Supreme Court of Ireland Decisions

You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Rayan Restaurant -v- Murphy & ors [2009] IESC 28 (27 March 2009)
URL: http://www.bailii.org/ie/cases/IESC/2009/S28.html
Cite as: [2009] IESC 28

[New search] [Help]

Judgment Title: Rayan Restaurant -v- Murphy & ors

Neutral Citation: [2009] IESC 28

Supreme Court Record Number: 433 & 434/06

High Court Record Number: 2005 3548 p

Date of Delivery: 27 March 2009

Court: Supreme Court

Composition of Court: Kearns J., Macken J., Finnegan J.

Judgment by: Finnegan J.

Status of Judgment: Approved


Judgments by	Result	Concurring
Finnegan J.	Other (see notes)	Macken J., Finnegan J.

Notes on Memo: Dismiss appeal regarding re-entry and lease Allow appeal of 2nd & 3rd
Appellants regarding contents

THE SUPREME COURT

APPEAL NO. 2006 433/434

Kearns J.
Macken J.
Finnegan J.

BETWEEN

RAYAN RESTAURANT LIMITED, DJAMEL MENNAD AND FATIMA ZOHRA-AZIZI

PLAINTIFFS/APPELLANTS

and

CATHERINE MURPHY-FLYNN AND BY ORDER JOSEPH RALPH SWEENEY AND P.J. DWYER

DEFENDANTS/RESPONDENTS

Judgment of Mr Justice Finnegan delivered on the 27th day of March 2009

This is an appeal from an order of the High Court (Quirke J.) made on the 12th October 2006. There is no copy of the order before the court. However from the approved note of the hearing the appellants’ claim against the first named respondent was dismissed on the ground that the issue of re-entry for non-payment of rent and determination of the first named appellant’s lease had already been determined in earlier Circuit Court proceedings. The appellants’ claim against the second and third named respondents was struck out on the grounds that it was bound to fail as the issue of the legality of the re-entry for non-payment of rent and determination of the lease had already been decided in the Circuit Court proceedings and that decision was binding on the appellants.

For ease of reference and for consistency when referring to the Circuit Court proceedings and the proceedings in the High Court the subject matter of the appeal I propose referring to the capacity of the parties in each of those proceedings and hereafter refer to them in the matter hereinafter indicated. In relation to the High Court proceedings:

Rayan Restaurant Limited (hereinafter “the company”). The company at all material times was the lessee of premises held under the lease hereinafter mentioned.

Djamel Mennad (hereinafter “D.M.”) and Fatima Zohra-Azizi (hereinafter “F.Z.A.”) (hereinafter together “the proprietors”) are entitled to the entire issue shared capital in the company and are the directors of the company.

Catherine Murphy-Flynn (hereinafter “C.M.F.”) is the widow of Barra Flynn (hereinafter “B.F.”) now deceased. B.F. at the date of his death was entitled to the lessor’s interest in the lease. He personally affected the re-entry. He died prior to the hearing of the Circuit Court action and C.M.F. was substituted for him as defendant to represent his estate. Under the terms of the will of B.F. deceased she became entitled to the lessor’s interest in the lease.

Joseph Ralph Sweeney and P.J. Dwyer (hereinafter together “the executors”) are the executors of the last will and testament of B.F. deceased probate thereof having been granted to them on the 26th April 2005.

By lease dated the 20th day of December 1996 and made between B.F. of the one part and C.M.F. of the other part (hereinafter “the lease”) premises situate at High Street, Athlone, Co. Westmeath (hereinafter “the premises”) were demised unto C.M.F. for a term of thirty five years from the 1st January 1997 subject to the yearly rents thereby reserved and the covenants on the part of the lessee and conditions therein contained. The lease contains a proviso for re-entry should the rent or any part thereof be unpaid for twenty one days after becoming payable. The company became entitled to the lessee’s interest under the lease by assignment dated the 1st day of August 2002. At all relevant times the rent payable under the lease was €45,000 per annum payable quarterly in advance. As a condition of consent to the assignment of the lease the company paid a deposit of one quarter’s rent to B.F.

The parties to the Circuit Court action were the company plaintiff and Julia’s Company Restaurant Limited, Claudia Pascau and B.F. defendants and D.M. third party. Following the death of B.F. on consent C.M.F. was substituted as a defendant to represent his estate. The issues between the company and the first and second defendants and the third party issue between the second defendant and D.M. are of no concern to this appeal the concern being confined to the issues between the company and B.F.

The Circuit Court Proceedings

The premises were formerly an antique shop. At the time that the company obtained an assignment of the lease the premises required considerable works to make them suitable for use as a restaurant. These works were carried out by and at the expense of the company or alternatively by and at the expense of the proprietors and it is claimed cost approximately €150,000. Rent amounting to €36,000 was paid while the works were being carried out. A gale of rent fell due on the 1st July 2003. On the 24th July 2003 in reliance on the proviso for re-entry B.F. using a key re-entered the premises and took possession of the same and excluded the company therefrom. Immediately a cheque for the outstanding gale of rent was tendered to B.F. who refused to accept the same. The Circuit Court Civil Bill was issued on the 15th August 2003 in which the reliefs sought by the company were an injunction to put it back into possession of the premises and damages.

The matter came on for hearing on the 16th and 17th November 2004 and judgment was delivered on the 18th November 2004. The company’s claim against C.M.F. was dismissed with costs to C.M.F. On C.M.F.’s counterclaim the court made a declaration that the lease had been lawfully determined and awarded C.M.F. the costs of the counterclaim. Against that order the company appealed. By order of the High Court dated 18th April 2005 it was ordered that the company should furnish security for costs. On the 26th June 2005 the amount of security was assessed at €51,000. The company failed to furnish security and by order dated the 23rd January 2006 the appeal against the orders made in favour of C.M.F. was struck out. The orders of 18th April 2005, 26th June 2005 and 23rd January 2005 were not appealed.

The High Court Proceedings

The High Court proceedings were instituted on the 24th October 2005 after the order requiring security for costs to be furnished was made but prior to the appeal being struck out. It is reasonable to infer that the principal purpose of instituting the proceedings was to re-litigate the claim made by the company in the Circuit Court. As will appear hereafter, however, that was not the sole purpose. Originally the sole defendant was C.M.F. On the 27th March 2006 she issued a motion seeking an order striking out the proceedings as an abuse of process pursuant to the inherent jurisdiction of the court or alternatively as failing to reveal a reasonable cause of action. On the 2nd May 2006 the executors were joined as co-defendants. The executors promptly issued a motion seeking to have the proceedings struck out on the like grounds as had C.M.F. Both motions came on for hearing on the 12th October 2006. The company’s claim against C.M.F. was struck out on the basis that the issues raised therein are res judicita having regard to the order made in the Circuit Court proceedings. The proprietors’ claim against C.M.F. were dismissed on the basis that no cause of action was disclosed against her as at the relevant time she was not the owner of the premises nor was she the executor of B.F. deceased. The claims of the company and the proprietors against the executors were struck out on the basis that the legality of the re-possession of the premises had been determined in the Circuit Court proceedings, there was issue estoppel and the claims were bound to fail. It is against these orders that the appeal is taken.
Discussion

I would record that while the company was professionally represented by solicitor and counsel in the Circuit Court proceedings they acted personally in the High Court and on this appeal. It is not surprising therefore that the proceedings in the High Court and in this court have been attended by considerable confusion. There is a great volume of documentation running to some five tightly packed ring binders. The documentation is a mix of pleadings, affidavits, exhibits, correspondence, unsworn statements and submissions on the law. The documents are not arranged chronologically or in any logical sequence. It would greatly assist this court where such a situation arises if the represented party would prepare a booklet, furnish a copy of the same to the other party and file copies of the same with the court the booklet to contain the pleadings and core documents.

The sole issue in the Circuit Court was whether the lease had been determined by re-entry. Relief against forfeiture, surprisingly, was not claimed although in the particular circumstances of this case where the outstanding rent was tendered immediately upon re-entry one would expect relief to be granted almost as a matter of course. Unless this course was adopted on the express instructions of the company then the company is entitled to at least an explanation as to why relief was not sought at or immediately after the hearing. No issue was raised in relation to the contents of the premises. The issue as to the lawfulness of the re-entry and determination of the lease having been determined against the company and an appropriate declaration having been made it is not open to the company to re-litigate that issue. The interest of the estate of B.F. deceased was represented in the Circuit Court by C.M.F. who also represented her personal interest as the beneficiary in respect of the premises under the will of B.F. deceased. There is privity of estate between the estate of B.F. deceased as represented by C.M.F. and C.M.F. personally as entitled under the will of B.F. deceased and the executors. For that reason the company’s claim that the lease had not been determined by re-entry cannot now be litigated against the executors notwithstanding that they were not parties to the Circuit Court proceedings. The learned High Court judge in holding that C.M.F. had no interest in the premises at the relevant time was in error: C.M.F. was joined as a party to the Circuit Court proceedings to represent the estate of B.F. This however makes no difference to the outcome of her application to the High Court as by reason of privity of estate between B.F. deceased, C.M.F. and the executors the issues sought to be raised against her are res judicita. Insofar as the proprietors seek to litigate in the High Court proceedings the issue of the determination of the lease I am satisfied that to do so is an abuse of the process of the court. The company acted through its directors, the proprietors, who are also between them entitled to the entire issued share capital of the company. Each of them was present throughout the hearing in the Circuit Court. They cannot now be heard to maintain a claim to the lessees interest under the lease in conflict with the claim maintained in the Circuit Court that the company was so entitled and to seek to do so is an abuse of the process of the court. Had they wished to maintain a personal claim to the lessee’s interest under the lease it was appropriate to do so in the Circuit Court proceedings: Henderson v Henderson [1843] 3 Hare 100 and Carroll v Law Society of Ireland [2003] 1 IR 309. They may not maintain such a claim indirectly in an action qua shareholder for diminution in the value of their shares in the company: Foss v Harbottle 2 Hare. 492, Robinson v Chartered Bank L.R. 1 Eq 32, O’Neill v Ryan [1993] I.L.R.M. 557. Accordingly the claims of the company and the proprietors relating to the re-entry and the termination of the lease are not maintainable in these proceedings.

An Additional Claim

The statement of claim raises an issue additional to the matters litigated in the Circuit Court. Included at paragraph (d) in the statement of claim is the following:-

“(d) We, the plaintiffs, do hereby say and affirm that the landlord upon locking us out, continued to operate the restaurant as a going concern using all the original equipment and facilities which were our specific property and furthermore were being used without our written permission. This trading situation has prevailed up to the present juncture. The use of our assets and facilities to carry on a going concern business without any reference to us the plaintiffs by way of seeking written permission or coming to some alternative arrangement with us is blatantly illegal and represents despicable and deplorable behaviour on the part of the landlord and we are hereby seeking a remedy in law for this infringement of our rights.”

The paragraph pleads facts sufficient to ground a claim in conversion or in detinue by the company and the proprietors. No such claim was made in the Circuit Court proceedings. Before the High Court and this court a large volume of invoices gives support to the claim that much of the restaurant contents were paid for by the proprietors. In this court there was a concession that the restaurant contents are still retained and in daily use by the caretaker operating the restaurant on behalf of C.M.F. and no basis was suggested which could justify the situation. Above the restaurant premises is an apartment. Elsewhere in the papers before the court it is stated that within the apartment were personal items the property of the proprietors which are detained by the respondents. Insofar as the company makes claim in respect of the contents of the restaurant that claim is so closely related to the issue in the Circuit Court proceedings that it could and should have been raised in those proceedings but was not raised. The company had legal representation in the Circuit Court. In these circumstances I am satisfied that it is an abuse of process by the company to refrain from making the claim in those proceedings and now to seek to maintain that claim in the High Court proceedings: Henderson v Henderson [1843] Hare 100 and Carroll v Law Society of Ireland [2003] 1 IR 309. It appears from papers before the court that a conscious decision was made not to pursue a claim by the company to the contents as it was assumed that on an order being obtained putting the company back into possession of the premises the contents would be recovered. The company’s claim must accordingly be struck out. However the proprietors were not parties to the Circuit Court proceedings save and except in relation to issues between Miss Pascau and the company in respect of which D.M. was a third party. In these circumstances I am satisfied that they are entitled to maintain a personal claim in respect of the contents of the premises including the overhead apartment. No issue of res judicata or abuse of process arises in relation to this claim by the proprietors.

Conclusion

I would affirm the order of the High Court dismissing the claim of the company and of the proprietors against C.M.F. and striking out their claim against the executors insofar as the claims relate to the re-entry and determination of the lease. In addition I would strike out the company’s claim in detinue and conversion. Insofar as the proprietors claim in detinue and conversion in relation to the contents of the premises, however, they are entitled to maintain that claim in these proceedings.

The proprietors are not professionally represented in the High Court proceedings. It is advisable that they should seek to be represented. The statement of claim should be amended so that only the claim now permitted to be maintained by the proprietors is contained therein. It would seem an unnecessary complication and will give rise to additional expense if it is necessary that both C.M.F. and the executors are maintained in the action as defendants particularly as to date they have been separately represented: for that reason I would allow fourteen days within which C.M.F. and the executors should consider their position and if possible write to the proprietors informing them that they accept that either C.M.F. or the executors are the correct defendants against whom the action should be continued. Should they fail to so agree this will be a matter to which the court of trial may have regard on the issue of costs. I would give liberty to the proprietors to deliver an amended statement of claim within six weeks from the date hereof or within such further time as may be agreed or as may be allowed by order of the High Court.

Rayan Restaurant v Murphy & Ors