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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Ochre Ridge Ltd -v- Cork Bonded Warehouses Ltd & Anor [2006] IEHC 107 (28 January 2006)
URL: http://www.bailii.org/ie/cases/IEHC/2006/H107.html
Cite as: [2006] IEHC 107
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Judgment Title: Ochre Ridge Ltd -v- Cork Bonded Warehouses Ltd & Anor

Neutral Citation: [2006] IEHC 107


High Court Record Number: 2000 9333 P

Date of Delivery: 28 January 2006

Court: High Court


Composition of Court: Smyth J.

Judgment by: Smyth J.

Status of Judgment: Approved





Neutral Citation Number: [2006] IEHC 107
THE HIGH COURT
DUBLIN
RECORD NO. 2000/9333P

Between/

OCHRE RIDGE LIMITED Plaintiffs



CORK BONDED WAREHOUSES LIMITED
& PORT OF CORK COMPANY LIMITED Defendants




    JUDGMENT OF MR. JUSTICE T.C. SMYTH DELIVERED THE 28TH DAY OF FEBRUARY 2006.

In these proceedings the Plaintiff claims against the
    1st Defendant specific performance of a contract for
    sale dated 8th October 1999 (and a range of
    declaratory reliefs claimed to arise out of the
    contract). There is also claimed – and the claims
    were pursued at the hearing - for damages for
(a) breach of contract and (b) conspiracy.

The property in suit is an old bonded warehouse
situated at the top end of an island of land in
Cork City, which is divided by the river.
The premises is effectively owned by the
2nd Defendant, which has a lease thereof of
999 years, and carved out of that interest is a
99 year lease made between the 2nd Defendant and the
1st Defendant.

The contract is conditional (inter alia) upon:-

a) The Plaintiff concluding negotiations to its
    satisfaction with the 2nd Defendant regarding the
    development of the premises;

b) The consent by the 2nd Defendant to assignment and
change of use; and

c) The obtaining by the Plaintiff of an opinion from
Senior Counsel to the effect that the 2nd Defendant
is not a "State Authority".

This latter provision (Special Condition 13) relating
to the status of the 2nd Defendant, being not a State
Authority, was established and accordingly this
    condition is of no relevance to the proceedings.
The Completion date of the Contract was 10th April
2000 in respect of which time was of the essence
(Special Condition 9(b), which further provides
    that:-
"It is agreed that if, for whatever
reason, the purchaser fails to complete
    on the Completion Date, this contract
    shall automatically be at an end and
    the Purchaser's deposit, less the
Non-Refundable Element (herein defined)
shall be returned to the Vendor's
Solicitor in exchange for all copy
    title documents furnished in connection
    with this agreement."


The Plaintiffs' case is that the consent of the
2nd Defendant both as to assignment and change of use
was wrongfully withheld and furthermore that the
    Defendants conspired together to ensure that the
    contract fell or would be frustrated.
The Plaintiff is a private limited company and was
the 'vehicle' used, by one Mr. Tim Tallent, with a
view to carrying out an intended scheme of
development. Mr. Tallent was not a property
    developer. His business was in 'packaging', a family
    business of which he had become, over time, the
    Managing Director. His family roots were in the Cork
    area, but he has spent the greater part of his
    business life in England. In his career in the
    packaging business he had been in some property
    transactions, buying or selling, leasing or letting
    premises for the packaging business. Without
    detracting from such experience, it could be fairly
described as modest dealings in property.

Prior to the Plaintiff and the 1st Defendant entering
into the contract of 8th October 1999 the
2nd Defendant had served on the 1st Defendant a
Schedule of Dilapidations in relation to the premises
    which had been seen by the Plaintiff. This fact was
    expressly referred to in Special Condition (5) which
    then noted:-
"The Vendor has not carried out any of
    the works referred to therein, nor does
    it intend to do so prior to completion.
    The Purchaser shall take the premises
    subject to the said Schedule of
    Dilapidations and subject to the
    obligations to comply with same.
    Following execution of this Agreement,
    the Vendor shall write to the Landlord,
    informing it of the existence of the
    Agreement and requesting the Landlord
to hold the Schedule of Dilapidations
    in abeyance, pending the outcome of
negotiations in relation to the
    premises to be conducted between the
    Purchaser and the Landlord.
If the Landlord refuses to agree to
    this course of action, the Vendor shall
negotiate with the Landlord in good
    faith to agree a Schedule of
    Dilapidations. The Vendor shall
        consult with the Purchaser before
        agreeing such schedule with the
Landlord. The Vendor shall endeavour
    to postpone commencement of the works
    to be carried out under the Schedule to
    date after the Completion Date."

The evidence established to my satisfaction that the
Plaintiff, prior to entering into the contract with
the 1st Defendant, had in March 1999 suggested to the
2nd Defendant that it issue a Schedule of
    Dilapidations on the 1st Defendant. Furthermore, the
    Plaintiff wished to be informed by the 2nd Defendant
    as to, if and when such Schedule would issue before
    fixing on a purchase price and terms of contract with
    the 1st Defendant. A Schedule of Dilapidations
    (which was quite extensive) was served on the
1st Defendant in June 1999. Subsequent to the
execution of the Contract, the 1st Defendant by
    letter dated 14th October 1999 sought consent to the
    assignment of the lease and change of use of the
    premises. This was not a defeatist application,
truthful information was given by the 1st to the 2nd
Defendant and the case is clearly distinguishable
    from Costello -v- Krishna Props (Ir) Ltd. & McVeagh
    (unreported 10/7/1975 Finlay, P.) The letter
    recorded the understanding (confirmed by the evidence
    of the 1st Defendant) that Mr. Tallent would contact
    the 2nd Defendant to discuss the matter of the

    dilapidations with them. The letter concluded:-
"In relation to the Schedule of
Dilapidations, I understand that
Mr. Tallent intends to redevelop the
property and that these redevelopment
works, would, on the whole, render
unnecessary the works required under
    the Schedule of Dilapidations.
    Accordingly, I would be grateful if you
    would confirm that the schedule may be
    left in abeyance pending the outcome of
    discussions between Port of Cork
    Company and Mr. Tallent. "

The letter seeking the consents drew a refusal from
    the 2nd Defendant and in the clearest terms signalled
    that such would not be forthcoming "until such time
    as effective arrangements have been put in place to
    comply with the Schedule of Dilapidations." I am
    satisfied that both Mr. Tallent and the 1st Defendant
    realised that there was little point in going to the
    trouble and expense of carrying out the repairs in
    the Schedule of Dilapidations if the property was to
    be re-developed. The contract had expressly given
    the power Mr. Tallent to negotiate with the
2nd Defendant on this issue. While the 1st Defendant
did from time to time carry out works of repair to
maintain the integrity of the building during the
building of the Cork Main Drain and some such could
coincide with items of dilapidations, they did so on
    the advice of their own engineer - not in purported
    compliance with the entire Schedule of Dilapidations,
    or the Schedule of Dilapidations at all.
Indeed, Mr. Tallent immediately on learning of the
position of the 2nd Defendant contacted Mr. O'Mahony
of the 1st Defendant and agreed on presenting a
united front to the 2nd Defendant. Furthermore,
Mr. Tallent was organising full surveys -
structural, dimensional and historical, which would
    be required in any event to submit to the Planning
    Authority. Mr. Tallent's telefax of 9th November
    1999 copied to Mr. O'Mahony concluded:-
"Therefore, whilst Cork Bonded
    Warehouse and Ochre Ridge accept that
        the Schedule is in place there seems
        little point in complying with it until
        both the reassignment and change of use
        are granted and the overall scheme is
        put before the planners as a concise
        conservation package."

    Later that month, on 23rd November 1999, Mr. Tallent
    wrote to Mr. Pat Keenan, the Secretary Or Chief
    Executive Officer of the 2nd Defendant, with
    reference to the surveys stating:-
"On receipt of these reports Scott
Tallon Walker will be in a position to
advise the way forward in both
architectural and heritage terms, at
    which stage I will copy you with our
    proposals. At that time, I shall
    contact you again so that we can
    arrange to meet and discuss further the
    redevelopment of the site, and
demonstrate how our proposals meet or
exceed the schedule currently in
    place..."

Mr. Tallent carried forward his intended enterprise
and informed Mr. O'Mahony of his intention to meet

with Mr. Keenan after consulting surveyors and
architects. Furthermore, Mr. Tallent informed
Mr. Keenan that as soon as he consulted his
advisors:-

"I will contact you to arrange a
    meeting to address both the
    Dilapidations Schedule and Port of
    Cork's consent to the change of use.
I have advised Mr. Liam O'Mahony at
    that Cork Bonded Warehouse Limited
    should apply to Port of Cork for
    consent to assign their interest in the
    lease so that it can be dealt with by
    your Board. "

      Why this latter matter was raised in this way in the
      light of Mr. Tallent clearly knowing on 9th November
      1999 that consent had been refused was not made
      clear. In the events, Mr. Keenan by letter dated
      11th January 2000 made it quite clear to Mr. Tallent
      that such an application had been made, was refused
      and "this was a very definite decision, unanimously
taken, and it is most unlikely that it will be
overturned."

While the contract made it clear that the 1st
Defendant did not intend to carry out any of the
works in the Schedule of Dilapidations and that it
would endeavour to postpone any such works being
carried out before April 2000, (the completion date)
- the problem with the consents had not been resolved
by February 2000. Mr. Tallent knew that while there
was little point in carrying out the works in the
    Schedule of Dilapidations, however if the
2nd Defendant would grant consent to the assignment
and change of use - his company (the Plaintiff) would
as part of its re-development of the property - agree
to carry out all of the relevant works included in
the Schedule of Dilapidations and reinstate the roof
without seeking any part of the contribution of the
2nd Defendant towards the reinstatement cost of the
roof (which was a joint obligation between landlord
and tenant under the lease). This proposal was put
and supported by the 1st Defendant. The response of
the 2nd Defendant was unequivocal in a letter of
24th March 2000 from Mr. Keenan to Mr. O'Mahony:-

"....I can confirm that there is no
    change in the position of the Port of
    Cork company in relation to any
    proposed assignment of the lease of the
    property now occupied by Cork Bonded
    Warehouses Limited. The Port of Cork
    Company will not agree to any
    assignment which involves the change of
    use for the premises."


The day before (i.e. 23rd February 2000) Mr. Keenan
had written to Mr. O'Mahony in (inter alia) the
following terms:
    "Lest there be any misunderstanding
    about the contents of my letter of the
    19th October, my Board decided that
    complying with the Schedule of
    Dilapidations was a matter of necessity
    and we have spoken about this since.
I would not wish you to have the idea
    that it was 'essentially a precondition

    to the Board giving its consent' to
    your request to assign the lease
    because this is not necessarily so."

I am satisfied and find as a fact that events at that
time and since left Mr. O'Mahony with the opinion
that it would make no difference to the 2nd Defendant
who an intended assignee might be - a refusal to
consent was probable and that the 2nd Defendant
(as Landlord) would 'sit out the remainder of the
term of the lease.'

In the course of cross-examination of Mr. O'Mahony,
it was put to him that he ought to have challenged
the refusal to consent in litigation. Altogether
from there being no contractual obligation to do so,
not only had the 1st Defendant put Mr. Tallent's
proposal forward, it had also sought and obtained
Counsel's opinion. It was not at all clear that a
legal challenge would succeed and furthermore the
1st Defendant, very understandably, did not wish to
weaken any bargaining position it might have in the
future by attracting an unfavourable Court Order.

Furthermore, General Condition 10(d) of the contract
dealing with consent to assignment of a lease
    provides (inter alia) that-
"... the Vendor shall not be required
    to institute legal proceedings to
    enforce the issue of any such consent
    or otherwise as to the withholding of

    the same. If such consent shall have
    been refused or shall not have been
    procured and with written evidence of
    the same furnished to the purchaser on
    or before the closing date, or if any
    such consent is issued subject to a
    condition, which the purchaser shall on
    reasonable grounds refuse to accept,
either party may rescind the sale by
    seven days' prior notice to the other."
At all material times, what was envisaged under the
Contract was a consent to assignment and change of
use. It was only when the response of the
2nd Defendant was unfavourable that Mr. Tallent
    considered that perhaps he could accept consent to
    assignment or change of use. But he made it clear in
    his fax of 24th January 2000 to Mr. O'Mahony that
    they should be not treated as separate issues. That
    the consents would not be decoupled is clear from the
    letter of 24th March 2000 from the 2nd Defendant
(earlier referred to).

It is clear from both oral and written evidence that
    the 2nd Defendant had a sense of the time frame of
    the contract between the Plaintiff and the
1st Defendant. I am satisfied and find as a fact
    that Mr. O'Mahony did not discuss with Mr. Keenan the
contract with the Plaintiff during its currency and
that the 1st and 2nd Defendant did not conspire to
deprive the Plaintiff of the benefits of the intended
fruits of the contract of 8th October 1999.

Of all material matters in the evidence where there
is a conflict between that of Mr. Tallent and
Mr. O'Mahony, I prefer the evidence of Mr. O'Mahony
as being more reliable, notwithstanding that on
occasion he could not recollect some details of
meetings or events. I found him a reliable and
forthcoming witness.
I am further satisfied and find as a matter of fact
and as a matter of law that the sale was not
completed by the 10th April 2000 but that this was
not because of any failure by the 1st Defendant to
    comply with its contractual obligations.
Notwithstanding it being suggested that the
1st Defendant did not pursue the 2nd Defendant on
receipt of the refusal to the consents. Mr. Tallent
made it perfectly clear and it is clearly agreed
between himself and Mr. O'Mahony that Mr. Tallent,
who was the person (or whose company) was going to
carry out scheme of redevelopment with the Port of
Cork Company, was going to make the running and bring
about whatever arrangement would best suit himself.
I reject as unfounded and unwarranted by the evidence
that there was any lack of good faith on the part of
the 1st Defendant in seeking to give effect to the
terms of the contract or that the 1st or 2nd
Defendants conducted themselves in a manner motivated
by the fact that there was an element of
non-refundability of the deposit or that it might be
more convenient and beneficial for them later to
contract with the 2nd Defendant. Furthermore, in each
    of the separate cases the relationship was
    contractual not fiduciary, therefore no obligation of
    good faith arises.
I am satisfied that the contract entered into between
    the Plaintiff and the 1st Defendant is a conditional
    contract and was understood by both parties. An
    understanding and applicability of the law in this
    regard is as set out in Aberfoyle Plantations Limited
    -v- Cheng [1960] AC 115 at p.124/5 viz (i) where a
    conditional contract of sale fixes a date for the
    completion of the sale then the condition must be
    fulfilled by that date; and more particularly (iii)
    where a conditional contract of sale fixed (whether
    specifically or by reference to the date fixed for
    completion) the date by which the condition is to be
    fulfilled, then the date so fixed must be strictly
    adhered to, and the time allowed is not to be
    extended by reference to equitable principles. The
contract read as a whole and in particular Special
Condition 9(a) - approval of a scheme, Special
Condition (14) – the obtaining of consents and
General Condition 10(d) indicated its conditional
character and the parties proceeded and regarded
compliance with these provisions as necessary
ingredients to give force to the contract. Further,
    there was a mutuality of benefit in the contractual
    conditions (Maloney -v- Elf Investments Limited
    [1997] ILRM 253) Special Condition 9(b) is quite
    specific.

"It is agreed that if, for whatever
reason, the purchaser fails to complete
    on the completion date, this contract
    shall automatically be at an end...."


    That is what the parties agreed - they agreed not to
    be bound after 10 a.m. on 10th April 2000: No
    interest existed under the Contract thereafter.
I am satisfied and find as a matter of fact and of
law that the 1st Defendant was not in breach of
Contract. Insofar as it is pertinent I am not
satisfied that there was any sound credible
convincing evidence upon which damages could be
awarded. Even if consents were unreasonably
withheld, it is the tenant who may claim damages (if
proven) Meagher -v- Luke J. Healy Pharmacy Ltd.
[2005] 1 EHC 120, Murphy, J. citing Kelly -v- Cussen
(88 I.L.T.R 97) For completeness, I was unconvinced
to a probability on adequate and imprecise evidence
that the Plaintiff was in funds at the appropriate
time such as to be able, ready and willing to
    complete the sale.
A great deal of the trouble that arose in this case
had its origin in the instigation of the Plaintiff to
    have the 2nd Defendant prepare and serve the Schedule
    of Dilapidations to assist in its negotiating a price
    with the 1st Defendant. The Plaintiff did not
    disclose this fact prior to the contract to the
1st Defendant. In opening the case, considerable
emphasis was laid on the candour and up front
approach of Mr. Tallent. The words of Goulding J. in
O'May -v- City of London Real Property Co. Ltd.
(1979) 245 E.G. 1065 at 1069 have a particular
resonance. "After all, the purpose of legal contracts
    is to reduce the mutual dependence of parties on one
    another's morality."
I refuse the Plaintiff any relief against the
1st Defendant.

The relationship between the Plaintiff and the
1st Defendant is based on the contract of 8th October
1999 that of the Defendants inter se by the terms of
    the lease of 22nd March 1918. There is no legal
    relationship between the Plaintiff and the
2nd Defendant. Undoubtedly the Plaintiffs sought to
negotiate a business arrangement with the 2nd
Defendant, but those negotiations bore no fruit and
no concluded agreement ever arose. Notwithstanding
the initial overture made by the Plaintiff to offer
15% of the benefit of the scheme of redevelopment
    being rejected by the 2nd Defendant, the Plaintiff
    thereafter entered into the contract of 8th October
1999 with the 1st Defendant. This was a commercial
decision made by Mr. Tallent. I am satisfied and
    find as a fact that no support was given to
Mr. Tallent by the 2nd Defendant to enter into the
contract of 8th October 1999. Mr. Tallent may have
assumed that because he was minded to enter into a
form of agreement to redevelop the site/premises at
some time in the future with the 2nd Defendant that
the 2nd Defendant would grant the consents required
under the lease. In my judgement, there was no
warrant or legal basis upon which he could rely or
make such assumption. In my judgement, there can
have been no legitimate expectation that his intended
or hoped for agreement with the 2nd Defendant would
be realised in October 1999 because his offer had
been rejected. Nothing in the evidence provided a
base either for such belief. The first task of the
Court is always to construe the particular words of
the particular contract against the factual
background known to the parties at or before the date
it is entered into (Charter Reinsurance Co. Ltd. -v-
Fagan (CA)[1997] AC 313 per Nourse J. At 394)

The Plaintiff in its legal submission contended that
both Rice and Kenny V Dublin Corporation [1947] IR
425 and W&L Crowe Ltd. & Anor -v- Dublin Port and
Docks Board [1962] IR 294 were authority for the
proposition that a Plaintiff as a proposed assignee
is entitled to bring an action (based on a breach of
an implied term in a contract between the proposed
assignor and the proposed assignee) against the
proposed assignor's landlord under S.67 of the
Landlord and Tenant(Amendment) Act 1980 for the
withholding of consent to assignment or change of
    use. The cases do not support such contention.
    Furthermore, the instant case is site and
circumstances specific, unlike Rice's case - where
the decision of refusal was a blanket policy
    decision.
The privity of contract in this case between the
Plaintiff and the 1st Defendant is wholly separate
    and distinct and apart from the privity created by
the lease between the 1st and 2nd Defendant (Ashworth
    Frazer Ltd. -v- Gloucester City Council [2001] 1 WLR
    2180 at p.2183 per Lord Bingham of Cornhill). I am
    satisfied and find as a fact and as a matter of law
    that even if the 2nd Defendant did act unreasonably -
and I make no such finding: good estate management to
retain a port related use as a Bonded Warehouse may
be a consideration within the terms of the lease.
    Indeed in the course of his judgement in Crowe's
    case, Haugh J. stated:
"In Lloyd & Anor -v- Earl of Pembroke &
Anor 89 I.L.T.R 40 at p.44, Mr. Justice
Dixon has said:- "In considering for
themselves" [the landlords] "whether
    they would or would not give consent,
    they are entitled to take everything
    affecting the position into account,
    including considerations of their own
    estate management and including
    questions of their own interests."
    In Rice -v- Dublin Corporation [1947]
    IR 425 at p.436 Maguire C.J.,says:-
    "....I am of opinion that while it is
    the duty of the Court to consider each
    case upon its merits, there is no
    reason why a landlord may not properly
    base a refusal of consent upon grounds
    of general policy in relation to the
    management of his estate."


The instant case is distinguishable from Crowe's case
in (inter alia) in that case both plaintiffs were
applicants for the consent sought - that is not the
position in the instant case. Even if the
    reasonableness or otherwise of the consents withheld
    required determination, 'the onus is on the tenant to
    establish that the landlord is unreasonably
withholding its consent.' [OHS Ltd. -v- Green
Property Company Limited [1986] IR 39 - in my
judgement, the evidence does not prove that the
refusal of consents by the 2nd Defendant was
unreasonable. The Plaintiff in this case seeks
declaratory relief - such is a matter of discretion,
in this case even if there was a supporting
evidential basis for doing so, I would refuse to
exercise my discretion in favour of the Plaintiff for
    a variety of reasons arising from some unsatisfactory
    features of the evidence and more particularly
because the Plaintiff by instigating the preparation
    and service of the Schedule of Dilapidations without
    disclosure to the 1st Defendant and by this
    generation putting the 1st Defendant at a
    disadvantage before the contract and inhibiting the
    1st Defendant in dealing with the property afterwards
    and agreeing that the agreement would automatically
    be at an end" as of 10th April 2000, by registering a
lis pendens. The latter in my judgement was wholly
unwarranted. I am satisfied and find as a fact on
the evidence and as a matter of law that there was no
case in estoppel resting against either Defendant.
I dismiss the Plaintiffs' case.


END OF JUDGMENT


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