Supreme Court allows discovery against lessee to prove lease forfeiture breach under modern Irish law.

THE SUPREME COURT

Keane C.J.

McGuinness J.

Hardiman J.

219/01

BETWEEN

DUBLIN PORT COMPANY

PLAINTIFF/RESPONDENT

AND

BOND ROAD CONTAINER STORAGE AND TRANSPORT LIMITED

DEFENDANT/APPELLANT

JUDGMENT delivered the 2Oth day of December 2002, by Keane C.J.

The point at issue in this appeal is not without interest, but is one on which the industry of counsel has failed to unearth a single Irish

authority. Can a lessor who seeks to forfeit a lease obtain an order for discovery against the lessee to assist him in proving that there

has been a breach of the relevant covenants giving rise to a forfeiture?

The facts are not in dispute. The plaintiffs/respondents (hereafter “the lessors”) entered into two leases on the 26th March 1996 and

the 29th March 2000 with the defendants/appellants (hereafter “the lessees”) demising premises at Bond Road in the docklands area

of Dublin for terms of 99 years from the 1st July 1995 and the 1st July 1999. On the 24th November 2000 the solicitors for the lessors

served notices of re-entry relying on a number of alleged breaches of covenants in the leases.

The breach alleged in respect of Covenant 7 in each case was that

“You have carried out alterations and additions to the demised premises in default of compliance with the Planning Acts

including:-

(a) erecting a communications mast with ancillary equipment on the premises;

(b) by subdivision of the property into separate units;

(c) by carrying out development works on the property;

(d) by changing the use of the property;

(e) By the erection of signs on the property.”

It was also alleged that there had been a breach of Covenant 12 in each case as follows:-

“You have subdivided the premises into separate units and also sublet the premises without consent”.

The lessees having failed to deliver up possession of the premises, these proceedings were instituted claiming an order for recovery of

possession and damages for breach of contract. The lessees delivered a defence and counterclaim, which contained a complete

traverse of the averments in the statement of claim and a claim inter alia for relief against forfeiture.

On the 20th April 2001, the solicitors for the lessors wrote to the solicitors for the lessees asking them to make discovery in relation

to what were described as “all arrangements between the lessees and all of the parties who were carrying on business in the various

areas comprised in the leases”.

The letter added

“The reason why such discovery is required is because the defendant has denied that there are third parties in occupation and

possession of the premises contrary to the terms of the leases.”

The lessees having failed to respond to this request, a motion for discovery was brought in the High Court. In an extempore judgment,

Morris P held that the lessors were entitled to an order for discovery. From that judgment and order, the lessees have now appealed

to this court.

The commendably succinct argument by Mr. O’Dulachain SC on behalf of the lessee rests squarely on two English authorities which,

as he properly concedes, were not binding either on the High Court or this court, but which, he urges, are of considerable persuasive

authority and should be followed. These decisions – Mexborough (Earl of) –v- Whitwood Urban District Council [1897] 2QB 111 and

Seddon –v- Commercial Salt Company [1925] 1CH 187 - were to the effect that in an action to enforce a forfeiture of a lease for

breach of covenant the court could not grant discovery of documents or leave to administer interrogatories for the purpose of

establishing the forfeiture.

Mr. O’Dualachain submitted that these two decisions of the Court of Appeal in England, both of them subsequent to the replacement

of the common law action for discovery by the statutory jurisdiction conferred by the Judicature Acts in England and Ireland

represented a practice common to both jurisdictions, although there was admittedly no equivalent decision of the Irish Court of

Appeal. In the result, he argued, the practice remained the same in this jurisdiction following enactment of the Courts of Justice Act

1924 and, in particular, s.22 thereof. An established rule of practice of that nature could be removed only by legislation, as had

happened in England with the enactment of s.16(1)(a) of the Civil Evidence Act 1968.

On behalf of the lessors, Mr. Gardiner SC submitted that, in the absence of any Irish decision prior to 1924 or any decision of the

House of Lords, to the same effect as the two English decisions relied on by Mr. O’Dualachain, there was no reason to believe that

the Irish practice as to discovery was subject to any such restriction in the case of actions for ejectment. He pointed out that the

rule as laid down in the English decisions had been treated as obsolete by the English Law Reform Committee whose recommendations

were implemented by the 1968 Act. The modern Irish Law of discovery was as stated by this court in AIB Bank Plc –v- Ernst and

Whinney [1993] 1IR37, 390. That decision made it clear that, in applications for inter partes discovery, the criterion for determining

whether such an application should be adjourned or refused was whether the order was necessary for disposing fairly of the cause or

matter or for saving costs and that the onus of establishing that it would not lay upon the party against whom discovery was sought

and who resisted it. He said that an obsolete rule adopted at one stage by the English courts but never adopted by the Irish courts

could not be a ground for refusing to make the order.

I am satisfied that the judgment of the High Court was correct and should be affirmed. In Mexborough, the Court of Appeal rested

their decision on the existence of two rules which, it was said, had always been part of the common law of England. The first was

that, where a common informer sued for a penalty, the courts would not assist him by their procedure in any way. Lord Esher MR

added

“I think a similar rule has been laid down, and acted upon from the earliest times, in respect of actions brought to enforce a

forfeiture of an estate in land”.

In support of that proposition, he referred to a passage from the judgment of Alexander CB in Orme –v- Crockford [1824] 13 Price,

376 where it was said that

“we must not lose sight of the fact that it is a most important right of which this bill seeks to deprive the defendant, no less

than that of protecting himself by refusing to answer from the consequences of answering questions which might tend to

charge him with a crime or subject him to penalties, or forfeiture of estate contrary to the humane policy of the law.”

The judgments in that case - which were extempore – make no reference to the provisions of s.14 of the Conveyancing Act 1881

which had introduced for the first time in England and Ireland a statutory procedure for obtaining relief against forfeiture. Nor, so far

as the report goes, was the 1881 Act cited in the arguments in that case. The fact that the law had been altered so as to relieve

tenants from the more drastic consequences of the operation of a forfeiture clause must surely have been a weighty consideration in

determining whether the old rule relied on in that case should be still applied. The fact that it does not seem to have been taken into

account in any way must seriously weaken the persuasive force of Mexborough as a precedent.

S.22 of the Courts of Justice Act 1924 provided that

“The jurisdiction vested in and transferred to the High Court and the Supreme Court and the Chief Justice respectively shall be

exercised so far as regards pleading, practice and procedure generally, including liability as to costs, in the manner provided

by such rules of court as may be made pursuant to this part of this Act and where no provision is contained in any such rules

of court and as long as there shall be no rule with reference thereto, it shall be exercised as nearly as possible in the same

manner in which it might have been exercised by the respective courts from which such jurisdiction shall have been

transferred by this Act.”

This section undoubtedly carried over into the law of the Irish Free State the pre-existing law as regards pleading, practice and

procedure generally in the Superior Courts. However, in the absence of authority in the form of a decision by the House of Lords or

any Irish Court to the same effect as Mexborough, it cannot be said, in my view, that the practice and procedure as to discovery and

interrogatories carried over by this provision was subject to any such rule in the case of an action claiming the forfeiture of a lease.

The modern Irish law of discovery, as explained by this court in Allied Irish Banks Plc –v- Ernst and Whinny, would, in any event, not

permit of any such restriction in the case of actions for the forfeiture of a lease. Commenting on the differences between discovery

inter partes and third party discovery, Finlay CJ in the course of his judgment in that case said,

“Notwithstanding these differences between a party to an action and a person who is not a party to an action, which may

place, in relation to the obtaining of discovery against a person not a party, a greater onus on the applicant, the basic

purpose and reason for the procedure of discovery remains identical in both instances. It is to ensure as far as possible that

the full facts concerning any matter in dispute before the court are capable of being presented to the court by the parties

concerned, so that justice on full information, rather on a limited or partial revelation of the facts arising in a particular action,

may be done.”

The existence of the rule in Mexborough would clearly be at variance with the general purpose of discovery as laid down in that case.

It remains to be noted that the rule in Mexborough was abolished by statute in England in 1968 following a recommendation by the

Law Reform Committee which saw no reason for the continued existence of this limitation on the court’s power to order discovery,

having regard to the wide powers of the court to relieve against forfeiture.

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