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