The Supreme Court has overturned a damages award against the owners of premises at 1 West Street, Drogheda, in a long-running dispute over consent to transfer a pharmacy lease.
Denis and Miriam Meagher appealed a High Court decision in favour of Luke J. Healy Pharmacy Limited, which held the landlords had unreasonably withheld consent to an proposed assignment of the lease to Cellular World Limited and awarded the pharmacy damages.
The 35-year lease dated May 14, 1971 covered premises used for a pharmaceutical business. It required the tenant to obtain the landlord's written consent before assigning the lease and also imposed extensive repairing obligations.
The judgment records that the tenant was in breach of its repairing covenant over a number of years. Schedules of dilapidations were served in 1993, 1995 and 1999. Proceedings seeking to compel repairs were begun by the landlords in October 1997.
During that period, the pharmacy sought permission to transfer the lease to several proposed purchasers. One application concerned Cellular World Limited in June 1998. The landlords neither granted nor refused that consent while correspondence continued. The tenant later counterclaimed, alleging wrongful withholding of consent and seeking damages.
By September 1999 the required repair works had been completed. Consent was eventually given for an assignment to Esat Digifone Limited in July 2000.
The High Court subsequently found that consent to Cellular World had been unreasonably withheld and awarded damages based principally on rent and rates paid by the pharmacy from October 1998 until Esat Digifone assumed responsibility, together with selling-agent fees.
The Supreme Court held that this damages remedy was not available. Mr Justice Finnegan said the statutory rule that consent cannot be unreasonably withheld qualifies the tenant's promise not to assign without permission. It does not, by itself, amount to a separate promise by the landlord whose breach creates a damages claim.
The appeal was therefore allowed and the High Court judgment set aside. Because damages were unavailable as a matter of law, the Supreme Court said it was unnecessary to decide whether the Meaghers had in fact acted unreasonably in withholding consent to the Cellular World assignment.