Cue Club Limited, Thomas McCarthy and Kathleen McCarthy (appellants) v Navaro Limited (respondent).

Practice and Procedure - Whether proceedings should be struck out as being frivolous and vexatious - Plaintiff seeking relief against forfeiture of lease - Whether plaintiff would be entitled to such relief

The Supreme Court (the Chief Justice Mr Justice Hamilton, Mr Justice Barrington, Mr Justice Murphy); judgment delivered 23 October 1996.

THE nature of the equitable discretion exercised by the courts in granting to a lessee relief against forfeiture is hardly applicable or applicable to the same extent, where the court is dealing with substantial commercial transactions in which the lessor and lessee are on equal terms. The Supreme Court so held in refusing an appeal against an order striking out the proceedings on the grounds that they were frivolous or vexatious or an abuse of court.

Joseph Finnegan SC and Sean Deegan BL for the appellants; Paul O'Higgins SC and Michael Delaney BL for the respondent.

MR JUSTICE MURPHY, delivering the unanimous judgment of the court, said that in the proceedings giving rise to the appeal an order was sought to set aside a judgment on consent obtained by the respondent against the appellants in 1993; alternatively, the appellants were seeking relief against forfeiture of a lease of which the respondent was the lessor. Mr Justice Murphy said that the lease in question was for a term of 35 years from 2 July 1986 and had been entered into by the respondent and S.S.L. Snooker Ltd. In addition to the rent the lessee had consented to pay certain communal charges. These were to be determined provisionally for the first year of the term on the basis of a specified estimate figure, but, the charge actually payable in that and every subsequent year was to be calculated and certified by the auditors to the landlord. The charges were actually never so calculated and the demands made by the landlord were based exclusively on the original estimate of such charges. On 23 May 1989 S.S.L Snooker Ltd assigned the residue of the term of the 1986 lease to the first appellant. The payment of the rent and the performance conditions were guaranteed by the second and third appellants.

Mr Justice Murphy said that the first appellant had defaulted on the payment of rent and ultimately a consent order had been made in the Circuit Court on 18 November 1993 granting possession of the premises to the respondent along with judgment in respect of the arrears of rent. The parties had agreed that execution would not issue thereon provided that the arrears were discharged before 12 April 1994. On that date part of the arrears remained unpaid and the respondent eventually recovered possession on 25 April 1994. In Circuit Court proceedings the appellants applied for an order setting aside the original order for possession dated 18 November 1993 on the basis that the respondent or its legal advisers had altered the terms of the written document postponing execution of the order. When that application came before the court on 9 May 1995, counsel for the appellants withdrew the allegation of forgery and the application was struck out by consent. High Court proceedings, in which the appellants claimed an order restoring them to possession of the demised premises, were struck out on 13 November 1995 by the President of the High Court as being frivolous and vexatious. An appeal against this decision was discontinued by notice dated 16 January 1996.

By notice of motion dated 28 February 1996 the respondent sought an order striking out the appellants' claim in the present proceedings pursuant to order 19 of the Rules of the Superior Court and the inherent jurisdiction of the court. The trial judge concluded that in all the circumstances the appellants claim could not succeed and ordered that it be struck out.

Mr Justice Murphy said that in the present proceedings, the appellants contended that they had entered into the consent, on foot of which the order for possession was made on 18 November 1993, as a result of representations made to them by the respondent. These representations dealt, inter alia, with the arrears of rent due and the method of calculating the communal charge. At the hearing of the appeal the appellants accepted that no such representations had been made expressly, rather, the appellants claimed they had intended to allege that the representations were implied in the claim put forward by the respondent in the ejectment proceedings. The court was referred to the decision in Huddersfield Banking Company Ltd v Henry Lester & Son Ltd [1895] 2 Ch 273, viz, a consent order made by the court to give effect to the compromise of a legal claim could be set aside on the ground that there had been a common mistake regarding a material fact.

However, Mr Justice Murphy pointed out that both parties had access to the lease which contained the formula by which the communal charge was to be calculated; in addition the compromise had been negotiated by solicitors acting for the appellants. Thus, in the circumstances, the court felt it was difficult to accept that there had been a fundamental error which would justify setting aside the original settlement.

Mr Justice Murphy said that an order striking out proceedings on the grounds that they were frivolous or vexatious, or an abuse of the process of court could be made where the proceedings disclosed a cause of action; but in accordance with the principles laid down in Tassandin v Banco Ambrosiano [1991] 1 IR 569, this jurisdiction had to be exercised with the greatest care and circumspection. Turning to the appellants' claim for relief against forfeiture, Mr Justice Murphy said that it was undisputed that rents payable under the lease remained unpaid and that the lease contained a proviso for reentry for non payment of the rent. Mr Justice Murphy went on to say that in previous litigation and in the present action the appellants had pleaded and then withdrawn an allegation of forgery which on its own would suggest an abuse of the process of court.

Referring to Miss Justice Carroll's judgment in Sweeney v Powerscourt Shopping Centre Ltd [1984] IR 501, Mr Justice Murphy was satisfied that the equitable discretion exercised by the courts in granting relief against forfeiture was hardly applicable or applicable to the same extent where the court was dealing with substantial commercial transactions in which the lessor and lessee are on equal terms. On that basis, the court was satisfied, that even if the parties had been labouring under a misapprehension as to their rights in the original proceedings or if some wrong had been perpetrated, no court would grant relief against forfeiture in the circumstances of the present case. In conclusion, Mr Justice Murphy said, the respondent had conceded the possibility of a miscalculation in the amount of rent due and the case should be allowed to proceed only insofar as it related to this.

Solicitors: Ronald J. Egan (Dublin) for the appellants; Peter O'Connor & Son (Waterford) for the respondent.