High Court of Ireland Decisions

1. These six defendants are all tenants of the plaintiff in Crumlin Shopping Centre. Along with another tenant, James Mountaine, they have been dissatisfied for many years past with alleged disrepair and deterioration of the fabric of centre and with what appears to them to be the landlord’s pursuit of the interests of one anchor tenant (Dunnes Stores) to the detriment of other tenants, particularly in the context of an overlapping of ownership interests in both Dunnes and the Plaintiff Company. (For example, it is alleged that of 20 units vacated in the centre, 12 have now become Dunnes outlets).

2. These tenants and others eventually issued proceedings in November 1997 seeking Specific Performance of the terms of their leases (including implied terms and representations) and damages.

3. It would appear that at about the same time some, if not all of these tenants commenced a pattern of non payment of rent, and it is the landlord’s claim for arrears of rent and service charges commenced by Summary Summonses dated July 2001, which now come before me on Motion for Liberty to enter Final Judgment.

4. When the possibility of an exhaustive hearing in respect of one of the cases was raised, the parties suggested that I select one sample case at random, and I delivered a written judgment in that case in February 2002. The tenants now think that perhaps Mountaine’s case (Crumlin Investments limited -v- James Mountaine 2001 No. 5635) was not a standard case and for that reason (or perhaps because there is a query over whether an appeal against my decision was lodged in time) they now ask me to review every case.

5. The plaintiffs' claims in each case are identical, with only quantum varying, and are for rent arrears and unpaid service charges due as of April 2001. I have ruled in Mountaine’s case (to which decision please refer for ratio) that no defence is disclosed and that there is no contest as to a defence. I have given liberty in Mountaine’s case, and do so again now in each of these six cases.

6. On the defendant’s Stay application I attempted to weigh the merits and quantum of the tenants’ 1997 proceedings and, in effect, concluded that

7. I then granted a stay in Mountaine’s case provided two thirds of all arrears were paid, and two thirds of future liabilities discharged when due.

8. I am now asked to review these six cases to see if this formula ought to be tailored individually for each case. To enable me to consider doing so I have read the materials both in these cases and in the 1997 proceedings and would make the following observations.

9. There is no basis for varying my assessment as to (b) above since all the tenants’ cases are in identical terms, except for one.

10. Since none of the tenants, as plaintiffs, pleaded special damage (other than reference to a schedule of dilapidations) in the Statements of Claim, or in the particulars furnished in November 1999 other than to state that they were “unascertained and continuing”, then proceeding (in some cases following application to Court to compel particulars) to specify an estimate (“together with consequential damages”) in January 2000 and finally furnishing a more precise analysis by Mr. Michael Norris in February 2000, I must take the high water mark as being the said report of February 2000. I have also read the replying affidavits in each of these cases, and the exhibited reports of Mr. McFettridge dated May 1998 and December 1999.

11. Turning to Mr. Norris’s report

12. I allowed Mr. Mountaine the benefit of approximately 25% of his claim. He claimed turnover losses averaging £15,000 per year. I used ten times the average alleged, annual gross loss as an approximate measure of the damages which Mr. Mountaine might conceivably recover from the landlord, inclusive of interest. The basis of a formula for a stay was then clear. Against a claim for £60,000 approx. Mr. Mountaine might offset his award of £40,000. Or, put another way, against a decree of £60,000 with 100% certainty I assessed his damages claim of £150,000 (15K p.a. for 10 years) with a success probability of only 25% approx..

13. Now lets look at these other cases. It is to be noted that the loss of turnover claimed, as a percentage, is not on all fours with that claimed, by Mr. McFettridge, in Mountaine’s case, namely 20%. In some cases the figure mentioned is 50%, in some, 100%.

14. In Mountaine’s case I accepted as a basis of calculation the alleged loss of turnover at 20%. (This figure was adopted by Mr. McNorris in his computation of Mountaines cumulative lost profits of £124,000 over the eight year 1992 to 1999 inclusive (plus or minus a couple of months)).

15. Yet in two of these six cases, the figure comparable to Mountaine’s 20% is 50%. These are Wigoders (“should be 500K instead of 337K”) and Gleesons (“should be 7½/10K more per week than 18½/19 achieved”). In two other cases, Mugs and Occasions, McFettridge simply suggested potential for additional £5K per week, in the latter case this approximates to 100% but for Mugs the percentage cannot be computed. We are offered no logical explanation for the differences. The higher figures, even by direct comparison with the lower, must be open to significant question. Clearly there must be forces at work here which vary from unit to unit and therefore cannot all be due to the landlord’s alleged fault which is identical to all cases. One could almost say that to suggest otherwise defies logic.

16. On the other hand there is a logic to the proposition that if Mr. Mountaine’s losses could be capped, perhaps by his own efforts, at 20%, the same was achievable by other tenants. In other words the landlord’s actions did not prevent Mountaine from achieving a turnover which had a potential upside of 20% only, to be realised by the landlord performing his obligations as understood by the tenants. To blame the landlords for lost turnover in other cases in excess of 20% is therefor significantly problematical. Accordingly I could with justification use the 20% figure for all tenants instead of 50% or 100%. I won’t but in fairness to both sides, I will reduce the 50% to 35% and the 100% to 60%.

17. The claim for damages of Gleesons is £82,000 per annum (at 35% instead of 50%), so the value of the claim for the purposes of a stay is £205,000. Their arrears to April 01 stand at £131,250 on an annual rent of £50,000.

18. Fletcher Phillipson (“Wigoders”) position is different in one respect, namely, that they secured a rent reduction from £61,000 down to £42,000 by renegotiation in 1990. Does this weaken their claim? I do not know what was agreed at the time, but the reduction agreed was significant by any measure. I am inclined to conclude that the 25% probability must be reduced in their case by a half. Their annual loss is £60,000 (at 35% rather than 50%). Accordingly, the “value” of their case stands at £75,000 against a rent claim of £94,500.

19. In the case of Occasions Ltd, the claim is for £92,000 on an annual rent of £25,000. Applying the same formula, with 60% turnover instead of 100%, to the lost turnover figure of £503,000 in Mr. Norris’s report, gives a “value” of £94,000 for tenant’s claim.

20. In O’Tooles case (“Mugs), owing £149,000 on an annual rent of £25,750, 60% (instead of 100%) of claimed loss of turnover divided by eight and multiplied first by ten and then by 25% gives £114,000.

21. The O’Tooles are much more heavily in debt to the Landlord, in terms of multiples of annual rent, than the other tenants. In addition to the % above specified they must as an additional condition attaching to the stay in their case, pay the sum of £60,000 to the plaintiff.

22. Linbury Ltd occupy unit 24 (a). There are arrears of £31,000 on an annual rent of £21,000 but I cannot identify any part of Mr. Norris’s report as referring to Mr. Kinsella’s company. Mr. Kinsella deposes to no loss, and he has not particularised a loss, or made discovery.

23. A similar position arises in respect of Mr. Cherif. Again, neither Mr. Norris nor Mr. McFettridge deal with any Abrakebabra cafe, nor does Mr. Cherif depose to special losses, nor has he particularised or made discovery. His arrears, on an annual rent of £24,500 stand at £99,500.

24. Doing the fairest I can for these two tenants, and for their landlord, I will adopt the formula in Mountaines cases in Cherifs case, and a reduced % for Linbury because its arrears figure is significantly less (as a multiple of annual rent) than for the other tenants.

25. In Mountaines case, having “valued” the tenants’ claim at £40,000 against a rent claim of £60,000, I then had to decide how to “apportion” the available damages “credit” of £40,000. I could have simply credited it against the rent, leaving the tenant a balance of £20,000 to pay. Instead I chose, somewhat unscientifically, to credit one half, or £20,000, against the arrears figure (to April 01) and the other half against future (post April 01) rent and service charges. Mountaine’s non payments started in 1999, two years prior to the Landlord’s proceedings, and I felt it not unreasonable to consider that the tenants case could proceed to trial at and 2003 or early 2004 - a 50:50 past and future split seemed appropriate.

26. I could now start to refine this basis of apportionment in these six cases - some have rent arrears history of four years for example - but to do so is to introduce a level of accuracy which is not warranted in this essentially artificial exercise designed primarily to ensure that neither party is unjustly enriched pending trial.

27. The artificial abatement of rent achieved as analysed above means that neither landlord or tenant will be unduly disadvantaged by any further delay in bringing the cases to trial.

28. Accordingly, I now calculate the percentage to be specified in the Stay conditions as follows:

29. Gleesons: £131,250 - £205,000 ÷ 2 as % of £131,250 22%

30. Occasions: £92,000 - £94,000 ÷ 2 as % of £92,000 49%