[2025] IEHC 151
THE HIGH COURT
[2024/281CA]
BETWEEN:
VERBENAGROVE LIMITED
Plaintiff / Respondent
AND
SIMON EVANS and MAUREEN GRIFFIN
Defendants / Appellants
JUDGMENT of Mr. Justice Barry O'Donnell delivered on the 14th day of March, 2025
INTRODUCTION
1. This is the ruling of the court on an application for a stay that was brought by the defendants / appellants. The application is brought in the context of an appeal against a decision made in the Dublin Circuit Court where His Honour Judge O'Connor determined part of the dispute between the parties as the first of two modules in a landlord and tenant dispute. The issue in the first module was determined in favour of the plaintiff / respondent. For ease of reference, in this judgment I will refer to the defendant / appellants as "the Landlords" and the plaintiff / respondent as "the Tenant". The underlying proceedings will be described in more detail below, but they concern a commercial premises in Donnybrook that has been operated as a restaurant for a considerable period by the Tenant.
2. The judgment that is the subject of the appeal before the High Court was delivered on the 29 October 2024, and the Notice of Appeal was filed on the 25 November 2024. The motion seeking a stay issued on the 26 November 2024, and the hearing of the application was on the 6 March 2025. In the application, the Landlords ask the court to impose a stay on the forthcoming hearings of the second module of the Circuit Court proceedings, pending the determination of the appeal from the judgment of the first stage. The hearing was relatively urgent as the Circuit Court proceedings on the remaining issues in the proceedings are scheduled to be heard on the 24th and 25th of this month.
3. It is abundantly clear from the papers and the manner in which the hearing progressed that the proceedings have generated an enormous amount of material and that there is considerable rancour on both sides. The underlying proceedings essentially are commercial in nature. It would be fair to say that there is a reasonable prospect that the costs of litigating the issues between the parties will end up being wholly disproportionate to the commercial value of the underlying matters. It is a matter for the parties how they choose to approach their dispute, but it must be observed that this is a case that ought to be mediated if the parties wish to avoid a stark win / lose outcome that likely will end with one party being fixed with a very considerable costs bill.
4. The premises operates as the Mulberry Garden restaurant. The Tenant occupied the premises first under a lease dated the 25 January 2011 and later under a lease dated the 25 October 2015. The 2015 lease expired by efflux of time on the 24 July 2020. Before that, on the 24 January 2016, the Tenant became entitled to a new lease under the provisions of Part II of the Landlord and Tenant (Amendment) Act, 1980.
5. There are considerable disputes between the parties regarding the matters that led to the breakdown in their relationship, and on a stay application this court is conscious to avoid unnecessary commentary. Suffice it to say that percolating through the proceedings there were disputed issues around the use of part of the restaurant premises by the Tenant that the Landlords considered a breach of covenant, there were issues around the provision of VAT invoices by the Landlord, there were issues relating to the payment of rent by the Tenant, and there were issues around claims by the Tenant about the state of the premises and the need for repairs.
CHRONOLOGY OF THE PROCEEDINGS
6. The relevant steps appear to be as follows:
1 October 2020: The Tenant brought these proceedings, seeking a new lease.
30 January 2023: The Landlords' defence was delivered, and in its original form it conceded that the Tenant was entitled to a new lease.
11 February 2023: The Tenant closed the restaurant and ceased paying rent.
1 August 2023: The Landlords served a forfeiture notice for non-payment of rent, which was served by placing it in a letter box at the premises.
17 August 2023: The Landlords re-entered and took possession of the premises - I will return to that event in the context of the analysis of the issues, as it formed a central part of the argument. The Landlords claim that their actions in that regard forfeited the lease.
25 August 2023: The Tenant re-possessed the premises on the basis that it disputed that the Landlords effected a valid or lawful forfeiture of the lease.
28 November 2023: The Landlords amended their defence to include a claim that the lease had been forfeited and that therefore the Tenant was not entitled to a new lease.
6 December 2023: The Tenant delivered a reply to the defence in which the validity of the forfeiture was challenged. In addition, while no claim for relief from forfeiture was pleaded, the Tenant claimed an equitable set off whereby it claimed an entitlement to deduct money it spent on repairs from the outstanding rent.
26 January 2024: The Landlord issued fresh proceedings (which remain separate from the within proceedings) claiming that the Tenant and one of its directors were trespassing on the premises and claiming mesne rates.
7. On the 12 February 2024, the Circuit Court directed that these proceedings should be approached in two stages. First there would be a trial of the issue of whether the forfeiture of the lease was valid. Depending on the outcome of that initial issue, the second stage would address the questions connected with the new lease. The parties on occasion described the first stage in the process as a trial of a preliminary issue, however it seems to have been a form of modular trial.
8. In any event, the trial of the first stage took place over five days between the 15 April 2024 and the 23 July 2024. Judgment was delivered on the 29 October 2024, and the learned Circuit judge produced a careful 31-page written judgment. The conclusion of the learned judge - for the reasons explained in the judgment - was that the lease had not been forfeited. This conclusion was grounded in three findings: (a) that the forfeiture notice of the 1 August 2023 was invalid, (b) the service of the forfeiture notice was invalid, and (c) the re-entry effected by the Landlord on the 17 August 2023 was not peaceable and was therefore invalid.
9. The Circuit Court, following a further hearing, made an order for costs in favour of the Tenant on the 21 November 2024. On the 5 December 2024, the Circuit Court rejected the Landlords' application to defer the hearing of the second module pending the outcome of the appeal on the first module. The Court fixed the hearing dates for the second module for the 24 and the 25 March 2025. It should be noted that the stay application seeks to defer the hearing of the second module of the Circuit Court proceedings. It was not directed to the costs issue which was addressed by the Circuit Court.
THE CIRCUIT COURT JUDGMENT
10. The judgment under appeal records the documentary and oral evidence that was considered. The primary focus of the court's attention was on the question of whether the lease had been forfeited. Essentially, the Circuit Court found that the service of the forfeiture notice was invalid. This was due to findings that the notice was posted to an unused letter box, and that there had been a deliberate strategy on the part of the Landlords not to provide any forewarning that a forfeiture notice was imminent, and to serve the notice on the basis of what was perceived to be minimal compliance with the legal requirements. The Landlords take issue with that characterisation of their approach and highlighted that under the terms of the lease there was no need to serve a formal forfeiture notice where there had been a breach of the covenant to pay rent. However, in that regard the Circuit Court took into account that the Landlords had ceased providing VAT invoices for a period which raised an issue around the withholding of rent.
11. In relation to the question of peaceable re-entry, the Landlords' evidence was that they attended with a locksmith on the day in question, accessed the demised premises by entering through a garden gate and affixing and then bolting a lock on the internal side of the gate. They then used an angle grinder operated by the locksmith to break the lock on the main entrance door to the premises and carried out a similar exercise on another internal lock.
12. The Landlords had contended that the act of entering the overall demised premises by the garden gate and then affixing a bolt to the gate and locking it was the act of peaceable re-entry. Hence, it was argued, the act of breaking the locks to the building using an angle grinder occurred after peaceable re-entry was effected. The Circuit Court considered that evidence and surveyed a volume of case law on the question of what can treated as constituting peaceable re-entry. The Circuit Court found that what occurred amounted to forcible entry, and therefore the purported forfeiture by peaceable re-entry was invalid.
13. Finally of relevance to the stay application, the Circuit Court found that the Landlords were "sluggish in processing the proceedings". This included delays in acknowledging the Tenant's right to a new tenancy, in defending the proceedings, and in providing a draft new lease. The Circuit Court also noted that while the Tenant should not have unilaterally ceased paying rent, it had paid rent during the Covid period when the restaurant was closed or operating on a restricted basis and that the Tenant was prepared to and had resumed paying rent to the Landlords' solicitors' client account.
14. Before addressing the particular basis on which the application for a stay was made and resisted it may be helpful to set out briefly the principles that the court will apply to this application.
APPLICABLE LEGAL PRINCIPLES
15. The parties in this application in large part were agreed as to the relevant applicable principles. The court has been directed to a number of authorities, and, in reality, the general guiding principles are very well established. As explained below, although the general principles are very clear, their application in the particular circumstances of a given application can result in finely balanced outcomes.
16. The parties agreed that the fact that an appeal has been brought against the decision in the first stage of the proceedings does not give rise to any automatic stay or presumption that a stay will be granted. It is a matter for the Landlord to persuade the court that a stay should be granted. There are two elements that need to be established.
17. First, the applicant must establish that there is a stateable or arguable basis for the appeal. In the context of an appeal from the Court of Appeal to the Supreme Court, Murray J. observed in Brompton v. McDonald (No.3) [2022] IECA 5 that:
"If the appellant cannot establish arguable grounds of appeal, their application for a suspensory order must fail, and the question of balancing the interests of justice as between the parties does not arise."
18. Murray J also observed that it was "less than usual" for an appellant to fail this test and that a:
"........ court should not easily conclude that an appellant has failed to establish arguable grounds of appeal for the purposes of an application of this kind. Apart from being properly conscious that it is evaluating its own judgment, the appellant has a right to seek leave from the Supreme Court to appeal decisions of this court and ideally it is that court which, in the course of considering an application for such leave, should determine arguability when the issue arises."
19. It can be noted that in this application the Circuit Court refused a stay, and this court is being asked to consider the stay application afresh. The Landlords made the point that, unlike other forms of appeal, there is an unqualified entitlement to an appeal from the Circuit Court to the High Court, and the appeal is heard by way of a de novo hearing. Hence, it is not necessary for the High Court to be persuaded that the Circuit Court erred on particular issues, instead the case in effect is heard afresh. While all that is true, I do not consider that this means that the test for a stay is substantially different. The authorities on this part of the test require the court to be satisfied that the appeal is genuine rather than a strategic ruse to avoid the implications of the judgment that has been given. The clearest way to demonstrate that the appeal is genuine, in that sense, is to show that there is a stateable or arguable basis for the appeal. Put another way, if there are no arguable grounds for the appeal, or, in an appeal from the Circuit Court to the High Court, it is very clear that the appeal cannot succeed, then the only reasonable inference is that the appeal has been brought for improper reasons.
20. The second element in the test for a stay is the issue that ordinarily can give rise to the most difficulty. The applicant must show that, analogous to an applicant for an interlocutory injunction, the balance of justice supports the grant of the injunction. The test has been framed in slightly different ways, but the essential focus is on attempting to identify an outcome that carries the least risk of injustice.
21. In that regard, in Jennings v. An Bord Pleanála [2022] IEHC 61 Holland J. succinctly identified the practical difficulties that can arise in addressing that second part of the test for a stay:
"The Problem and the Underlying Principle
9. Paraphrasing Clarke J in Okunade [[2012] 3 IR 152] and as to the grant or refusal of a stay pending appeal, the problem stems from the fact that the court is being asked to put in place a temporary regime pending appeal knowing that the court does not know what the result of the appeal will be. That involves the risk that, when the dust has settled, it will be seen that someone has suffered by the intervention of the court or, equally, by its non-intervention. Recognising that a risk of injustice is inevitable in those circumstances, the underlying principle is that the court should put in place a regime, if needs be nuanced, which minimises the overall risk of injustice. That view is also apparent in the observation of O'Donnell J in Krikke [[2020] IESC 42] that "there is a clear risk of injustice, whatever course is adopted on the stay application" and that "In circumstances where there is an unavoidable risk of injustice on either side, and no simple rule of thumb which can reduce it, the court must necessarily reach a nuanced decision.""
22. There is a variety of authorities addressing the factors that the court should take account of, depending on the nature of the matter under appeal, as set out in Delaney & McGrath on Civil Procedure, (5th Ed., 2023) paras. 23-183 to 23-201. Here, it appears to the court that in seeking to address the risk of injustice, the strength of the issues on appeal are important. Likewise, I considered that in this case there has been a full trial of the first stage of the proceedings in the Circuit Court and that the Court produced a reasoned written judgment addressing the issues that arose.
THE EVIDENCE ON THE APPLICATION FOR A STAY
23. The following evidence was adduced:
· An affidavit by the Landlord's solicitor dated the 24 November 2024
· An affidavit by Laura Peat, a director of the Tenant company, dated the 30 January 2025
· An affidavit by Ms Griffin, the second defendant / appellant, dated the 17 February 2025
· An affidavit by Ms Peat dated the 3 March 2025
24. All the affidavits rehearsed extensively the overall dispute between the parties and the grievances that each side considered were motivating each other. For the purposes of this application, I will focus on matters relevant to arguable grounds and balance of justice. The additional matters are not strictly relevant, and the court is mindful that it is not required to make any findings that properly are a matter for the full appeal and any subsequent modules that may or may not be required.
25. The solicitor's affidavit contended that there were arguable grounds for appeal on the basis that the Circuit Court was incorrect on the VAT payment issues, was incorrect in relation to the question of the service of the forfeiture notice - because the lease provided for service of documents in the way that was effected, and on the basis of a contention that the judge was incorrect to find that the re-entry was not peaceable.
26. In relation to the balance of justice, the solicitor asserted that there was no logic in proceeding to the next stage of the hearings in the Circuit Court if, ultimately, the High Court found that the lease had been forfeited. It was asserted that this was a potentially serious waste of resources and court time.
27. In her first affidavit, Ms. Peat notes that although the earlier leases were short term occupational lettings, the Tenant will be seeking a 20-year lease in the next module. Ms. Peat contends that the Landlords adopted a strategy of trying to lengthen and delay the proceedings, and she points to the fact that it took five days of hearings to resolve the issue on the forfeiture of the lease.
28. In that regard, she contends that the earlier lease expired in June 2020 and the Tenant commenced the proceedings seeking a new lease in October 2020. However, the Tenant had to bring two motions to obtain the first iteration of the defence, which was delivered in January 2023. Ms Peat notes that the contested forfeiture occurred while proceedings were ongoing between the parties, which she has been advised is unusual. Ms. Peat asserts that the Tenant has spent just over €387,000 on repairs and improvements to the premises.
29. All of the above were framed as examples of the prejudice experienced by the Tenant to date, and that further prejudice would be caused by staying the Circuit Court proceedings. The Tenant states that the temporary closure of the restaurant has extended far beyond any period that was expected at the time, and the Tenant is anxious to re-open the restaurant. In relation to the delay issue, Ms. Peat also pointed to an attendance note from the Landlords' solicitor that appeared to suggest that there was a deliberate strategy of dragging out the proceedings.
30. In relation to the forfeiture issue, Ms. Peat highlights that evidence was given in the first module by the Landlords and this demonstrated clearly that the Landlords re-entered the premises having employed a locksmith to cut through dead bolts with an angle grinder. Ms. Peat highlighted that the garden gate was not locked and that the premises of the restaurant was behind the locked doors. She also contended that when the Tenant re-possessed the premises in August 2023, they confirmed that the then outstanding rent could be transferred to the Landlord's solicitor without prejudice to their equitable set off claim. She notes that the solicitors' affidavit did not mention the fact that the Tenant had transferred €25,212 to the Landlord in April 2024.
31. Ms. Griffin swore a detailed affidavit replying to Ms. Peat's affidavit. Ms. Griffin denied that there was any strategy of delay and highlighted that the premises has not generated any rent for the Landlords for a number of years. She was also concerned that the premises were not being properly maintained which she contended further injured the interests of the Landlords.
32. In relation to the issue around the new lease, Ms. Griffin stated that in early 2022, on foot of advice, the Landlords agreed that a new lease should be negotiated. A draft lease was provided by the Landlords and there were attempts to carry out negotiations in October 2022, but these were unsuccessful. I will pause here to observe that the Tenant's entitlement to a new lease arose in 2016, and the proceedings herein were commenced in October 2020. No explanation has been given by the Landlord why it took two years to commence negotiating on the terms of a new lease.
33. Ms. Griffin described the process of re-entry after the service of a forfeiture notice on the 1 August 2023, at para. 33 of her affidavit:
"33. Not having heard from the Plaintiff over the following 16 days, the Defendants re-entered the demised premises on the 17th August 2023 and thereby forfeited the Lease. Your deponent was present with my daughter and a reputable locksmith at the time of the re-entry of the Premises. We were able to gain access to the Premises and enter thereon by pushing open the unlocked gate/door from Mulberry Lane and securing it by placing a sliding door bolt on the inside thereof.
34. The bolt on the lock on the outer door to the restaurant was then cut by the locksmith and a new lock installed. The inner door was bypassed in a similar manner. The alarm was on and did not activate. We left the premises locking both the restaurant door and the garden door behind us."
34. Ms. Griffin also complained that notwithstanding the fact that an appeal had been brought against the orders made by the Circuit Court, the Tenant has sought to progress the taxation of the costs awarded following the judgment on the first module, and that the quantum of costs was very high.
35. In addition, as noted in the affidavit, the Landlords contend that there are issues in relation to the payment of rates, insurance, and the need for repairs and renovations. In relation to the balance of justice, Ms. Griffin concludes by making the following points:
a. The Tenant has occupied the premises since August 2023.
b. The premises is effectively lying empty.
c. The Tenant does not intend to reopen the restaurant, given what the Tenant has described as a need for significant renovations.
36. In her second affidavit, Ms. Peat engages in further argument and commentary - a feature of the evidence adduced by both sides. Ms. Peat asserts that the Landlords' real position is that they do not want to have a new lease and wish to sell the premises with vacant possession. The allegations about delay are re-iterated. Ms. Peat states that there is a firm intention on the part of the Tenant to reopen the restaurant. Insofar as Ms. Griffin complained that rent had not been paid for a substantial period, Ms. Peat suggests that this position would be resolved by the agreement of a new lease or its terms being fixed by the court. In relation to insurance, Ms. Peat states that this is an obligation for the Landlord under the terms of the leases to date. Ms. Peat also states and exhibits documentation to show that rates have been paid up to date.
DISCUSSION
37. In relation to establishing arguable grounds, given the low threshold I am prepared to accept that there are stateable or arguable grounds for the appeal. This is a case in which a forfeiture notice was delivered to the premises. There is a dispute in relation to the question of whether it was valid or effective. However, for the purposes of this aspect of the process I am not satisfied that there is no issue or that the issue is being agitated merely for strategic reasons.
38. The question of re-entry is more difficult. The court was directed to a volume of case law - involving cases relating to landlord and tenant disputes and also cases involving the actions of receivers - which address the question of forfeiture by re-entry where locks have been damaged or interfered with.
39. In my view the Landlords' arguments are very weak. The position generally is that forfeiture by re-entry can be validly effected where the re-entry is peaceable. What has been proposed by the Landlords is that the re-entry occurred when they entered the demised premises by entering the garden. On that analysis, the bolts on the locks were cut by an angle grinder after peaceable re-entry had occurred and the lease had been forfeited. This seems to me to be an artificial and atomistic approach to the overall circumstances. Entry through an unlocked gate into a garden - even where it forms part of the overall demise - is unlikely to demonstrate the requisite intention to forfeit the lease. This is particularly so where the main element in the demised premises is a building, and a landlord enters the building by having a locksmith using an angle grinder to cut the bolts on two sets of locks, thus damaging the building.
40. Nevertheless, while I consider the argument to be very weak, I am reluctant at this point to find that it is wholly unstateable. It would be preferable for the proposition to be tested following a full hearing - as afforded by an appeal from the Circuit Court. However, that does not mean that the weakness of the case is irrelevant as it is a matter that can be considered in analysing the balance of justice.
41. In that regard, I am not satisfied that the Landlord has established that the balance of justice here favours granting a stay.
42. In truth, very little evidence was adduced to assist the court in determining where the least risk of injustice lies. The starting point is that, as applicants for a stay, the Landlords bear the burden here. The main argument being made by the Landlords is that if they are successful in their appeal then there will have been a waste of court time and considerable expense in conducting the trial fixing the terms of the new lease.
43. Overarching my consideration of the likely consequences of each outcome are three factors:
a. First, while it is clear that an appeal to this court is a de novo process, it cannot be ignored that the parties have had a hearing over 5 days in the Circuit Court. As matters stand, the Tenant has the benefit of a decision in its favour which has been expressed in a reasoned written judgment. This is a substantial interest and the result of a judicial process, and as such I consider that some weight must be attached to this matter.
b. Second, from my review of the proceedings and papers provided for the purposes of the appeal, there is a reasonable argument that, whether or not this was the underlying intention, the Landlords have not acted with expedition. The Tenant issued proceedings seeking a new tenancy in 2020, and the Landlord initially accepted its entitlement in that regard. These matters should have been resolved some time ago, and it seems to me that the approach adopted by the Landlord has delayed the resolution of what - according to the legislation - should be a relatively straightforward exercise.
c. Third, I consider that the legal basis for the appeal is weak. I am not at all convinced that the approach to forfeiture adopted by the Landlords was correct. The re-entry bears all the hallmarks of a forcible re-entry, and the service of a forfeiture notice for non-payment of rent is problematic in the context of the failure of the Landlord to address the VAT issue properly and the approach adopted to service and forewarning. I should note for the avoidance of doubt that these views cannot in any sense bind the approach to be adopted by the court hearing the appeal who will have evidence from the witnesses and presumably far more comprehensive evidence.
44. It is possible to analyse the risks associated with granting a stay in this case by reference to the potential outcome of the appeal. Here, there are two potential outcomes:
a. If the appeal does not succeed then the finding that the forfeiture was not valid will stand: the Tenant's holding was not terminated properly, and it is entitled to a new lease. That will mean that the hearing of the second module will have to proceed and the determination of the terms of the new lease will be made a considerable period after that entitlement arose. Presumably at that stage the issue of outstanding rent will have to be addressed, and the Landlords will recover whatever is properly owed to them. If costs are incurred in the second module, they will be allocated in accordance with whatever order the Circuit Court considers appropriate.
b. If the appeal succeeds, there was a valid forfeiture: the Tenant has not had permission to possess the premises since August 2023, and the premises should be returned to the possession of the Landlords. As the second module will have been stayed, neither party will have incurred the costs of the trial of those issues. There will still be issues around the claims relating to rent and improvements. Presumably - although this is not certain - the Landlords may be in a position to persuade the High Court to reverse or vary the costs order made by the Circuit Court in respect of the first module.
45. In relation to outcome (a), a stay will mean that the determination of the terms of the new lease will be further delayed. This prejudices both parties by deferring the certainty that should attend commercial relationships. The Tenant's ability to resume the restaurant business will be further delayed, with obvious commercial costs for it. In addition, the question of whether the Landlords will be entitled to arrears of rent and to obtain rent under the new lease - subject to the resolution of any issue in relation to equitable set off (on which I am not expressing any view) - will be further delayed.
46. In relation to outcome (b), the parties will have engaged in the trial of the second module in circumstances where it has become moot or unnecessary. That is a drain on the scarce resources of court time and the parties will incur costs that will transpire to have been incurred unnecessarily. However, in that eventuality, the Tenant presumably will become liable to the Landlords for the costs of the proceedings, thereby compensating - to the extent provided for in a costs order - the Landlords for the legal costs incurred.
47. Hence, in large part, the concern of the Landlord under this heading is capable of being compensated. There was no argument or evidence that the Tenant would be unable to meet any order for costs. Moreover, in opposing the stay application it can be inferred that the Tenant is willing to run the risk that it will face a higher costs outcome than would have been the case if the second module was stayed.
48. In premises where the most obvious negative consequences for the Landlords of not obtaining a stay but later winning its appeal are clearly capable of being compensated, and in light of the overarching considerations identified above, it seems to me that the Landlords have not discharged the burden of proof in this case.
49. The appeal proceedings which are travelling with the stay application will be listed in the ordinary non-jury list on the earliest available date, and the parties are free to seek directions at that stage with a view to progressing the appeal. This court cannot grant the appeal priority status but subject to the parties being in a position to progress matters expeditiously they are free to inform the court dealing with the list of my recommendation that the appeal should be afforded an early hearing date, insofar as that can be accommodated in light of other pressures on the list.
50. As this judgment is being delivered electronically, I will indicate a provisional view that, subject to the undertaking referred to above, the Tenant should be entitled to the costs of the stay application on the basis that it was successful in its opposition. I am further proposing that any costs order in this stay application should itself be stayed pending the determination of the appeal. I will list the matter before me at 10.30am on Thursday, the 20 March 2025 for any argument in respect of costs.