement comes into force, it is what lawyers have called a condition

precedent (or a contingent or causal condition), that is, a condition of the agreements coming into force; and if it is not

performed there is no agreement. If the condition is to be performed after the agreement has come into force, it is what

lawyers have called a condition subsequent, or a condition inherent (or a promissory condition), that is, a condition of the

agreements continuing; and if it is not performed the agreement comes to an end.”

96. Had the parties intended in negotiating the Terms of Settlement to provide that only irrevocable and/or unconditionally binding

agreements for lease or leases were to be captured by Clause 11(c), then language consistent with such a state of affairs which

would have clearly and effectively exclude any agreements made subject to condition subsequent would have been required to be

used. The omission of any such provision is significant and determinative of the matter. Having duly considered same, I am satisfied

that the said Kix agreement upon its execution was a concluded binding agreement for lease valid as such for the purposes of Clause

11(c ).

97. The condition or event arising in the cases of Ducas and Kix whether by negotiations or by act and operation of law in either case

was demonstrably not a condition precedent to the formation of a binding agreement for lease or leases within the meaning of Clause

11(c ).

98. From a conveyancing perspective, a binding contract came into existence immediately upon execution of each agreement for

lease, and the parties to it were from that moment subject to its obligations. Conditions subsequent of the kind arising in the instant

case in the agreement concluded with Kix are part of normal commercial reality. The contention that these agreements for lease were

not binding within the meaning of Clause 11(c) is unsustainable in fact and unsound in law.

99. Dunnes’ contentions conflate binding agreements and unconditional agreements. A conditional agreement can be binding, provided

the condition is a condition subsequent. In this instance the agreements the subject matter of the dispute were in each case at the

date of their execution clearly binding in accordance with their terms. Had it been the intention of the parties to the Terms of

Settlement to insist that unconditional agreements for lease or leases were required to have been exchanged in addition to being

binding, then the agreement ought to have stated this. The exclusion of such language necessarily infers that it was either not in the

contemplation of the parties at the date of execution of the Terms of Settlement or that Dunnes failed to successfully negotiate such

a term. Either way, it never formed part of the concluded agreement between the parties, and there is no basis in law identified by

Dunnes to imply that the binding agreements for lease or leases referenced in Clause 11(c) were intended to only encompass

unconditional binding agreements: expressio unius exclusio alterius.

Extrinsic Proof of Enforceability

100. A distinct argument on the part of Dunnes was that to trigger its obligations to release €15,000,000 from the nominated account

pursuant to Clause 11(c), the seven agreements for lease were required to be demonstrated by Point Village to be valid in accordance

with the obligations to comply with Clauses 4.7.1 and 4.7.2 of the long-lease entered into on the 28th November, 2008. The said

clauses required the receivers to include certain restrictions in leases with other tenants of the Centre for the benefit of Dunnes. It

was argued that since the receivers had failed to provide information on compliance with these clauses, significant doubt surrounds

the validity of the agreements for lease the subject of the certificate. This proposition seeks to impermissibly overreach the terms of

the parties’ concluded Terms of Settlement to satisfy the curiosity of Dunnes based on surmise. Such an entitlement was never

negotiated at the time the Terms of Settlement were entered into on 7th July, 2010. Such an approach is not consistent with the

norms of business or commercial conduct by lessors in general and neither is it consistent with prudent estate management. There is

no evidence that the agreements for lease in question have failed or omitted to comply with the various obligations arising on foot of

the long-lease including clauses 4.7.1 and 4.7.2. There was no obligation on the receivers to provide information in regard to same on

foot of the Terms of Settlement, the long-lease or the Development Agreement to validly comply with clause 11(c).

101. The trial judge correctly observed at para. 46 of her judgment that the arguments being advanced on the part of the defendant

to support this aspect of its claim were pure speculation amounting to a mere possibility that the agreements for lease did not include

the restrictions envisaged by the said terms of the long-lease.

102. I am satisfied the trial judge was correct in that regard, particularly since the parties had agreed to a clear mechanism under

Clause 11(c) which would lead to the release of the €15,000,000 from the nominated account with Point Village has on the evidence

demonstrated compliance.

103. Dunnes have failed to demonstrate or establish manifest error. The trial judge was correct at para. 37 and 38 of her judgment

that once Point Village had proved that their solicitors had confirmed that there were binding agreements for lease or leases

exchanged within the meaning of Clause 11(c), same was sufficient for the purposes of demonstrating compliance with the said

Clause.

Exceptionality

104. Dunnes’ claim is wholly lacking in any valid basis that would warrant exercise of the exceptional discretion to admit extrinsic

evidence to undermine the clear language of the clauses under dispute. This is not “a very unusual case”. The evidence does not

disclose “unusual circumstances” such as would warrant the expansive approach to the factual matrix for which Dunnes contends.

105. The substance of the contentions asserted on behalf of Dunnes distils down to this; that the perfectly clear word “tenants” in

the Terms of Settlement negotiated by the parties and signed off on with extensive legal and expert advice should be construed to

mean “tenants of a high quality”. To accede to this contention would be to grant an Alice in Wonderland licence to Dunnes to

interpret words in the negotiated and executed Terms of Settlement of 7th July, 2010 as they wish depending on the result they

sought to achieve.

106. To construe Clause 11(c) by implication or otherwise so as to replace “tenants” with “high quality tenants” would be to obliquely

impeach the clauses’ clear words and distort its simple, plain language. It would supplant certainty with uncertainty, clarity with

opacity and would be a measure amounting to a Trojan horse capable of sempiternally facilitating any party who wished to obstruct,

delay or defeat performance of the provisions of the Terms of Settlement.

Entire Agreement Clause

107. Entire agreement clauses are to be construed strictly. Such a clause does not operate to exclude evidence which is otherwise

admissible regarding the way parties to litigation considered the exercise of rights conferred on them pursuant to the terms of an

agreement. Dunnes accepted that Clause 25 of the Development Agreement precluded the introduction of implied terms into it based

upon materials produced or representations made prior to its execution. But it did not accept that it precluded reliance on such

materials to construe the terms of Development Agreement.

108. It bears repetition that this was a settlement document negotiated with extensive expert advice at the disposal of both parties

with every word reflecting the fruits of their negotiated compromise. Had either party intended to modify or circumscribe the ambit of

the category of tenant intended to be encompassed, it ought to have expressly done so. No valid basis was established by Dunnes

for the admission of the extrinsic materials to construe the terms of Development Agreement as modified by the Terms of Settlement.

109. The material sought to be introduced by Dunnes to support their contentions as to the type of tenants envisaged in the

Development Agreement is inadmissible by reason of the “entire agreement clause” as well as the well-established principles in Analog

Devic es.

Mannai

110. As outlined earlier, the decision in Mannai must be understood in its context. The decision addresses the principles governing the

correction of mistakes such as where a court construes the date in a notice to terminate a lease as the 12th rather than the 13th of

the month on the basis that there would never have been any doubt on the part of either party but that the notice was intended to

take effect on the former date.

111. Correction by interpretation ought to be confined to instances where the objective contextual interpretation of the words used

discloses an obvious mistake such as an erroneous date. There is no basis established by Dunnes for contending that any word or

provision in the Development Agreement, the long-lease or the Terms of Settlement failed to reflect the contemporaneous objective

intention of the parties thereto.

112. The decision in Mannai does not avail Dunnes. The decisions in Mannai and I.C.S. are not a charter for the unscrupulous. They

provide a mechanism for determining what the objective meaning of a contract is in the limited and narrow circumstances where the

principles are engaged and where the background available to both parties makes clear that an error occurred.

Relevance of interests of third parties

113. The trial judge was correct to take into account the interests of affected third parties and in particular AIB – notwithstanding

that they were not party to the litigation. Such an approach of attaching weight to the interests of third parties who may be

prejudiced were the Court to rely on an overly broad factual matrix accords with authority. Where an instrument will potentially be

relied on by a third party its wording should be paramount as is suggested in Re Sigma Finance Corp. [2009] UKSC 2 per Lord

Collins – “The instrument must be interpreted as a whole in the light of the commercial intention which may be inferred from the fact

of the instrument…” (para. 37).

Conclusion

114. Construction of Clause 11(c) involves balancing internal textual considerations and external factors revealing a balance struck

between the need to pay attention to the language of the Terms of Settlement negotiated and drafted by the parties and the

concern to give effect to the apparent commercial purpose of that clause in their Settlement. Dunnes has failed to establish any

dissonance between the objective intention of the parties and the clear linguistic meaning of the said sub-clause.

115. I would dismiss this appeal on all grounds

Appeal 468/2017

116. Turning then to the judgment and orders of Mr. Justice Twomey delivered on the 15th September, 2017 and order perfected on

the 22nd September, 2017 refusing inspection of documents by Dunnes, the following grounds of appeal are relied on:

(i) The High Court erred in refusing to grant the reliefs sought.

(ii) The trial judge erred in placing undue weight on the purported entitlements of Dunnes Stores per the Terms of

Settlement in particular that it only entitled them to “confirmation” of the existence of binding agreements for lease.

(iii) The judge erred in his interpretation and in application of O.31 r. 18(2) RSC, in particular as to whether production of

the agreements for lease is “necessary either for disposing fairly of the cause or matter or for saving costs”.

(iv) The judge erred in concluding that McCann Fitzgerald did not labour under a “manifest error” in interpreting the

agreements for lease as being “binding” notwithstanding the entitlement of the landlord or tenant to terminate same by

agreement.

(v) The trial judge erred in his interpretation and application of para. 23 of the judgment of Hogan J. in the Court of

Appeal in proceedings between the same parties. ([2017] IECA 159)

(vi) The judge erred in failing to have regard to the obligation on the receivers to comply with their obligations in paras.

4.7.1 and 4.7.2 of the long-lease to impose restrictive covenants on other tenants in the Centre for the benefit of Dunnes

Stores.

117. In an earlier interlocutory motion in these proceedings, Dunnes had sought discovery from the High Court of, inter alia, the same

documents which they sought production of pursuant to O.31 r.18 RSC:

“All documents evidencing and / or relating to the agreement for lease and /or leases entered into by the plaintiff with the

tenants set out at para. 7.14 of the affidavit of Stephen Tennant sworn on the 6th April 2016.”

On appeal to this Court (Point Village Developments v. Dunnes Stores [2017] IECA 159) Hogan J., refused the application for

discovery stating: -

“… the plaintiff’s engagement with actual or potential tenants could only be relevant to show what the subjective beliefs

of [Point Village] regarding the scope and meaning of the reference to ‘tenants’ in clause 11(c) actually were. But since

such evidence would – generally speaking, at least – be inadmissible at trial for this purpose, the discovery sought in aid

of this line of inquiry must also be deemed not to be relevant so far as any issues in these proceedings are concerned.”

118. In his judgment Hogan J. also declined to order discovery of a further category (“documents evidencing and / or relating to the

agreement for lease and /or leases entered into by the plaintiff with the tenants”) on the basis that they were not relevant to the

construction of Clause 11(c) of the Terms of Settlement stating:

“One might therefore ask: what purpose would this discovery serve? It could, at most, serve to show the understanding

of the receivers’ solicitors. But, as I have just explained in the context of category 2, the construction of clause 11(c) will

not be dependent on the beliefs of third parties such as the receivers’ solicitors regarding the meaning of the agreement”.

Manifest error

119. In dismissing Dunnes’ appeal against the High Court’s refusal of its application for discovery, Hogan J. stated: -

“Absent fraud or manifest error – neither of which have been alleged – it does not seem to me that Dunnes Stores can

look behind the certificate provided by McCann FitzGerald.” (para. 22)

120. Latching on to the language of Hogan J., Dunnes contended in a letter dated 7th September, 2017 that McCann FitzGerald had

been guilty of a “manifest error” in their understanding of Clause 11(c) of the Terms of Settlement:

“It is, in fact, the apparent interpretation of ‘binding’ in your letter dated 4 July 2017 which casts considerable doubt over

the validity of the purported confirmation given for the purposes of Clause 11(c) of the Settlement Agreement, and which

raises the concern that there has been a manifest error in respect of the interpretation of ‘binding’.”

121. In his judgment Twomey J. concluded: -

“[14] Dunnes argues that this letter evidences a manifest error on the part of McCann Fitzgerald regarding the meaning of

a ‘binding’ agreement. As such, it is argued that this justifies this Court in going behind the confirmation and ordering Point

Village to grant Dunnes access to the six agreements for lease, which previously McGovern J. and the Court of Appeal had

decided was not necessary for a fair disposal of the matter. In a letter to McCann Fitzgerald dated 7th September, 2017,

Arthur Cox puts the matter as follows: -

‘it is, in fact, the apparent interpretation of “binding” in your letter dated 4 July 2017 which casts considerable doubt over

the validity of the purported confirmation given for the purposes of Clause 11(c) of the Settlement Agreement, and which

raises the concern that there has been a manifest error in respect of the interpretation of “binding”.’

[15] In arguing that this alleged manifest error justifies the making of an order for inspection, Dunnes relies on the fact

that although its application for discovery was rejected by the Court of Appeal, that Court did so in a way that suggested

that if there was fraud or manifest error, it might not have been rejected…

[16] On this basis, Dunnes argues that the statement by McCann Fitzgerald in its letter of 4th July, 2017, amounts to a

manifest error, as envisaged by Hogan J. and thus justifies this Court in looking behind the confirmation and ordering the

inspection of the six agreements for lease.

[17] This Court does not find this argument persuasive. In this Court’s view there is nothing illogical in the statement by

McCann Fitzgerald that at any stage during the term of a legally binding agreement between two parties, both parties to

that agreement can agree to terminate that agreement, in which case the agreement ceases to be legally binding, but

that this termination does not result in the agreement being deemed to never having been legally binding in the first

place. Thus, this Court does not accept that the statement by McCann Fitzgerald on the 4th July, 2017 amounts to a

manifest error by that firm regarding the law of contract.

[18] For this reason, this Court cannot conclude that a manifest error has occurred as envisaged by Hogan J. so as to

justify this Court in looking behind the confirmation issued by McCann Fitzgerald that the agreements for lease are

binding.”

Conclusion

122. I have determined in the first appeal that there was no manifest error arising in the construction and operation by Point Village

of Clause 11(c) of the Terms of Settlement of 7th July, 2010 contrary to the contentions of Dunnes. In light of the factors set out

above, I am satisfied that Twomey J. was correct in finding that the test for determining whether a document was discoverable under

O.31, r.12 RSC or liable to be produced under O.31, r.18 RSC is similar under both provisions; Dunnes are bound by the terms of the

judgment of Hogan J. in the Court of Appeal in which its application for discovery of the agreements for lease was rejected.

123. The High Court judge was correct in his conclusion that McCann FitzGerald was not guilty of any manifest error in the statement

made in its letter of 4th July, 2017 and that irrespective of whether McCann FitzGerald was guilty of manifest error or not, inspection

of the agreements would also not serve any purpose since “the discovery of a document and the inspection of a document will lead to

the same result, namely Dunnes having knowledge of the terms of the agreements for lease”.

124. Hogan J. had stated at para. 26 of his judgment ([2017] IECA 159) that the contents of documents which might reveal the

subjective beliefs of Point Village or its solicitors regarding the interpretation of Clause 11(c) of the Terms of Settlement were

irrelevant to the construction of same because such an exercise would be carried out objectively by the Court at trial based on the

text (as I am satisfied it was by Costello J.):

“It accordingly all comes back to the proper construction of clause 11(c) of the 2010 agreement. But this is a matter to

be determined by the High Court by reference to the standard principles of contractual construction as explained in

leading cases such as Analog Devices BV v. Zurich Insurance [2005] IESC 12, [2005] 1 IR 274 and, to repeat, the

beliefs of the parties regarding the meaning of the clause are irrelevant.”

125. For the above reasons I would also dismiss this appeal.