Frank Towey Ltd, Patrick Farrelly, Barrett Haulage Ltd, Sibra Building Company Ltd (plaintiffs) v. County Council of the County of South Dublin (defendant).
Injunction - Plaintiff sought to rely on letter furnished to previous owners to prevent the defendant closing access to its premises from dual carriageway - Whether particular words in an exchange of letters amounted to a contract or merely letters of comfort - Whether agreement gave rise to an easement for the benefit of the premises - Whether agreement amounts to restrictive covenant the benefit of which passes without a deed - Whether plaintiff entitled in equity to benefit from rights accruing from agreement.
The High Court (before Mr Justice Peart): judgment delivered March 16th, 2005.
For a broad commitment in an exchange of letters to have the nature of an actionable right, the terms of such agreement must be certain. The concept of an "easement of necessity" which permits a physical right of access where there is no other access available to the dominant tenement, does not extend to the right to maintain a level of profit or property value.
The High Court so held in dismissing the plaintiff's claim for damages and in discharging an injunction granted at the commencement of the proceedings.
Hugh O'Neill SC, John Gleeson SC, Tom Hogan BL for the plaintiff; George Brady SC, John Doherty BL for the defendant.
Mr Justice Peart said that at the date of hearing, the proceedings no longer involved the second and third named plaintiffs. For the purposes of the judgment, the plaintiffs seeking relief were the first (Towey) and fourth (Sibra) named plaintiffs which are referred to collectively in the judgment as "the plaintiff", except where it is necessary to distinguish between them.
Mr Justice Peart then outlined the background to the case. Sibra is the freehold owner of the licensed premises known as "The Foxhunter" (the premises), which are situated on the south side of what used to be called Palmerstown Road, near Lucan, Co Dublin, before it became the Palmerstown By-Pass. This location is now on the south carriageway of the N4 Dublin to Galway Dual Carriageway. There is for all practical purposes a common shareholding between Towey and Sibra. Towey trades in the premises, and holds the leasehold interest therein from Sibra under an Indenture of Lease dated July 13,1993, expressed to be for a term of ten years from July 1st , 1993, at a rent of £20,000 per annum, reviewable every five years. The lease has now expired, and while no new lease has been entered into, Towey remains in occupation under the same terms as the expired lease. There was evidence that Sibra contracted to purchase the premises by contract dated June 20th, 1984. There was also evidence that Towey has in fact been in occupation of and trading from the premises from that time, and that what was clearly a somewhat informal relationship of landlord and tenant was formalised in 1993 by the execution of the lease referred to. The defendant is the roads authority for the relevant area.
Mr Justice Peart said that prior to the commencement of the proceedings in 1989, in which certain injunctions and damages for breach of contract were sought against the defendant, there were discussions between the then owner of the premises (Langan) and the council. These culminated in certain "agreement" regarding what access openings the council would include in the median of the dual carriageway, so as to permit access to the premises to traffic coming eastwards towards Dublin city by crossing the dual carriageway, and which would also permit patrons to exit the premises by crossing the westbound carriageway so as to make a right turn towards Dublin city.
It was contended by the plaintiff that at the time of the negotiation of the purchase of the premises from Langan in 1984, a letter dated August 4th, 1983, from estate agents on behalf of Langan to the council, and a letter from the council in reply, which confirmed that items 1 to 6 in the letter of August 4th "are as agreed with you on site", were handed over by Langan. In evidence for the plaintiff, it was stated that it was made clear by Langan that the letters were very important and that "we should not lose sight of them". The openings were regarded by Langan and Towey as important to the business run in the premises, and it was certainly to be reasonably inferred from the evidence for the plaintiff that since the price agreed for the premises was based on turnover, the price paid was influenced by the reassurance the plaintiffs took from the exchange of letters between Langan and the council. Following the negotiations between Langan and the council, the dual carriageway contained four openings in the vicinity of the premises. In due course three of these were closed on safety grounds. Opening No. 2 was of critical importance to the plaintiff since it was the opening which provided direct access across the dual carriageway for patrons wishing to enter by means of the carriageway.
Mr Justice Peart said that in 1989 the council proposed to close opening No. 2 and this led to the commencement of the proceedings for the purpose of seeking injunctive relief. The defendants undertook not to close this opening pending the determination of the proceedings. Much time has elapsed since then. In the intervening period, the Road Traffic Act 1994 was enacted. Section 38 of the 1994 Act entitles a road authority to provide such traffic-calming measures as it considers to be in the interests of safety and convenience of road users, subject to compliance with the requirements in the section. There was evidence from the Gardai that the remaining opening poses extreme danger for traffic.
The defendant contended that whatever may or may not have been agreed in 1983, they were now statutorily entitled to close the opening in the interests of safety. Accordingly injunctive relief should not be granted and the undertaking given in 1989 discharged so that work could commence to close the opening.The defendant denied there was any privity of contract between it and the plaintiff, even if one existed between it and Langan as a result of negotiations and correspondence in August 1983 and that the plaintiff was not entitled to damages for breach of contract.
The plaintiff contended that the rights arising from the negotiations in 1983 amounted to an easement for the benefit of the premises and as this easement was not the subject of any deed or grant, it was equitable in nature and operated by way of a proprietory estoppel against the defendant. Alternatively, the plaintiffs argued that the agreement amounted to a restrictive covenant the benefit of which passed to the current owners without any deed. Further, the plaintiffs submitted that the rights created by the exchange of letters following the 1983 negotiations with Langan constituted a chose in action in respect of which there had been an equitable assignment by the vendor to the plaintiff. In these circumstances the plaintiffs claimed in the first instance an entitlement to injunctive relief to restrain the closure of the opening.
However, in view of the plea that the defendant was entititled under the 1994 Act to close the opening, the plaintiff sought damages in the event that the opening was found to be in the interests of public safety and convenience to close it, since to do so would cause a breach of rights to which the plaintiff were entitled and in respect of which they said they could prove a loss into the future.
Mr Justice Peart said that the issue to be determined was to ascertain the precise nature of the 1983 agreement. Once that was ascertained the court would have to determine whether the plaintiff had any entitlement in equity to benefit from any rights that accrued from the agreement. Mr Justice Peart then outlined the evidence given concerning the 1983 agreement. This evidence included memos of meetings on the site of the premises and letters in relation thereto. The court also heard oral evidence from witnesses concerning what took place between the parties and council at that time.
In a memo dated July 27th, 1983, of a meeting between personnel from an estate agent retained by the then owner and representatives of the council, it was recorded that "With regard to permanent access Mr Langan was assured that two openings in the median strip would be available with traffic being able to do a complete u-turn."
In a letter dated August 4th, 1983, estate agents for the then owner wrote to the council in relation to a meeting held at the site. This letter asked for confirmation in writing of verbal agreements reached at the meeting, including in relation to, inter alia,
"5). Two permanent accesses will be provided at either end of the property, their exact location to be agreed between the engineers and Mr Langan at the relevant time.
6). Openings in the completed median strip will permit a right turn from the east bound carriageway at the entrance at the Hermitage Golf Club and a right turn from the west bound carriageway at the opening just west of the public house."
In response a letter was written by the council on August 26th, 1983. This letter confirmed that the matters referred to as items 1 to 6 inclusive were as agreed on site.
Mr Justice Peart then referred to two further letters. The first was from the council outlining "terms of settlement". The second was from the then owner's estate agents in response confirming acceptance of the "terms of settlement". The contract for the sale of the land to the current owner was executed on June 20th, 1984, and the sale was completed on December 21st, 1984. During this period the purchaser enjoyed an equitable interest in the property by virtue of the contract of sale.
Mr Justice Peart next outlined the oral evidence that was before the court. Mr Bannon, the estate agent, said that he had been instructed by Langan to negotiate a package, including compensation, for part of the land belonging to the Foxhunter pub. Having refreshed his memory he said that the memo of the meeting with the council in July 1983 represented what took place at that meeting. He stated that the existence of these openings in the median, giving access to the premises by traffic travelling from the westerly direction was a matter of considerable importance at the time to the owners in relation to the volume of the passing trade enjoyed by the premises. In relation to the sum of money in respect of compensation included in the "terms of settlement", Mr Bannon stated that in his view if it had not been for the agreement about the number of openings in the median at that time, the amount of compensation would have to have been a higher sum.
On cross-examination it was suggested to Mr Bannon that in 1983 when this meeting took place with the council regarding what was then the Palmerstown By-Pass, the later Lucan By-Pass would have been in contemplation and that he would have known that it would happen in due course. Mr Bannon frankly admitted that he could not recall now whether that would have been within his knowledge at that time. He did, however, accept that he would have been aware of the Compulsory Purchase Order made in September 1983. He accepted that it was in the nature of road developments that they are simply a phase at any particular time and that things inevitably in time will move on and change, and that any person, such as the plaintiffs, who were buying property in an area would be aware of the risks attendant on this. But he added also that at that particular time it was quite common to have openings in a median on a dual carriageway.
Counsel for the defendant referred to the fact that what Langan really appeared to have been concerned about when the meeting was arranged in July 1983 was access to the premises itself rather than the openings in the median. In this regard Mr. Bannon was referred to the first paragraph of the file memo dated July 28th,1983 which stated:
"He [MR LANGAN]complained that he had not got a temporary access directly in front of his pub and consequently his trade was substantially diminished"
Counsel also related to the first item in the letter dated August4th, 1983, which stated:
"During the construction of the works full access will be maintained to Mr Langan's property and every effort will be made to minimise the disturbance."
He also pointed out that item 5 did not refer to openings in the median. The reference to the opening in the median was at item 6. Counsel pointed to the fact that the reference to "permanent" related to access at either end of the premises, not to the opening in the median strip referred to in item 6.
Mr Frank Towey gave evidence the he and his late father had been approached by Mr Langan in 1984 in relation to buying the premises. Negotiations had taken place and there had been chat about the openings in the median due to the construction of the Palmerstown By-Pass. Mr Towey stated that Langan had produced the letters from the council and that it had been conveyed that these letters were very important and that they should not lose sight of them. Mr Towey state that it was critical to them to have access to customers approaching from the west, otherwise they would lose a huge amount of business. He stated that at the time they signed the contract for sale, openings nos. 1, 2 and 3 were in situ in the median. By 1986 there were four openings in the median. At that time the plaintiff was anxious to build an extension and sought permission. There were discussions with the county council who considered that with the advent of the Lucan By-Pass, openings nos. 3 and 4 were hazardous on the median. He also stated that at that time the plaintiff did not have the two letters of the 4th and 26th August, 1983, to produce to the county council. They were mislaid at that time but were subsequently found. He stated that without opening no. 2 in the median, traffic approaching from the west would have to continue past the Foxhunter, along the carriageway as far as the Liffey valley exchange or the M50 Roundabout and then come back to these premises. The difficulty from the plaintiff's point of view was that while that is possible to achieve, any potential patrons making that journey would pass two other licensed premises and in all probability would not bother to come back to the Foxhunter.
Mr Towey also gave evidence about a wall which was required to be built between the premises and the Texaco service station to the east of the premises. It was a condition of a planning permission that this wall be put in place, because the council was keeping opening no. 2 and they did not want a situation whereby cars from his carpark would access opening no. 2 by going into the Texaco premises and going across the median at that point. He was of the view that they could have closed opening no. 2 instead and suggested presumably that they did not do so because they knew that they had agreed not to in August 1983. He stated that the plaintiff would not have engaged in their expansion plans had they been aware that the council were entitled to close opening no. 2. He described the effect of this closure as hugely devastating. Under cross-examination, Mr Towey accepted that in 1983 he would have been aware of the plans to develop the Lucan By-Pass, but stated that he always knew that opening no. 2 would be there so he was not worried about road development. Mr Towey stated that he had not gone back to Langan for any abatement in the purchase money being paid for the premises because no. 2 was remaining. Mr Towey accepted that in the sale of the premises, it was a straight transfer of the property and that there was no assignment of any contract or agreement between Langan and the council, or the benefit of any such agreement, if any. He also accepted that there was no notice given to the council of any assignment of any such rights following completion of the purchase. He was of the view that if the opening at no. 2 was now closed, the loss of turnover would be in the order of 20 per cent.
Mr Justice Peart thenstated that before proceeding to consider whether the plaintiffs were entitled to exercise any rights derived from the 1983 agreement, it was necessary to reach a conclusion as to exactly what was agreed between Langan and the council in 1983. His view of the evidence was that the road works in 1983 caused Langan considerable disruption to his trade. One source of disruption was the loss of access across the carriageway. The council informed him it was unable to facilitate him with temporary access while the work was ongoing but agreed that when the works were completed there would be two openings in the finished roadway. A sum of £25,000 was agreed to compensate him for the loss of business and disruption generally. Mr Justice Peart said that if the exchange of correspondence was looked at in that context, it was clear that the word "permanent" referred to in the memo but not replicated in the follow-up letter, was not used in the sense of "for all time" but rather in the sense of when the works have been completed, or being other than temporary while the work was in progress. Mr Justice Peart said it was not reasonable to interpret the use of the word "permanent" to extending to a guarantee or commitment by the council that at no time in the future when the roadway might be altered in any way, that these openings would be left in place forever. Far more by way of certainty would be needed in the terms of the agreement for such a broad commitment to be inferred. There is no evidence that the letters were regarded, nor could they be so construed, as other than some form of letter of comfort, and certainly did not constitute any sort of warranty by Langan that the openings would remain for all time. This was confirmed by the fact that as the openings were closed one by one, there was no question of the plaintiff going back to Langan for any abatement of the purchase price or seeking to involve Langan in the proceedings which were commenced against the council when opening no. 2 was under threat. Mr Justice Peart's view was that Towey in all probability purchased the premises in the knowledge that the existence of these openings was something over which some doubt necessarily existed for the future but he would have derived some comfort from the letters. However, he must have been aware and would been so advised if such advice had been sought that the letters could not form any guarantee against closure should the council plans in the future require it.
Mr Justice Peart said that this finding of fact as to what was agreed between Langan and the council was sufficient to dispose of the strongest line of legal argument put forward by counsel for the plaintiffs. This argument was that even though there was no direct privity of contract between the council and the plaintiffs, the rights under the agreement amounted to an equitable chose in action and were such as could benefit the plaintiffs on the basis of proprietory estoppel. Mr Justice Peart said that for it to be successfully argued that by its conduct since 1983 in creating and maintaining the opening(s) in the median the council had thereby encouraged the plaintiffs to act to their detriment such that it would be unconscionable for it to now resile therefrom, it would have to be shown that the nature of the agreement reached with Langan was of the nature contended by the plaintiffs. As the court had already found as it had above, it followed that the council's conduct in seeking to close the opening did not amount to unconscionable behaviour or conduct amounting to fraud.
The next question to be considered was whether the creation and existence of the opening in the median had the legal effect of creating some sort of equitable easement over the council's property for the benefit of the plaintiff's property. Mr Justice Peart said that in trying to formulate the nature of such an easement gave rise to difficulty. Mr Justice Peart said that one possibility was a right of passage to the plaintiff's premises for persons travelling in an easterly direction, but if it were that, it was the potential patrons who were the beneficiaries and not the plaintiffs. Alternatively it might be contended that it was a right of access which attached to the plaintiff's property, but the present case was not one where an easement of necessity was deemed to exist in circumstances where there was no other available access to the dominant tenement. The plaintiffs would have had to contend that equity would recognise the right or easement on the basis of extending the concept of necessity from actual physical access to the right to maintain a previous profit level or even a property value. No case was referred to the court in which such an extension of the meaning of "necessity" was recognised.
Mr Justice Peart said that it was contended for the plaintiffs that the agreement of 1983 had the legal effect of creating a restrictive covenant over the area of the council's property covering the opening in the median. Given the court's finding in relation to what was agreed in 1983, it could not have given rise to what was contended for by the plaintiffs. Given those findings, it was not necessary to examine the evidence in relation to the question of damages.
Mr Justice Peart dismissed the plaintiff's claim and discharged the undertaking given by the council at the time of the application by the plaintiff for interlocutory relief.
Solicitors: Brannigan Cosgrove Finnegan (Dublin) for the plaintiffs; Adrian P. O'Gorman, Council Solicitor for the defendant.
P.J.Breen, barrister
