Supreme Court of Ireland Decisions

1. By an indenture of lease dated the 12th day of March, 1970, P Donnelly & Sons Ltd demised the premises known as 76, Sir John Rogerson’s Quay, in the City of Dublin to Transport and Warehousing (Ireland) Limited (whose name was subsequently changed to Twil Limited) for the term of 28 years from the 1st day of February, 1970. The interest of the lessor subsequently became, and is now, vested in the above named John F Kearney (the Lessor).

2. The right of Twil to a new tenancy in the said premises or any part thereof pursuant to s.16 of the Landlord and Tenant (Amendment) Act, 1980, was disputed by the Lessor and that matter came before Judge John F Buckley of the Circuit Court on the 16th day of March, 2000. Having regard to the questions of law which arose on the interpretation of the Landlord and Tenant (Amendment) Act, 1980, Judge Buckley stated a case dated the 31st October, 2000, for the consideration of this Court.

3. The facts as established or admitted before the trial Judge included the following:-

4. The fundamental issue which arises on the case stated derives from an apparently modest variation of the terms in which are expressed the right to a new tenancy deriving from business user in s.13 (1)(a) of the Act of 1980 in comparison to the terms in which the same or a similar right had been expressed in s.19(1)(a) of the Landlord and Tenant Act, 1931. The Act of 1931 had provided as follows:-

5. The comparable provision in the Act of 1980 is as follows:-

6. The operation of the Act of 1931 had been complicated by the fact that s.19(2) thereof gave an artificial meaning to the expression “the termination of a tenancy”. In the case of a tenancy terminating by the expiration of a term of years the termination was deemed to occur on the day which was three months before the actual expiration of the term. In the case of a tenancy terminated by notice to quit the tenancy was deemed to terminate on the date of the service of the notice. Further problems had been identified in the application of the Act of 1931 by the decision of Circuit Court JudgeDavitt (as he then was) in Farrell .v. Barron. In that case it was held that a lessee who held over on the expiration of a lease and paid rent having served a notice of intention to claim a new tenancy was precluded from obtaining relief under the Act of 1931 because the subsisting lease, which arose by implication as a result of the payment and acceptance of the rent, had not been terminated.

7. In identifying the tenements to which the right of a new tenancy attached, the Act of 1980 not only abandoned the concept of an artificial termination of the tenancy but any reference to “termination” at all. It substituted for that word the phrase “at any time”. The essential problem raised by the case stated is the meaning and effect to be given to the words “ at any time” in s.13 of the Act of 1980 in relation to the right of a tenant to a new tenancy.

8. Before turning to the arguments recorded in the case stated and addressed to this Court it is important to advert to certain undisputed provisions of the Act of 1980, namely,

9. “1 Where a new tenancy is granted to the tenant of a tenement it commences “on the termination of his previous tenancy” (see section 16).

10. The legislative attempt to remedy the defects in the Act of 1931, which had been recognised by a generation of practitioners and more particularly by the Landlord and Tenant Commission over which the late Judge John C Conroy presided, does give rise to a number of problems which are clearly identified by the questions posed at paragraph 9(b) of the case stated in the following terms:-

11. Most, if not all, of the foregoing candidates held significant attractions but also serious shortcomings in their bid to fill the position as the operative or relevant date by reference to which the performance of the tenant’s conditions precedent to the grant of a new tenancy must be determined.

12. To say that a tenant has achieved a statutory right to a new tenancy as soon as he has completed three years occupation for business purposes would seem to fall within the literal meaning of the phrase “at any time”. On the other hand it is argued with considerable force that this would lead to an absurd result. If a lease were granted for a term of twenty-five years and the tenant could and did apply for a new lease after, say, five years it would seem inconceivable that the Court could or would fix the terms of, and in particular determine the rent to be payable under, areverionary lease which would not commence for a further twenty years. If the purpose of the “business equity” to a new tenancy is the need to protect the goodwill which a tenant has established in the business carried on by him or his predecessors in the tenement that purpose might be defeated or abused by the determination of the tenant’s rights several years before the expiration of the lease.

13. The date on which the lease actually expires - as opposed to some date on which it may be deemed to expire - would appear to be the most logical date by reference to which the performance of the conditions precedent should be tested. On the other hand it must be observed that not only did the draftsman refrain from using the word “termination” in this context but the express power conferred upon the Court by s.21 of the Act of 1980 to determine the applicant “ before and in anticipation of” the termination of the tenancy suggests that this was not the date which was intended.

14. Whilst it does not seem the date of service by the Lessor of a notice pursuant to s.20(A)(ii) could have any relevance Twil argued, with considerable force, that the date of the service of the notice of intention to claim relief is the operative date. It is pointed out that relief is claimed on the footing that the tenant is at that stage entitled to the statutory relief and that any subsequent hearing is simply determinative of that claim. However, this proposal is subject to the criticism already noted: it would enable a tenant to bring an application at an early date and establish his rights on a basis which might not be valid on the termination of his tenancy.

15. Both parties would dismiss, rightly in my view, the suggestion that the date of the hearing by the Court could be material in determining the rights of the parties. It is inconceivable that the Legislature would have intended that the right of the tenant to a new lease should be dependant upon his conduct or activities at and immediately prior to a date which was wholly fortuitous and dependant upon the volume of business to be dealt with in a particular Circuit Court at any given period of time.

16. The researches of distinguished Counsel did not produce any fully convincing interpretation of the relevant statutory provisions whether on a literal analysis or on a purposive approach..

17. It seems to me that the words “at any time” and “at that time” when used in s.13 of the Act of 1980 were neither authorising nor directing an application to be brought at a particular time. The particular phrase was neutral and permitted parties relying on the Act to ascertain their rights by inserting an appropriate date which fell to be identified by other provisions of the Act and the circumstances of the case. This flexible interpretation would permit theappropriate date to be determined by different methods in different circumstances. Whilst the Act does not expressly so provide, it seems to me that the general thrust of the Act and some of its provisions indicate that where the tenancy has expired the “appropriate date” to insert in s.13(1) would be the date of the expiration of the lease. That approach would be consistent with preserving the continuing right of the tenant to carry on his business in the tenement and certainly would afford the Court a realistic possibility of determining the rent to be payable under the new lease which is required to commence from that date. Most of all it would accord with the policy of the Legislature in abolishing - as it manifestly did - the artificial, or deemed, date of termination by substituting therefor the actual date of termination.

18. That solution leaves unresolved the problem of ascertaining an appropriate date where the application for the new tenancy is made, heard and determined before the termination of the tenancy in accordance with s.21(3) of the Act. In my view - as Counsel for the Respondents contended - the most probable explanation is that the appropriate date in that case is the date of service of the notice of intention to claim relief. However, having said that I think it is unlikely that the Legislature intended the Courts to determine an application for relief - or indeed that the Courts would be willing to attempt to make such a determination - at any time significantly in advance of the termination of an existing tenancy. Certainly I believe that any Court would be justified in disclaiming the competence to fix the commercial rent for a new lease of commercial premises which would not commence for some years after the decision of the Court and perhaps in very different economic circumstances.

19. In my view the crucial question raised by the case stated in the present case, namely, whether the expression “at any time” in s.13(1)(a) of the Act of 1980 when applied to the facts of the present case is the date of the expiry of the lease, namely, the 31st January, 1998, should be answered in the affirmative.

20. Whilst the case stated did raise a question as to the nature and effect of occupation of premises by a licensee, the Court was informed that there was no issue between the parties in relation to that matter. The remaining question concerned the consequences for Twil of the occupation of unit number 2 by Abbey Transport Ltd under a subletting which expired on the 1st day of January, 1996, that is to say, within the period of three years next preceding the 31st January, 1998. The question posed in that regard was in the following terms:-

21. I agree that this question should be answered in the negative for the reasons set out in the judgment of Mr Justice Fennelly.

22. I believe that the attention of the appropriate authorities should be drawn to the fact that doubts have arisen in relation to a proposition which is fundamental to the operation of legislation which is of great practical and commercial importance so thatthe legislation could be reviewed and any necessary amendments made to it.

23. The Court is asked by the Circuit Court, His Honour Judge John F. Buckley, in a Case Stated pursuant to section 16 of the Court of Justice Act, 1947, to answer a number of questions which have arisen in the course of the hearing of an application for a new business tenancy by virtue of the Landlord and Tenant (Amendment) Act, 1980. (the act of 1980)

24. The relevant facts can be summarised as follows:

25. At the hearing of the Application before His Honour Judge Buckley, it was accepted that the Applicant was entitled to a new tenancy in respect of the parts of the premises which had been occupied by it for the period of three years prior to the termination date, but the Applicant submitted that "at any time" in Section 13 means that, once the tenant has satisfied the specified qualifying period of 3 years business use, Part II of the Act applied. It was also submitted, in the alternative, that the expression "continuously in the occupation of the person who was the tenant" included a person occupying as a sub-tenant and that so long as the applicant occupied the premises for the purpose of its business at the date of termination of the lease it was entitled to relief under Part II. The Respondent does not dispute that the Applicant should be considered as having carried on business in respect of the areas covered by the license agreements mentioned in paragraph (c) above, although the first question in the Case Stated concerns that issue.

26. The questions posed by the Learned Circuit Judge are as follows:

27. A. Does occupation of property by a licensee, in the circumstances outlined herein, constitute use by the tenant for the purposes of carrying on a business within the meaning of Section 13(1)(a) of the 1980 Act.

28. C. If "at any time" means the date referred to at paragraph B.1. above, is the tenant entitled to a new tenancy in the entire of the demised premises notwithstanding that portions were subsequently sublet and particularly during the last 3 years of the term.

29. D. Does the occupation by a sub-tenant for a period of time constitute occupation by the person who was the tenant immediately before that time in Section 13(1)(a).

30. E. Are there any other circumstances on the facts outlined in which the Applicant is entitled to a new tenancy under the provisions of Section 13(1)(a) of the 1980 Act.

31. It is agreed, correctly in my view, that to the extent that the Applicant permitted certain persons or companies to store their goods in certain designated areas of the store under license agreements, it was nonetheless carrying on a business there. Question A should consequently be answered in affirmative.

32. All the remaining questions concern the interpretation of section 13(1)(a) of the act of 1980 and particularly the expression “at any time.”

33. The act of 1980 repealed the Landlord and Tenant Act, 1931 ("the act of 1931") in its entirety. However, it retains the essentials of the notion of the right to a new tenancy - “business equity”- in business premises established by the act of 1931. Business had to be carried on in the premises by the occupying tenant for a minimum period of three years. It is helpful, for this case, to recall the antecedents of the section under consideration. For the sake of clarity, I should emphasise that I will recall only those provisions which relate to leases for terms of years certain, as only they are relevant. It is agreed that the facts of the present case occurred at a time when theycould not be affected by the Landlord and Tenant (Amendment) Act, 1994.

34. Section 19 of the act of 1931 provided:

35. The troublesome feature of this provision was the special definition given by section 19(2) to the “termination of a tenancy.” For a case like the present, of termination by the expiration of a term years, it was “the day which is three months before the expiration of such term.” Thus, the conditions of the grant of the right to a new tenancy – in particular three years business user – could not be satisfied where the lease was for a fixed period of three years. A Landlord and Tenant Commission was established in 1966 to inquire into the workings of the law relating to landlord and tenant and, in particular, to furnish an Interim Report on the provisions relating to grant of new tenancies in the Landlord and Tenant Act, 1931. The latter report dated (Pr. No. 9685) noted that the “artificial meaning given to “termination” by section 19(2) was criticised” by witnesses who advocated a “meaning more in accordance with realities.” The Commission recommended the amendment of the definition. For cases of termination by the expiration of a term of years, it recommended that "termination" be defined as “the expiration of the term or period.” If that simple recommendation had been followed, the difficulty which has arisen in the present case would have been avoided.

36. The legislative solution adopted was, however, to provide in section 13(1) as follows:

37. This provision has to be read with section 16 of the act of 1980 which reads:

38. The first argument of the Applicant is that the expression “at any time” should be read literally: the tenant satisfies the requirements for a new tenancy, if he can show three years continuous occupancy and business user terminating at any time during the currency of the lease. At the end of any such three year period, the right to a new tenancy, in a familiar phrase "crystallises".As a matter of fact, the Applicant says that it satisfied the necessary criteria as long ago as 1983. Counsel accepted at the hearing that this submission would have the consequence that a tenant in that position could apply to the court and have his right to a new tenancy determined and the terms fixed in reliance on that fact at a very early point during the term. Thus, he could obtain the grant of a reversionary lease many years before the end of the current lease. The legislature, it is claimed in explanation of this, went further than was intended by the Landlord and Tenant Commission. The concept of termination was dropped altogether. Section 21(3) is cited in support of this point of view; it allows the application to be heard and determined at any time. The Applicant criticised the High Court decisions in Mealiffe v Walsh [1987] ILRM and Baumann v Elgin Contractors [1973] I.R., while relying on the latter for the proposition that the act should receive a purposive interpretation.

39. Secondly, the applicant has submitted that the expression , “continuously in the occupation of the person who was the tenant” in Section 13(1)(a) includes the occupation of a person occupying as a sub-tenant. This argument turns on the contention that a comma should be interpolated both before and after the expression, “who was the tenant.” This would separate this from the ensuing qualification of the tenant as the person satisfying the condition “immediately before that time.” Thus, it would include any sub-tenant, although counsel accepted at the hearing that a sub-tenant could not be a predecessor in title of the tenant, by reason of the definition of the latter expression in section 3, where it includes only “all previous tenants under the same tenancy .”

40. Thirdly, it was submitted that the application of the notion, “at any time”, for consideration of the application continues beyond the expiry of the term up to such time as the occupation of the tenant is lawfully terminated.

41. The respondent submits that section 5(1)(a)(iii) shows that the premises to be a tenement must be held by the occupier for the entire of the relevant three-year period and the Applicant was not so in occupation of the sub-let parts and emphasises that the new tenancy is to commence form the termination of the previous tenancy. The Respondent did not explicitly contest the literal interpretation of the expression, “at any time” propounded by the Applicant or its extreme consequences. He says that the Applicant has, in fact, relied in this particular case on the situation existing during the last three years of the lease and not on having satisfied the statutory requirements as long ago as 1983.

42. This being a Case Stated, I believe that the Court is bound to provide an interpretation of the statutory provisions cited by the Learned Circuit Court Judge, even if the solution proposed has not been explicitly advocated by any party. In Dublin Corporation v Ashley [1986] I.R. 781 at 785, Finlay C.J. stated:-

43. The language chosen to give effect to a desired reform has left an unintended uncertainty to be resolved by the Court. It would be unfortunate if the Court were compelled to conclude that the legislature had replaced one anomaly with another.

44. The literal reading of the expression, “at any time,” would, in my view produce a serious anomaly. The conditions for the grant of a new lease would be satisfied by reference to a date unconnected with the end of the previous tenancy and, thus, unrelated to the date from which a new tenancy would commence. The termination of a tenancy is no longer the date at which to assess the concept of "equity". This is well illustrated by the Applicant’s argument that it achieved the necessary status as long ago as 1983 and could not lose it thereafter. Section 16 provides that “the tenant shall be entitled to a new tenancy ... beginning on the termination of his previous tenancy ..” (emphasis added). Consequently, there is no necessity, on the applicant's case, for there to be compliance with the conditions of section 13(1)(a) at the time of termination of the tenancy. In particular, the logic of this argument appears to mean that the act does not require that there be business user either for a continuous period of three years before termination or, indeed, for any part of that period. Such a reading would, in my view, defeat one of the essential and fundamental purposes of the act, carried through from the act of 1931, the protection of business equity. A tenant who had satisfied section 13(1)(a) could, if the Applicant is correct, maintain his right to a new tenancy, though he had long abandoned business user. He would merely have to ensure he was in occupation at the expiry of the lease.

45. The act of 1980, accords a right, originally created by the act of 1931, to a tenant in occupation of a tenement after defined periods of actual occupation and business user, to a renewal of his existing tenancy. This has been justified historically as a socially necessary encroachment on the rights of landlords. An occupying tenant who establishes and continues business in a premises has contributed to the goodwill associated with it and hence has potentially enhanced its rental value. It would be unjust–inequitable-to deprive such a person of the right to continued occupancy of a premises thus associated with him and his business; by the same token, a landlord not in possession would acquire an uncovenanted gain if entitled to repossess the premises at the end of the term. This is, as I understand it, the meaning of business equity. By parity of reasoning, however, it would be unjust to the landlord to deprive him of his right to repossess his property in the interests of a tenant, who can no longer point to continuing business user at the point when his tenancy comes to be renewed.

46. The Applicant relies also on the power given to the court by section 21(3) to hear and determine an application “either before and in anticipation of or after the termination of the tenancy.” By implication, any hearing which takes place prior to termination is, in my opinion, linked directly with the latter event by the word, “anticipation”. To anticipate is not merely to expect but to take into account and act by reference to a future event. This qualifies the necessary implication flowing from the applicant’s argument that the rights can crystallise “at any time,” that they can also be heard and determined at any time however early without any limit before termination. In my view, any hearing before the termination of the term of the lease would have to be at a time when it was possible to establish that the requirements of section 13(1)(a) would, without doubt or dispute, be satisfied at the date of termination.

47. It has to be accepted that the words used are, to the say the least, not a model of clarity. In that situation, the Court should consider the act as a whole. It should seek a meaning of the expression in question, which is most consistent with the aims of the legislation. It is also entitled to take into account the legislative history includingthe act of 1931 the recommendation of the Landlord and Tenant Commission and the mischief that it was intended to remedy.

48. The report of the Landlord and Tenant Commission identifies the mischief to be remedied as the anomaly flowing from the artificial meaning assigned to “termination” by the act of 1931. Section 13 of the act of 1980 aims to remedy that mischief. It is not possible to discern any intention to abandon the date of termination as a date relevant to the determination of the rights of tenants. To allow a tenant to “crystallise” his rights at any time of his choosing would not merely be unjust to landlords, for the reasons given above, but would run counter to the long established notion of the nature and purpose of business equity.

49. Although my analysis of the terms of the act differs significantly from that of Murphy J, it is clear that I agree with his proposed answer to Question B.

50. I would also reject the second argument of the Applicant. There is no warrant for the introduction into the text of punctuation not provided by the legislator, particularly when that would alter the clear meaning of the provision. The expression “person who was the tenant immediately before that time” is clear and unambiguous. It identifies the tenant as a single (legal) person and the subsequent words extend the term to include “predecessors in title,” a term which does not, by virtue of section 3 include sub-tenants. The intention to exclude sub-tenants from its scope is beyond dispute.

51. Similarly, I would also reject the third argument of the Applicant. The Applicant has presumably continued in occupation of the premises at least in part in exercise of his rights under section 28. However, for his occupation and business user during that time to meet the requirements of section 13(1)(a), he must also be the tenant. The definition of “tenant” certainly includes “where the context so admits , a person who has ceased to be entitled to that occupation by reason of the termination of his tenancy.” (emphasis added) However, I do not believe this provision was designed to enable the over-holding occupier to establish rights to a new tenancy which he would not otherwise have had. This would not accord with the “context” of section 13(1)(a). Section permits a tenant, strictly speaking a former tenant, to continue in occupation while his application for a new tenancy is pending. The purpose of the provision is to avoid the hardship of requiring a tenant to vacate a premises with obvious inconvenience, while his rights are being established, a situation discussed by Finlay J, as he then was, in Baumann v Elgin Contractors Ltd [1973] I.R. 169. It is implicit that the such a tenant has satisfied or, at least, claims he has satisfied the requirements of section 13(1)(a). It would be unjust to the landlord to allow this protective provision enabling a tenant to remain occupation to be used to establish the rights themselves. Although the Applicant points out that section 28 does not apply until the making of the Application to the court, I think analogous considerations apply. I respectfully agree with the analysis of Finlay J of the issue in Baumann, in particular, his rejection of the contention that a new tenancy by operation of law should be inferred merely from the fact that the tenant has remained in occupation and continued paying rent. The facts of this case differ from those of Baumann, where notice of intention to claim relief had been served before the end of the term. In the altered statutory circumstances, that was not necessary in this case. However, the underlying reality was the same. It rebuts any implication of a new tenancy. Furthermore, as has been pointed out by the Respondent, the definition of a “tenement” envisages an occupier who holds “under a lease or other contract of tenancy.” The premises do not comply with this requirement during the statutory period of permissive or over-holding occupancy and that is essential if that occupancy is to be relied on to satisfy section 13(1)(a).

52. I would propose answering the questions pose in the Case Stated as follows:

53. B. The date of expiry of the lease, namely 31 ^st January 1998.

54. C. Does not arise.