The High Court declared a 1997 lease of Block V at East Point Business Park valid and binding on Conduit Enterprises Limited, rejecting the company’s attempt to treat it as void. The court did not decide the plaintiffs’ claims for further consequential relief; it said it would hear the parties on whether any additional orders were warranted.
The dispute arose after Conduit said in a letter of 4 December 2008 that it would treat the lease as void and surrender the property. The company argued that two of its directors had been among the landlords and that no resolution had been passed at a general meeting approving the lease, as required by section 29 of the Companies Act 1990 if the transaction involved a non-cash asset of the requisite value.
Justice Finlay Geoghegan found that Conduit had acquired a non-cash asset as tenant, but held that the company had not proved its value exceeded the relevant threshold. The court treated the asset as the tenant’s interest in the lease and said its value was the capital value of that interest. The defendant’s valuer had assessed the lease’s assignment value to Conduit as nil. The judge also noted that no premium was paid and that the lease was not recorded as an asset in the company’s balance sheet. She therefore concluded that the company had not established that the lease was worth more than IR£10,292 in December 1997, and section 29 did not apply.
The judge also addressed what would follow if section 29 did apply. She found that, before the lease was signed, all four shareholders entitled to vote at a general meeting had agreed at a directors’ meeting that Conduit should enter it. They knew that two directors were among the landlords and knew the lease’s key terms. The judge held that, under the principle in Buchanan Ltd. v. McVey, the unanimous agreement of those voting shareholders could count as approval equivalent to a resolution in general meeting. She found the arrangement honest and within the company’s powers. Enterprise Ireland held non-voting preference shares; the judge noted evidence that it had been notified of and approved the move.
On either basis, the judge concluded that Conduit was not entitled to avoid the lease. The court granted the declaration sought by the landlords that the lease was valid and binding. It left further consequential relief for a later hearing.