High Court dismisses tenant's negligence and repair covenant claims against landlord for factory ground heave. Tenant failed to prove breach or causation.

Neutral Citation Number [2007] IEHC 95

THE HIGH COURT

[1996 No. 6285P]

BETWEEN

UDARAS NA GAELTACHTA

PLAINTIFF

AND

UISCE GLAN TEORANTA

DEFENDANTS

Judgment of the Honourable Mr. Justice O’Neill delivered 13th day of March, 2007

1. In these proceedings the plaintiffs claim damages for negligence, breach of duty, breach of statutory duty, nuisance and breach of

contract against the defendants arising out of damage to a factory premises let by the plaintiffs to the defendants. Although not

specifically pleaded, in the trial the plaintiffs stated their claim for damages also, on the basis of a breach of the covenant to repair in

the lease between the plaintiffs and the defendants.

2. The background to this matter is as follows. The plaintiffs by a lease of 25th February, 1985 let to the defendants ALL THAT part

of the lands of Baile Liam in the Barony of Moycullen, County of Galway upon which stood portion of a factory premises and storage

tanks for a term of 35 years from the 1st January, 1985 subject to the rent reserved and the covenants on the part of the

defendants and the conditions contained in the lease. A further lease of the 3rd October, 1987 was made between the same parties

for an additional part of these factory premises. That lease was for a term of 32 years and 8 months from the 30th April, 1987.

3. The defendants engaged in the business of manufacturing a substance known as aluminium sulphate better known as alum. This

substance was used for the purification of water. For the purposes of the manufacture of this substance large quantities of sulphuric

acid were used. The defendants stored large quantities of this acid in storage tanks on the leased premises. In 1987 as a result of

complaints about leakages or discharges from the defendants premises the defendants requested the plaintiff to install a new a

drainage system in the yard attached to the factory premises. The plaintiff’s applied for planning permission for this, which they

obtained, and they then proceeded to carry out the works in accordance with the planning permission. This involved removing the

existing drainage system in the yard and installing a single drain for the purpose of draining spillages in the yard into a sump. The yard

was re-slabbed with a concrete slab and the sulphuric acid storage tanks were surrounded by what is known as a “bund”. In addition

the yard itself was bunded. The purpose of these changes was to ensure that any spillages of sulphuric acid which might occur would

be either safely contained within the bund or quickly discharged into the drain which went into the sump. From time to time the

material in the sump was analysed and, if safe, was discharged into the normal drainage system.

4. Until 1993 the sulphuric acid in the storage tanks was pumped into the factory, into a reactor vessel by means of an automated

pumping system which was controlled from within the factory. The acid passed through a pipe which was under the yard and when it

reached the factory wall the pipe rose above ground, travelled up the inside of the outside factory wall and then travelled over ceiling

height into the reactor vessel which was known as a “kettle”.

5. Within the factor premises itself there was a large storage area for finished product. This was largely covered by a tiled floor,

which the evidence established, to my satisfaction, was at all times during the occupation of the defendants in relatively poor

condition. In particular there was never any grouting between the tiles.

6. Because of the nature of the operation carried on, significant quantities of finished dry alum would end up on the floor. This was

cleaned away, initially by sweeping, and then by washing down and all of this cleaning was directed towards a sump installed for that

purpose. The material accumulated in this sump was then recycled into the production process.

7. Towards the end of 1992, probably in October or early November, there occurred the events which gave rise to these proceedings.

8. In or about that time employees of the defendants noticed cracking developing in the walls in the factory and this process

accelerated through November, December and into January, 1993, to such an extent that a concrete cross beam lifted off its

supporting pillar. In addition it became apparent that the ground in a portion of the yard had risen. The speed of occurrence and the

extent of the damage occasioned by this event, needless to say, caused alarm in the defendants and indeed the plaintiffs when

brought to their attention.

9. In the spring of 1993 experts were brought on the scene and whilst initially some thought the problem was subsidence, it very

quickly became clear that it was the very opposite was the problem, namely, the very rare occurrence known as “ground heave”.

Both plaintiffs and defendants engaged engineering architectural and scientific expertise to investigate and explain this occurrence

and to prescribe remedial work. The plaintiffs in April of 1993 wrote to the defendants holding them liable for the damage that had

occurred.

10. In due course it emerged that the essence of the plaintiffs complaint against the defendants is that the defendants had caused

or permitted sulphuric acid to escape into the ground underneath the factory specifically in the area where the ground heave had

occurred and this sulphuric acid had reacted with materials in the ground to form a compound known as calcium sulphate or otherwise

known as gypsum, which they said was an expansionary substance and it was the expansion caused by this substance which gave

rise to the “ground heave” which in turn pushed upwards a portion of the building causing the cracking and other damage.

11. The defendants through their experts vehemently contested the scientific basis of the plaintiffs explanation of the occurrence,

contending that there was no discharge or leakage of sulphuric acid into the ground, that the presence of sulphates in the ground did

not indicate a discharge of sulphuric acid but rather the presence of sulphate from the process of manufacture and some sulphuric

acid in a very dilute form as a result of the reaction of sulphate from the manufacturing process with water in the ground. In either

event it was contended that the levels of dilute sulphuric acid and any formation of gypsum could not have caused the damage which

has occurred because it could not have, having regard to the nature of that substance, generated a kind of pressure which would

have been necessary to cause the heave that had occurred. It was further contended that a potential explanation of the occurrence

was water pressure resulting from a very high water table, very wet weather at the time, and the discharge into the site through an

ESB ducting pipe of water from higher ground. In this regard it was contended that the site had been carved out of granite and had a

bowl configuration, so that it naturally tended to retain water.

12. The first issue to be confronted is whether or not the evidence establishes the probability of discharge of sulphuric acid by the

defendants into the ground.

13. The evidence which was not contradicted was that the defendants stored large quantities of sulphuric acid in storage tanks and

that from 1987 onwards these tanks were surrounded by “bunds” which were designed to confine any spillage or leakage from these

tanks within the bunds. There was also evidence of the use of a stainless steal tank to catch any leakages during the process of

delivery of sulphuric acid. From 1987 onwards the drainage in the yard was reconfigured so as to drain any spillages into a single drain

and from there to a sump. All of the expert evidence was that this drain was intact and functioning properly.

14. The pipe which carried the acid underground across the yard to the factory building was excavated, when this problem arose in

1993, and it was agreed that the pipe was in good condition and with no signs of any leaks from it. There was no evidence of any

leakages from the continuance of this pipe inside the building. I am satisfied on the evidence that this did pipe did rise vertically inside

the building, travelling up the inside of the outer wall and across above ceiling height to the reactor vessel. Thus it was plainly visible

at all times. There was no evidence of any leakages of sulphuric acid in the area of the reactor vessel inside the factory.

15. I am satisfied from the evidence that it is highly unlikely that there was any significant discharge or leakage of sulphuric acid into

the ground. That being so I am of opinion that as a matter of probability the explanation of the defendants experts and in particular

Mr. O’Flaherty, namely that the low ph was associated with the presence of sulphates in the grounds and specifically a reaction

between the sulphates and the water in the ground causing the formation of sulphuric acid in a dilute form, is more likely to be

correct. I am also of the view that such formation of gypsum, that might have occurred, having regard to the very high water table in

the area as evidence by the photographs put in evidence, and that the reaction of this compound with water, would be very unlikely

to have generated the kind of pressure needed to create the ground heave that occurred.

16. The presence of sulphates in the soil is in my view convincingly explained as an inevitable consequence of the process of

manufacturing carried on by the defendants, where large quantities of aluminium sulphate were manufactured. I accept the evidence

that this substance is essentially inert and harmless save to the extent that in water it reacts to form a dilute form of sulphuric acid.

17. As a matter of probability in my view the alum got in to the ground by a gradual process of percolation down through the floor in

the storage area, having regard to the poor condition of this floor.

18. Having considered all of the evidence offered in this case by the experts called on both sides, it is my view that this evidence falls

short of explaining the ground heave on the basis of a balance of probability.

19. I am quite satisfied that the plaintiffs theory to the effect that it was caused by sulphuric acid discharged by the defendants into

the ground has not been proven on the balance of probabilities and I am also satisfied that the alternative theory of water pressure

likewise has not been established to that standard either.

20. As mentioned earlier the plaintiff’s claim damages in respect of a variety of causes of action.

21. The first of these is negligence and the basis of the claim here is that in essence the defendants caused or permitted this

dangerous substance to be discharged into the ground or failed to take adequate precautions to ensure that this did not happen.

Having concluded that in fact this did not happen I am satisfied that there was no negligence on the part of the defendants in this

regard.

22. The plaintiffs also claim damages in nuisance and rely upon the rule in the case of Rylands v. Fletcher, claiming that the

defendants permitted the escape of a dangerous substance. In the first place I am satisfied that the defendants did not cause or

permit the escape of a dangerous substance i.e. sulphuric acid but in any event the evidence clearly established that there was no

escape beyond the boundaries of the leased premises and hence in my view for that reason alone the cause of action in nuisance fails

and the reliance upon the rule in Rylands v. Fletcher is misplaced.

23. Finally the plaintiff’s claim damages for breach of contract. In the course of the hearing this was explicitly fleshed out to be

damages for breach of the covenant to repair and indeed other covenants in the lease.

24. The relevant covenants relied upon where as follow;

“2(3) To repair and keep in good and substantial repair and condition using suitable materials of good quality the whole of

the demised premises and every part thereof and the lessor fixtures therein and such parts of the drains, pipes, wires and

sanitary apparatus serving the demised premises as are situated within same and from time to time as required and in any

event in every fifth year of the term and in the last year thereof to paint in colour all of the outside and inside parts of

the demised premises as are usually painted and coloured and all additions thereto in proper and workman like manner and

with suitable materials of their several kinds…

2(10) Not to use the demised premises or suffer or permit the same to be used for any offensive noisy or dangerous

trade, business manufacture occupation or for any purpose or in manner which may be a nuisance to the lessor or the

owners or occupiers of neighbouring adjacent premises provided that the carrying on in a proper manner and in such way

as to cause as little nuisance to the lessor or the owners or occupiers of neighbouring or adjacent premises as is

reasonably possible of the trade or business as in herein before in sub paragraph (9) of this clause provided for, shall not

be deemed to be in breach of this covenant…

2(12) To take such measure as may be necessary to ensure that any effluent discharged into the drains or sewers which

belong to or are used for the demised premises in common with other premises will not be corrosive or in any way harmful

to the said drains or sewers or cause any obstruction or deposit therein and to obtain such licences, authorisations and

consents as may be required by law for the discharge and disposal of such effluence.”

25. I am quite satisfied that there was no evidence of any breach of covenants 2(10) and 2(12). There was no evidence whatever

that the carrying on by the defendants of their trade in these premises was a source of nuisance to the plaintiffs or occupiers of

adjacent premises which could have been avoided by the defendants. Likewise there was no evidence of any injury or damage to

drains by corrosive substances discharged by the defendants into these drains or sewers.

26. The plaintiff based its claim for breach of covenant 2(3) on two bases. The first of these was the escape of alum through the

floor in the storage area resulting in a build up sulphate in the soil. It was submitted that the defendants breached their obligation to

repair in failing to have repaired the floor of this storage area so as to prevent this escape.

27. I am satisfied from the evidence that the floor in this area was in a poor conditions when the defendants went into occupation of

these premises. They were not in my view obliged under the covenant to repair, to carry out work to in fact improve the floor. These

cases of Lister v. Lane and Neshan [1893] 2 QB 212, and Norah Whelan and Others v. Patrick Madigan [1978] I.L.R.M. 136, Chaloner

v. Broughton Irish Jurist Vol XI [1865/6] and Sotheby v. Grundy, [1947] 2 A.E.R. 761 in my view established the principle that a

lessee under a covenant to repair does not have to rebuild or carry out works to improve the premises beyond the state of repair of

the premises upon the demise.

28. That being so in my view the defendants were not obliged to have carried out work to this floor so have to rendered it non-

porous thereby prevent the percolation of alum through the floor into the ground beneath and surrounding areas.

29. In any event I am satisfied that the percolation of this material into the ground was not the probable cause of the ground heave

and hence the damages claimed for breach of covenant.

30. The second basis upon which the plaintiff claims that there has been breach of the covenant to repair is that notwithstanding the

cause of the ground heave, that the mere occurrence of this ground heave and the damage which it caused to the demise premises,

was sufficient to impose a liability on the defendants, under the covenant to repair.

31. I am quite satisfied that this submission is ill founded. The right to recover damages for a breach of the covenant repair arises out

of a breach of that covenant. The occurrence of the ground heave and the ensuing damage in my view was not caused by any

breach of the covenant to repair, in the sense of a failure on the part of the defendants to have kept the demised premises in good

repair. Thus in my opinion the damage occasioned by the ground heave not having been caused by any failure to repair on the part of

the defendant is outside the ambit of covenant 2(3) and the plaintiff is not entitled to recover damages for any breach of it.

32. I have come to the conclusion that the plaintiff has failed to establish any of the several causes of action advanced and

accordingly I must dismiss the plaintiffs claim