Summary
Beauchamps recently acted for the Dublin Port Company in the case of Dublin Port Company v. Automation Transport Limited [2019] IEHC 499, which concerned a lease over property at Promenade Road in Dublin Port.
When the Dublin Port Company (Dublin Port) terminated the lease, the tenant argued, among other things, that a Deed of Renunciation – which renounced the tenant's right to a further tenancy – was invalid.
Following a hearing in the Commercial Court, Mr Justice McDonald held that notwithstanding any errors contained in the Deed of Renunciation, it was valid and enforceable under a rule of contractual construction known as the "Chartbrook Principles".
Facts
The lease stipulated that the tenant would be required to execute a Deed of Renunciation waiving any renewal of tenancy rights it may obtain.
Business tenants may obtain the right to renewal of a lease pursuant to section 13 of the Landlord and Tenant Amendment Act, 1980 (the 1980 Act). Section 17(1)(a)(iiia) of the 1980 Act provides that the renewal rights may be renounced by the tenant in writing provided the tenant has received independent legal advice.
In this case, the tenant claimed that the Deed of Renunciation of its renewal rights was invalid, including on the basis that there were errors in the Deed, which caused uncertainty. Dublin Port maintained that the validity of the Deed was unaffected by any errors and argued that the Court could invoke its ability to correct any errors under the rules of contractual construction.
Decision
Following a hearing in the Commercial Court, Mr. Justice McDonald provided a comprehensive review of the applicable law.
The Chartbrook Principles were enunciated by Lord Hoffmann in Chartbrook Ltd. v. Persimmon Homes Ltd [2009] 1 AC, wherein it was held that the correction of mistakes by construction could take place if:
- There is a clear mistake on the face of the instrument; and
- It is clear what correction ought to be made in order to cure the mistake.
The Chartbrook Principles were approved in Ireland in the case of Moorview Developments Ltd v. First Active Plc [2010] IEHC 275. In that case, Mr. Justice Clarke accepted that guarantees which had been incorrectly provided in the name of Moorview Properties Ltd – there was no such company – could be binding on Moorview Developments Ltd. There was a clear mistake on the face of the guarantee, and it was equally clear that the correction to refer to the company as Moorview Developments Ltd ought to be made.
Applying the Chartbrook Principles, Mr Justice McDonald held that the corrections required to be made to the Deed of Rectification were obvious and confirmed that the Deed is enforceable.
Requirement for independent legal advice
In obiter (ie not binding) comments, Mr. Justice McDonald noted that a covenant in a lease requiring a tenant to enter into a deed of renunciation and which does not itself amount to a renunciation would not be enforceable where it does not adequately deal with the requirement for prior independent legal advice.
Conclusion
The Chartbrook Principles are applicable to a wide range of contractual disputes and parties will not be permitted to avoid obligations on the basis of 'obvious errors'.
The case also serves as a reminder to landlords and their lawyers to ensure that tenants obtain independent legal advice before agreeing to renounce renewal rights.
