Supreme Court of Ireland Decisions

1. Clonmannon Retirement Village has had a chequered history. It is to be hoped that this appeal will see the end of a prolonged and bitter saga of litigation. Thankfully, the issues in dispute have been narrowed to two essentially technical legal questions.

2. The Village was established in the 1980’s on about twenty four acres of land surrounding an eighteenth century residence, Clonmannon House in County Wicklow. It was to deliver a comprehensive scheme of residence and care for retired people. Bungalows were leased to residents and care contracts made providing for the care and maintenance of the Village and facilities for the residents. After a promising start, it failed, regrettably, to live up to expectations. In the early 1990’s it ran into financial difficulties. The provision of services ceased. Residents refused to pay charges. From 1993 to 1996, all provision of services ceased and Clonmannon House was closed up. These matters were the subject of a statutory investigation by an officer appointed by the Minister for Enterprise and Employment. The Minister petitioned in October 1995 for the winding up of the companies then responsible for running the scheme. A receiver had already been appointed over the lands in 1994. The first two named respondents (“the McGraths”) purchased the enterprise in 1996. The third-named respondent was their nominee. This was the third set of owners.

3. The subsequent attempt by the respondents to extricate the scheme from its difficulties became the subject of bitter recriminations between the majority of the residents, who supported the respondents, and a minority, represented by the appellants, who insisted on strict adherence to what they claimed to have been the terms of the original scheme. As was inevitable, some of the original protagonists are now deceased and certain of the appellants are the legal representatives of deceased residents.

4. In the years prior to 1993, an upper floor of Clonmannon House had been used to provide nursing home services to some of the residents. The plaintiffs claimed that this was part of the scheme and they had a right to have this continued or at least that they should have access to the entire of Clonmannon House for this and other purposes. When the McGraths gave notice that they intended to reside with their family in the House in 1996, some residents, in particular the first-named appellant objected. As the appellants state in their written submissions, this was the fundamental part of the appellants’ case and it precipitated the present litigation which was heard by Kearns J in the High Court over a period of seven days.

5. The learned trial judge has detailed at some length the steps which the McGraths took, following their purchase in 1996, to ascertain by means of consultations and questionnaires the wishes of the residents. This exercise demonstrated that the overwhelming majority of the residents supported the McGraths’ efforts to formulate an altered and viable basis for the care contract. Twenty five of them (in some cases their executors) swore affidavits in High Court proceedings to demonstrate their support. The learned trial judge expressly found that the respondents had discharged the onus of showing that a bona fide opinion had been formed that it was in the best interests of the residents to make the variations. The McGraths had properly considered the amount of the service charge, doing so on the basis of a calculation with their accountant. In the event a varied contract was put in place. This included the provision of a “country club” in the basement of Clonmannon House consisting of a dining room, bar, reading room, launderette, office, store, toilet and library. The contract also provided for reinstatement of the necessary arrangements for the maintenance of the Village as a whole.

6. All these matters have been thoroughly ventilated, investigated and litigated.

7. It is necessary, nonetheless, to describe the central elements in the original scheme but only insofar as is relevant to the points remaining to be decided.

8. Two legal documents contain the essential elements of the original scheme. Firstly, Rayhill Property Company Limited (“Rayhill”) granted a lease of each bungalow to some forty six lessees. Secondly, Home Affairs Limited (“Home Affairs”) entered into a “care contract” with each of the lessees. However, it was also necessary for Home Affairs to join in each lease, because it was the holder of an intermediate registered leasehold interest in the common areas of land and of certain parts of the structure of Clonmannon House.

9. The respondents can be treated, for the purposes of this appeal, and without detailing the relevant conveyancing transactions, as the successors of these companies. They purchased the lands and house at Clonmannon from the receiver, with the co-operation of the liquidator, in 1996. They accepted by way of compromise of an earlier appeal to this Court that the third-named respondent would take an assignment of the care contracts as successor of Home Affairs.

10. The title to the estate was divided to give effect to the various transactions. Rayhill from 1989 to 1991 (and its predecessor in title, Retirement International (Ireland) Limited from 1985 to 1987) granted the leases of the bungalows. Home Affairs (and in the earlier period its predecessor, Retirement Ireland Limited) entered into the individual care contracts. It is only leases granted in the latter of these periods that are relevant to this appeal. In addition, Retirement International (Ireland) Limited, on 10th September 1984, granted a lease for a term of twenty five years from 1st August 1984 to Retirement Ireland Limited of all the common areas and of certain parts not only of the leased bungalows but also, which is relevant to the issues on the appeal, of Clonmannon House. Those parts were described as follows:

11. Home Affairs, therefore, shared, at the relevant time, an interest in the premises of Clonmannon House with Rayhill.

12. All the titles are registered. Thus the lessors’ interest in the bungalow leases was held at the times relevant to these proceedings by the McGraths, subject to leases registered as burdens on their freehold folio, Number 17590 County Wicklow, and in turn registered on leasehold folios. Similarly, the title of Home Affairs was registered on a separate leasehold folio 3265L as well as a burden on the said folio 17590. However, a matter upon which much reliance was placed, the rights claimed by the appellants to be enjoyed over Clonmannon House, were not registered as a burden on the leasehold folio (3265L) of Home Affairs.

13. It is now appropriate to turn to the terms of the bungalow leases.

14. Recital B.(1) to each lease stated:

15. Each lease referred to in these proceedings was granted for a term of forty five years or the life of the lessee whichever should be shorter and in consideration of the payment of a sum of £42,000 together with a small annual rent payable to Rayhill and also in consideration of the lessee entering into the care contract with Home Affairs, which also joined for the purpose of certain “rights and easements...” in consideration of an additional rent of £1 per annum payable to it, Home Affairs granted and demised to each lessee the rights and easements specified in the Second Part of the First Schedule. These are as follows:

16. Furthermore, Home Affairs entered into the covenants with each lessee which are set out in the Fourth Schedule:

17. In addition, each lease contains a number of references to the Care contract. Recital B. (1) cited above declares the intention that the bungalows are to be used as part of the Retirement Village in a manner explicitly linked with the care contract. Each lessee is not only bound to enter into the care contract, but continuance of the lease is made conditional upon his continuing to observe its terms. Home Affairs, on the other hand, merely covenants to perform and observe the covenants on its part “contained in the lease.” Specifically, Home Affairs enters a covenant for quiet enjoyment in terms that the lessee “may peaceably hold and enjoy the easements ...demised to him by [Home Affairs] without any lawful interruption or disturbance from or by...” [Home Affairs] or anyone on its behalf.

18. The care contract was, of course, a fundamental part of the original scheme. It was designed to enable elderly people to enjoy the independence of living in their own homes, the comfort of having some daily needs catered for, the society of others and the security of certain minimum health care. Naturally, the care contract provided for routine care and maintenance of the estate. The first schedule to the care contract set out a list of the “care facilities” which Home Affairs then undertook contractually to provide. The cost of these facilities in about 1990 was about £5,500 per annum. Some residents became unwilling to pay so much. That issue is part of the history of the deterioration of the Village and its not necessary now to review it. In the High Court, the appellants claimed that there was a right under the care contract to have a nursing home facility. This was linked with the question of a right of access to Clonmannon House. The only relevant provisions of the care contract are the following items from the First Schedule:

19. Kearns J rejected the claim that there was a right to have a nursing home facility as completely unfounded. This is no longer a live issue. What is of most relevance is the facility contained in the care contract to vary the terms of the care provided as contained in two clauses:

20. The first of these provisions allowed for the provision of new or additional facilities, the second for the elimination of services hitherto provided. Apparently, it would suffice if twenty five per cent of the residents supported such a proposed change. In each case, however, Home Affairs had to be “of the opinion that [the change was] in the interests of the village as a whole.” It was held by Kearns J and is not now disputed that these clauses permitted variation of the care contract. The validity of the opinion formed by the McGraths, in order to effect the variations, nonetheless remains at issue.

21. As already indicated, the appellants have at all times maintained that they are entitled to insist on the level of services to be provided on the lines of the original care contract. In particular, they maintained that these had to include a nursing home facility in Clonmannon House. For this reason, therefore, they have claimed and continue to claim a general right of access to Clonmannon House. Consequently, the McGraths did not have the right to live in the house. Furthermore, they contended that such residence was in contravention of planning legislation and, in particular, the terms of a planning permission which had been granted so that nursing home facilities could be provided. In support of their claim that the respondents were bound to provide a retirement complex on the lines for which they contended, the appellants placed reliance on some sales brochures produced at the time of the marketing of the Village complex. Kearns J indulged in a little hyperbole when he described one of these brochures as promising “a version of heaven on earth to purchasers.” They demonstrated “an impressive range of facilities ..... under a picture of smiling staff outside Clonmannon House.” More directly to the point, the following paragraphs seemed, in the view of the learned trial judge, clearly to imply that the residents would have access to and use of the facilities of Clonmannon House:

22. It is important to note that the McGraths at no time saw this brochure before the purchase.

23. The essence of the case made by the appellants in the High Court was:

24. A) the McGraths did not have the right to reside in Clonmannon House, because, inter alia, the planning permission precluded it;

25. B) the respondents were bound to provide a nursing home;

26. C) the appellants had a right to enjoy general access to Clonmannon House;

27. D) the respondents had not validly varied the care contract.

28. The learned trial judge rejected all these claims. As already stated, he found the contention that there was a right to a nursing home to be completely without foundation in fact. There was nothing in the planning permission which prevented the McGrath residing in Clonmannon House. He found that there was no defect in the variation of the care contract effected by the respondents. On the question of the right of access to Clonmannon House, he accepted the evidence of Mrs McGrath that she had not seen the brochure before purchasing the property and accepted the respondents submission that liability for any such representation as might be contained in such a brochure would not affect a purchaser for value without notice. In any event, nothing in the brochures prevented the respondent from availing of the machinery provided in the care contract for the variation of its terms. He also rejected the appellants’ contention that the rights claimed affected the land without registration by virtue of the provisions of section 72 (1)(j) of the Registration of Title Act, 1964, as being included in the expression:

29. The learned trial judge held that there was, in any event, no question of anybody being in possession at the time of the purchase. Clonmannon House had been closed for three years when the McGraths became interested. Nor were the rights in the care contract rights in land. They were mere contractual rights which could be varied.

30. The issues have been further narrowed down on this appeal. No further reliance is placed on the claimed absence of planning permission for the residence by the McGraths in Clonmannon House. The appellants make essentially two arguments.

31. It is submitted that the right of access to Clonmannon House is granted by necessary implication having regard to the terms of the lease. Clonmannon House was the central core of the entire scheme. While the brochure was not relied upon as varying the contract or adding to the lease, the lease and the care contract were two documents which together showed the intention of the parties. The care contract should be read as if it were appended to the lease. The recitals to the lease followed closely the terms of the brochure. There are numerous references to the care contract in the lease. It was not possible to make sense of the lease, and in particular the covenants by Home Affairs as set out in the Fourth Schedule (as quoted above) to maintain and repair Clonmannon House if the lessee did not have access to it. The right of access could also be considered as a license coupled with an interest. The license is contained in clause 15 of the First Schedule to the care contract:

32. The interest coupled with this is to be found in the lease.

33. The appellants’ continued challenge to the variation of the care contract is now based essentially on the narrow contention that the McGraths could not validly have formed a bona fide opinion, as required by the care contract, that the variation was in the interests of the Village as a whole, because they were affected in this by their own wish to reside in Clonmannon House.

34. I will refer only briefly to the submissions on these two issues. As to the contents of the brochure, they rely on the proposition that extrinsic evidence cannot be used to contradict, add to or alter the terms of a deed.. Insofar as the brochure is replicated in the terms of the care contract, the latter was expressly made subject to the possibility of variation. Representations made by Rayhill cannot affect the respondents as purchasers for value without notice. Furthermore, neither the care contracts nor the brochures nor any rights claimed by virtue of them was registered as a burden on either the freehold folio of the McGraths or on the leasehold folio of Home Affairs. The separation of the lease and the care contract was a clear and deliberate part of the scheme. The lease did not confer any rights of access to Clonmannon House on the lessees of the bungalows.

35. With regard to the variation, the respondents point to the evidence of the respondents, and in particular of Mrs Jane McGrath which was accepted by the learned trial judge. The judge had asked that she give evidence first of the circumstances of the variation. She had said that she would have had no problem with the reviving of the old care contracts. It was clear, however, that there were serious cost implications. In fact, when consulted, a very large majority of the residents (in many cases, it was their legal personal representatives) supported a variation to reduce the level of services and thus their cost.

36. I will deal first with the issue of the right of access. I have set out all the relevant terms of the lease above.

37. The scheme for the Retirement Village was effected by two distinct documents, each with its separate purpose. The lease conferred a leasehold interest on each resident in respect of his or her own bungalow. It was not, of course, restricted to the bungalow. The lease was part of the scheme for the Retirement Village. Consequently, the lessor entered into a number of covenants relevant to the upkeep of the estate generally. Since Home Affairs was the registered owner (by means of the intermediate lease) of the common areas of the estate, it joined for the purpose of granting a number of easements and similar rights over some common areas and imposing covenants on Home Affairs. These are all set out in the Second Part of the First Schedule and in the Fourth Schedule, which I have quoted above. Nowhere does the document purport to grant any right of access to Clonmannon House, nor do the appellants claim that it does so expressly.

38. This leads to the first point, the reliance placed by the appellants on the contents of the brochure. The respondents are clearly correct in their submission that the terms of the brochure cannot be the source of any such rights. It is trite law that extrinsic evidence cannot be relied upon to contradict, add to or vary the terms of a deed. (Norton on Deeds, 2nd ed. p 135). The lease sets out a comprehensive list of the rights and interests it grants and the obligations it imposes. It does not purport to incorporate the terms of the brochure. These are in the nature of advertising promotion. They do not confer any rights unless they are incorporated in the lease. It is not necessary, therefore, to apply the additional rule, though it would also clearly apply, namely that a representation such as that contained in the brochure could not bind a purchaser for value without notice of the property.

39. I also reject the submission that the lease conferred on each lessee an implied right of access to Clonmannon House. Such an implication would have to follow necessarily and obviously from the terms of the deed. It is said that the covenants entered into by Home Affairs make no sense if there is no right of access. In one sense, that is so. A party does not normally undertake an obligation to another person to repair a property if that other has no interest in having that repair carried out. However, the implication of the grant of a property right would require more. It would have to be demonstrated that the term effecting such a grant would as a matter of compelling necessity have to be implied to give what is usually called business efficacy to the terms of what is expressly agreed. If, for example, the deed, as distinct from the care contract had contained the obligation to provide services at Clonmannon House, it would have been impossible for the beneficiary to enjoy them without a corresponding right to enter the house. Home Affairs can perfectly well perform its repair obligations at Clonmannon House without conferring any right of access on the bungalow lessees. Such a right would have to be considered by reference to the care contract. To the extent that it provides for services to be rendered at Clonmannon House, the law will imply a right of access if that is clearly necessary in order to receive the services. It does not follow, however, that a proprietary right has to be granted. For essentially similar reasons, I reject the contention that there is here involved a license coupled with an interest. In truth the appellants’ argument begs the question. Sometimes a right in land cannot be effectively enjoyed unless accompanied by the grant of a license to enter. (see Wylie, Irish Land Law 2nd ed. par 20.04.) The appellants cannot point to any such antecedent interest in land. Rather their case is the converse, namely that the interest in land is required if they are to enjoy the benefit they claim to have been conferred by the care contract.

40. For these reasons, I would reject the appellants’ contention that they have a proprietary interest in Clonmannon House and it is unnecessary to consider the points concerning the Registration of Title Acts.

41. I would also reject the argument against the validity of the variation of the care contract. The appellants make a point which is more usually encountered in judicial review proceedings, where a decision of a public-law character is being challenged. The care contract was a private contract made between the parties to a commercial transaction. The company or persons responsible for the running of the Retirement Village will of necessity have an interest in the matter. Furthermore, the learned trial judge has made findings of fact, more than sufficiently supported by the evidence. The McGraths engaged in a careful and well supported exercise to ascertain the genuine wishes of the residents. The learned trial judge has found that they discharged the burden of proof of showing that the variation was in the interests of the Village as a whole. Essentially, the appellants’ point is a technical one. They have to accept that the contract can be varied; they cannot dispute the findings of fact made by the learned trial judge. They say that the McGraths had an interest in the outcome and could not form a fair and bona fide opinion, because they could not behave objectively. They were the persons bound under the contract to form any such opinion. The finding of the High Court means that they formed the opinion bona fide. To my mind that disposes of this ground of appeal.

42. Accordingly, I would dismiss the appeal and affirm the order of the High Court.