High Court of Ireland Decisions

1. The first named Plaintiffs were at all material times the owners of premises at 27, Temple Lane South, otherwise known as 53, Dame Street in the city of Dublin. The first named Plaintiffs purchased these premises from CIE in July 1991. The premises in question incorporate Nico’s restaurant on the ground floor, the proprietors of which are the second and third named Plaintiffs, who purchased the entire premises from Temple Bar Properties in 1997, subject to certain covenants with regard to the occupancy of the upstairs premises by various individuals as artists studios.

2. Going back to 1986, individual studios on the first - fourth floors of 53 Dame Street were made available to various artists (who styled themselves the “Atelier Group”) by way of temporary letting agreement from month to month from the 8th day of October, 1986, which said agreement was not intended to exceed a period of two years.

3. The artists and group had as its initial co-ordinator or representative a Mr. John Brobbel and the Defendant was one of the first artists to occupy a studio, being one on the first floor. With the passage of time, and without objection from the owners of the property, the Defendant’s occupation extended, it has been agreed herein, to three rooms.

4. Rather than deal with all the artists individually, CIE and Mr. Brobbel agreed that the group would for convenience purposes form themselves into a co-operative of an informal nature. The idea was that the artists would pay their monthly rent into an Atelier account in the Bank of Ireland in Baggot Street, into and from which the landlords rent could be paid by direct debit. However, within a short space of time, it became apparent to Mr. Brobbel that problems were going to arise, because only two of the artists signed up to direct debits themselves and, as he told the Court, “I could see problems coming”. He pulled out in 1988, and in November of that year a further caretakers agreement was drawn up whereby the various artists, including the Defendant, undertook individually to pay all “rates, taxes and other outgoings due and payable in respect of the said occupied premises as and from November 1, 1988.” The Defendant took over Mr. Brobbel’s role and made himself responsible for collecting and transmitting the monies payable by the artists to CIE.

5. A new monthly lease was drawn up in November, 1989 between CIE and the Defendant alone for the monthly letting for £300 of the premises by way of temporary convenience. This agreement expressly acknowledged that at that particular time CIE were considering plans for the development of these and other premises as a bus and rail terminal.

6. At a certain point in time, the Defendant moved into residential occupation of one of the studios which gave rise to certain concerns in CIE, culminating in a request for an undertaking and acknowledgement in writing dated 30th March, 1990, furnished and signed by the Defendant which is expressed in the following terms:-

7. This document was also signed at the time by all the other artists comprised in the Atelier co-operative.

8. When CIE’s development plans for the area ended, a notice to quit was served by CIE on Mr. Kavanagh as a sale of the property to the first named Plaintiffs was then in prospect. However, no action was taken on foot of such Notice to Quit, the same being served purely to resolve any title difficulties, it always being the intention, both of CIE and Temple Bar properties, to preserve this building and others in the nearby area for the use and occupation of artists on favourable financial terms. It is clear that from the outset in this matter ordinary business criteria were not applied to the dealings between either CIE and the artists concerned, nor indeed by the first named Plaintiff to this group from 1991 onwards.. Mr. Kavanagh was largely left to his own devices on a day by day basis. It was he who dealt with both CIE and Temple Bar on behalf of the other occupants. It was he who determined who should gain access to any studio which might become vacant in the premises. It was he who was responsible for collecting in and paying over occupants, monies; he also paid the electricity and took care of the maintenance and good order of the premises. He received no remuneration for this work, either from CIE or Temple Bar, nor from the other occupants of the studios. The only suggested benefit, from Mr. Kavanagh’s point of view, from these arrangements was the fact that over a period of time he became the occupier of three studios at a knockdown rent. He ran art classes in one studio. He was also permitted to use one studio as a residence despite the undertaking of March, 1990.

9. In July 1991, the purchase by Temple Bar went through. Thereafter on the 23rd of September, 1991 the Defendant wrote to Mr. Quillinan who was then the property executive in Temple Bar dealing with the premises. In his letter, Mr. Kavanagh applied for permission for the arrangements concerning the occupants of 53 Dame Street to continue. He asked in his letter, expressed to be on behalf of the Atelier group, for permission to continue to “administrate, and also to continue as studying artists in 27 Temple Lane”. Mr. Kavanagh also had some meetings around that time with Mr. Hickey, who was then property director of Temple Bar, and who was anxious to reassure the artists that their continued occupation of their studios was secure.

10. These exchanges translated into a number of agreements which were drawn up in December 1991. It is perhaps important to stress that prior to that date, Mr. Quillinan advised the Court that he called to Mr. Kavanagh at 53 Dame Street with these (as yet unexecuted) written agreements and got from him a list of the then occupants of the various studios, so that the identity of the various occupants was not merely ascertainable, but was actually known by reference to individual names as of October 1991. Mr. Quillinan in evidence produced his handwritten contemporaneous note, the accuracy of which was not challenged by Mr. Kavanagh.

11. The first of these written agreements is an agreement to grant a lease in the future in the form of a draft annexed to the agreement. This agreement, dated the 9th of December 1991, was made between Temple Bar Properties Limited of the one part and “Arthur Kavanagh In trust for Atelier artists” of the other part. The agreement recognised that the tenant had lately held the premises specified in the schedule (and therein described as the upper floors of 27 Temple Lane South) and it was acknowledged by Mr. Kavanagh that any previously existing tenancy had been validly terminated by CIE by a Notice to Quit dated 21st December, 1990.

12. The agreement went on to recite the purposes for which Temple Bar Properties had been formed and recited that it was intended to develop this and other premises in the Temple Bar area in accordance with the objectives of the Temple Bar Area Renewal and Development Act. As part of this plan, Temple Bar expressed its intention to offer some properties within the Temple Bar areas to existing lessees by way of lease for various terms of years. It further recited that Temple Bar Properties would permit the tenant to remain in the premises on foot of a temporary convenience letting until such time as the landlord was ready to proceed with the redevelopment of the premises. The agreement further recited that the tenant would either obtain his new lease in respect of the existing premises or in a property adjacent to the premises.

13. By memorandum of agreement made on the same day, a temporary convenience letting of the same premises was made to the Defendant (again, in trust for Atelier artists) from month to month, commencing on the 1st of August, 1991 at the annual rent of £3,600. This temporary letting agreement also provided that the tenant should be liable for the rates and insurance on the premises.

14. The third document, the intended lease, was undated and unexecuted and did not describe any premises intended to be demised, but was clearly expressed to be a 35 year lease which, I am satisfied from the evidence, was intended to be at economic rents which would be within the capacity of individual occupants to meet. The first two agreements were executed by the Defendant, but were not executed by Temple Bar until 1994. They were not furnished to the individual occupants.

15. Moving to 1992, difficulties began to arise at 57 Dame Street because various artists were not honouring their obligations to remit their rent to Temple Bar via Mr. Kavanagh. There were also ‘disciplinary problems’ which led to a meeting between Temple Bar, the Defendant and the occupants in January, 1992 to which I will shortly refer. Mr. Quillinan gave evidence (which was not challenged) to the effect that at this meeting all occupants were clearly advised that they were the beneficiaries of the agreement for lease. In the years that followed some negotiated for new leases in other premises owned by Temple Bar in the area. The Defendant wrote a number of letters to the first named Plaintiffs in the period 1992 - 93 highlighting ongoing problems, mainly to do with rent. A letter dated 26th August, 1992 written by Mr. Kavanagh to John Quillinan refers to rent outstanding and owing both to the first named Plaintiffs and to “me personally”. On the 28th of September, 1993 he wrote to the first named Plaintiffs inviting them to “give me a free hand to deal with the matter as I see fit”.

16. It seems clear that with the passage of time the Defendant was beginning to see himself as something more than a mere agent or spokesman for the Atelier group, but rather as an individual who was running a business of providing studios for artists in conjunction with the first named Plaintiffs to whom he would turn as and when required for assistance in dealing with the various occupants. This state of mind on the part of the Defendant was undoubtedly fostered to a certain degree by the first named Plaintiffs and their Solicitors who took no steps to disabuse Mr. Kavanagh of his mistaken beliefs, nor to place their relationship with him on any sort of commission or business footing or to take any steps to identify the actual occupants at particular points in time or control the manner in which they were allowed access to the various studios. All of this was left to Mr. Kavanagh. On the 31st January, 1994, Messrs. P.F. O’Reilly & Co, the first named Plaintiffs Solicitors, executed the Agreement for Lease and Letting Agreement. The title of the covering letter returning same makes no reference to Atelier artists, albeit the letter recited that Temple Bar wished to have the names of the parties on behalf of whom the agreement was signed by Mr. Kavanagh. The Court has been told by Mr. O’Shaughnessy, conveyancing solicitor for Temple Bar, that leases would not have issued until the names of the occupants were given to Temple Bar.

17. These omissions are surprising, given that problems and disputes between the occupants and Mr. Kavanagh had been notified to Temple Bar. The allegations from the other occupants which were aired at the January, 1992 meeting were essentially to the effect that Mr. Kavanagh was acting in a high handed manner, changing locks on doors and generally acting in excess of what the other occupants believed his authority to be. Matters drifted on and on the 6th of September 1992, the Defendant furnished a full list of people who then shared and occupied studios. Negotiations then followed both with Mr. Kavanagh and some of the individual occupants for the creation of new leases. All payment of rent to Temple Bar ceased in September, 1993. Various options were put to Mr. Kavanagh, including a compensation offer of £15,000 “to move out” in November 1994, by which time he was obviously seen as a ‘problem’ by Temple Bar.

18. At around this time, the Defendant changed Solicitors. Virtually the first event to follow that change was the registration by the Defendant of ‘Atelier artists’ as a business name in the Companies Office. In February 1995 Mr. Kavanagh, acting, he says, on the advice of his new Solicitors served Notices to Quit on the various artists of Atelier operating from 27 Temple Lane South.

19. In view of these actions, the Plaintiff in turn served a Notice to Quit on the Defendant, following which an assortment of legal proceedings then ensued between the various parties, including ejectment proceedings brought by the Defendant against the various occupants, all of which said proceedings have been stayed pending the resolution of these proceedings.

20. In the course of the proceedings before this Court, the parties have agreed that the primary issue for determination is the status of the Defendant in the premises. Is he entitled to hold himself out as a ‘landlord’ in respect of the occupants of the premises, or is he now, and was he at all material times, simply the spokesman or representative on behalf of the occupying artists, otherwise known as Atelier artists?

21. Various indications were given to the Court during the hearing as to what might happen in relation to arrears of rent and rates which would follow certain findings by the Court. Equally, various matters raised in the Defendant’s counterclaim seemed to me to be matters which can be deferred for further consideration in the aftermath of a ruling on this primary issue.

22. Insofar as the second and third named Plaintiffs are concerned, the arrangements between Temple Bar and these Plaintiffs were that the entire premises were sold to the second and third named Plaintiffs in 1997, subject to covenants on the part of the second and third named Plaintiffs to develop eight rooms as studios, reserving to Temple Bar the right to nominate tenants to all these rooms. As the Defendant during these proceedings maintained that Temple Bar had no authority to maintain same following the sale to the 2nd and 3rd Plaintiffs, these Plaintiffs were joined as co-plaintiffs by Temple Bar in July, 1998.

23. The Plaintiffs dispute the Defendant’s claim that, notwithstanding the express terms of the temporary convenience letting, he is and was tenant of the Plaintiff in the entire first four floors of 27 Temple Lane South. The Plaintiff relies on Section 3 of the Landlord and Tenant (Ireland) Act, 1860 (Deasy’s Act) which provides as follows:-

24. It is submitted that a tenancy cannot be created by stealth or by adverse possession. There are two essential ingredients which must be present to found an agreement for a tenancy, namely, the right to exclusive possession in return for the payment of rent. If these elements are not present there can be no tenancy ( Gatien Motor Company Limited -v- Continental Oil Company of Ireland Limited (1979) I.R. 406).

25. It was clear from the aforementioned case that in order to ascertain whether there is a valid contract of tenancy, it is necessary to enquire into the intention of the parties as expressed in the contract. Insofar as the terms of the agreement may not be fully or properly expressed, the Court must:-

26. The Plaintiff also relied on Irish Shell and BP Limited -v- Costello Limited (1984) I.R. 511, where Henchy J., stated (p. 517):-

27. It is further submitted that the Defendant was never granted exclusive possession of the entire of the premises. Even taking the Defendants evidence at its best, there is no suggestion that he had in fact control of the entire of the four floors at any time which could be construed in any way as supporting his claim for a tenancy in that much of the premises. Further, there is no evidence to suggest that the Defendant ever paid rent for any portion of the premises other than that which he was entitled to occupy as tenant of the Plaintiffs, namely, two rooms on the first floor and one room on the second floor.

28. Furthermore, the Defendant at all times held himself out as taking the benefit of the 1991 agreements in trust for a number of beneficiaries (including himself) and not for his own exclusive benefit. It is the Defendants case that there was no trust because the Plaintiff did not know precisely who the other beneficiaries were at the material time and thereafter they treated the Defendant as a sole tenant. Having regard to the evidence of Mr. Quillinian who prepared the written list of occupants in October 1991, this had to be seen as demonstrably groundless. Even if that list was not precisely correct as and of the 9th of December 1991, it is nonetheless sufficient to form the basis of a trust for the following reason. A trust will fail for uncertainty only if the objects intended to be benefited cannot be ascertained with precision. However the members of the class can be ascertained with certainty. As pointed out in Keane (Equity and the Law of Trusts in the Republic of Ireland - par 7.04):-

29. The trust is valid because there were no more than eight other beneficiaries in occupation at the time of the creation of the trust and the precise list of names could have been easily and accurately ascertained if it was not known to the Plaintiff at the time.

30. Furthermore, a true sub-letting involves a sub grant by the tenant to the sub tenant, usually for a term less than the main term of the lease. The actual temporary convenience letting contained an express covenant prohibiting sub letting without the prior written permission of the first Plaintiff. In this case there are no subtenancy agreements, nor any indication of the terms of what any such subtenancy might consist of. If valid sub- tenancies existed, there would be no need for the Defendant to regularly invoke the first named Plaintiff when, as the correspondence shows, he ran into difficulties with the other occupants. Furthermore, the Defendant did not challenge the Plaintiffs’ right to obtain an injunction restraining the Defendant from ejecting the other occupants of the premises on this ground at the interlocutory stage.

31. On behalf of the Defendant, it is submitted that the Defendant is the sole tenant of the four floors of the premises in question and that he was sub-letting to artists and receiving rent. The contract for the sale of the premises between CIE and Temple Bar made it a condition of the contract that the property was sold subject to whatever rights might exist in favour of existing occupiers whether arising as tenant or otherwise. The Schedule of Occupiers in the contract for sale described the occupants as “Arthur Kavanagh and others”. The remarks column of the Requisitions on Title stated:-

32. Arthur Kavanagh’s name did not appear on the ‘schedule of caretakers’ annexed to that contract. Accordingly, it followed that when Temple Bar purchased the property from CIE it was on notice of Mr. Kavanagh’s special position, which was that of sale tenant.

33. Even if Mr. Quillinan collected a list of the names of the occupants in October 1991, no letter was sent by Temple Bar to the Defendant clarifying that it intended to benefit this class or category of persons prior to the execution of the agreement by Mr. Kavanagh. The list of names was not furnished to Mr. O’Shaughnessy, the Solicitor in P. F.O’Reilly who was responsible for conveyancing. If any sort of trust for a definite class or category had been intended, it was inconceivable not to incorporate a schedule of the beneficiaries in the December, 1991 agreements.

34. Between 1992 - 1994, Temple Bar never wrote to Mr. Kavanagh correcting him on what it now alleges were his misconceptions, nor did Temple Bar write to the subtenants setting out the situation which Temple Bar says now exists. In April 1994, the Plaintiffs’ Solicitors had written to the Rates Department of Dublin Corporation informing them that under the terms of a temporary convenience letting, Arthur Kavanagh occupied the property and was responsible for the payment of the rates on the property and the insurance premium in respect of same. There was no mention in that letter of any trust, co-tenants or caretakership. In the events which followed, Mr. Kavanagh had been sued for the entirety of the rates arrears, and indeed the entirety of the rent arrears which was a position quite inconsistent with the case now being made by and on behalf of the first named Plaintiffs. At no stage had the first named Plaintiffs sought arrears of rent from any of the other occupants. Indeed, when one occupant, Paul Ferriter, tried to pay rent to Temple Bar, it was refused. Further, the various occupants served notices to claim relief under Section 20 of the Landlord and Tenant (Amendment) Act, 1980 on the Defendant following termination of their sub- tenancies by Mr. Kavanagh, a course of action which was consistent with recognition of Mr. Kavanagh as their landlord.

35. Insofar as the creation of a trust is concerned, there must be certainty of intention, subject matter and objects ( Chambers -v- Fahy (1931) I.R. 17). In this case the only known object or beneficiary of the trust was Arthur Kavanagh, being the only identifiable person connected to Atelier artists. Various occupants had come and gone since 1991. Some of the 1994 occupants were quite different from those in December 1991. Most of the occupants gave no evidence of joining any organisation or body entitled Atelier artists.

36. Like many high minded endeavours, the initiative of firstly, CIE and later Temple Bar Properties to create a working environment for artists in Temple Bar was not marked by the careful business or legal attention or scrutiny which would in the normal course accompany a commercial transaction. It is one of the features of this case which render it particularly unfortunate from both sides point of view.

37. From the point of view of both CIE and Temple Bar Properties, it must be acknowledged that a high premium was placed on protecting and fostering the activity of the various artist occupants of the premises in question. From the evidence of Mr. Hickey and Mr. Quillinan in particular, whose evidence on all disputed facts I prefer to that of Mr. Kavanagh, I am satisfied that this high priority continued well beyond 1991 right up to the point where various legal developments and legal proceedings took centre stage in 1995.

38. While I have considerable sympathy with Mr. Kavanagh, I have no doubt that he has laboured under a misconception as to his real position in 27 Temple Lane South. I am quite satisfied, taking the evidence as a whole, and particularly the evidence in relation to the agreements prior to and including 1991, and most particularly his own written acknowledgement of the 3rd March 1990, that Mr. Kavanagh, must have realised that his actual status was and remained that of spokesman, representative or agent of the other occupants in the building. I am fortified in this view by evidence given by Mr. Patrick Lawlor, the rate collector for Dublin Corporation, who sued Mr Kavanagh for arrears of rates payable in respect of the premises and obtained a decree against the Defendant in the District Court. He was present in the Circuit Court when Mr. Kavanagh, he says, gave evidence in the course of an appeal that he occupied the premises in the capacity of caretaker. I accept the accuracy of Mr. Lawlor’s recollection on this specific point. I also accept the evidence of the various occupants, and in particular, Mr. Cahill, Mr. Ferriter and Mr. Robbins, all of whom occupied individual studios, to the effect that at no stage did they understand Mr. Kavanagh to be their landlord, nor did he ever hold himself out as such to them. As far as they were concerned, he was simply transmitting their rent to the landlord who was, and always remained, Temple Bar properties. It is undeniable that his willingness to work for the success of the initiative without commission or payment from CIE or Temple Bar is a highly unusual arrangement, given that Mr. Kavanagh received no commission or payment from the other occupants and fellow artists in the premises. He became and remained, in his own words, “a general dogsbody” serving the interests both of the property owners and the other occupants, albeit he was allowed the use of three studios at the knockdown rent payable and was not pressed in respect of arrears of rent from September 1993 onwards when all payments ceased.

39. However, the conclusion I have reached is that much of the muddle in Mr. Kavanagh’s mind, bearing in mind what he described as his limited education, springs from the inactivity and failure of the Plaintiffs and their legal advisors to regulate the legal arrangements in a more clearly and formally defined way. More particularly, by their conduct from 1992 onwards, Temple Bar did nothing to disabuse Mr. Kavanagh of his misconception about his role and status in the premises. That lack of clarity bore tainted fruits from that time, not the least being that Mr. Kavanagh found himself being sued for the entirety of the rent and rates arrears in respect of the four floors, a course of action which the Plaintiffs now accept was in effect retaliatory rather than one based on careful analysis of the true position.

40. For the purpose of the exercise in which the Court is presently engaged, namely to ascertain the status of Mr. Kavanagh in the premises as of 1991, the Court is not called upon to decide whether any issue of estoppel arises by virtue of events after 1991. No such issue has been raised on the pleadings.

41. However, even if such an issue had been raised by way of a shield or defence on Mr. Kavanagh’s part, I do not believe it could have succeeded because I accept Mr. Counihan’s point that a tenancy cannot be created by stealth or by accident, or, one might add, by ineptitude. While the actual thinking of Temple Bar Properties as expressed from day to day in relation to these premises is somewhat contradictory insofar as internal memos and correspondence may be concerned, the overall basic intention as of 1991 is, in my view, unmistakable. It was clearly intended, and I so hold, that in the run up to December 1991, Temple Bar Properties and Mr. Kavanagh intended to make various agreements for and on behalf of the group of artists known as Atelier artists, of whom Mr. Kavanagh was one himself. At no stage was it intended to elevate Mr. Kavanagh to some superior status other than that of co-ordinator or spokesman on behalf of the group, nor, in my view, was it ever intended that the entirety of the premises (being the four floors) be demised to Arthur Kavanagh in a personal capacity, so that the other occupants would be his sub tenants thereafter. It is inconceivable that such a far reaching measure would have been in contemplation without some express contemporaneous and written reference to such an idea or proposal which simply does not exist.

42. I also accept Mr. Counihan’s submission that for the trust to be valid and effective, he need only show that the beneficiaries of the particular class were ascertainable as of the time of the making of the trust instrument. That was clearly the case in December 1991 and indeed Mr. Kavanagh in evidence confirmed that precisely the same occupants were in situ in December 1991 as per the list given by him to Mr. Quillinan in October 1991. The words “in trust” are clearly highlighted in the agreements, as indeed are the intended beneficiaries, the Atelier group. I am satisfied that all the requirements of a valid trust have been met in this case.

43. That being so, I hold in favour of the Plaintiffs on the primary issue placed before this Court for determination.

44. Various other collateral and incidental issues have arisen which I will, if necessary, deal with by means of a further hearing. However, the indications which were given to the Court during the course of submissions made at the conclusion of the evidence convince me that I should proceed no further at this juncture and rather trust instead to the good sense of both parties and their respective legal advisors to bring matters now to a final conclusion. I therefore do not propose to make any other determination at this point in time, other than to receive such application as may arise in respect of the costs of the second and third named Plaintiffs.