|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> The Minister for Communications & Ors -v- Figary Watersports Development Company Ltd  IEHC 541 (03 September 2010)
Cite as:  IEHC 541
[New search] [Printable version] [Help]
Judgment Title: The Minister for Communications & Ors -v- Figary Watersports Development Company Ltd
Neutral Citation:  IEHC 541
High Court Record Number: 2005 3374 P
Date of Delivery: 03/09/2010
Court: High Court
Composition of Court:
Judgment by: McKechnie J.
Status of Judgment: Approved
Neutral Citation  IEHC 541
THE HIGH COURT
Rec. No.: 2005 / 3374 P
THE MINISTER FOR COMMUNICATIONS, MARINE AND NATURAL RESOURCES
FIGARY WATERSPORTS DEVELOPMENT COMPANY LIMITED
JUDGMENT of Mr. Justice William M. McKechnie delivered on the 3rd day of September 2010
1. This action arises out of a lease made between the Plaintiff, as lessor, and the Defendant, as lessee, for a term of 99 years from the 1st January 1993, in relation to lands in Co. Donegal, upon which the Defendant was to construct a marina. The Plaintiff claims that since the commencement of the lease the Defendant has failed, neglected and omitted to pay and discharge the rent thereby reserved. Up to and including the 1st January 2009, rent in the sum of €206,749.28 remained due and owing, the Defendant having paid only four instalments since May 2006 totalling €136,080. The Plaintiff seeks to rely on a Notice of Forfeiture dated the 12th June 1998, upon which, inter alia, these proceedings were issued and on foot of which re-entry is sought. Furthermore, it is claimed that the lessee is in breach of covenants contained in the lease and in other agreements subsequently made. The Defendant denies the same, seeks relief against forfeiture, and is countersuing, alleging breaches of covenant/conditions by the Plaintiff, in particular with regards to the unreasonable withholding of authority and consents required, or else such were only furnished with significant delay. It also seeks damages on what is known as the “Interreg issue”.
2. In the late 1980s, negotiations were commenced with the Plaintiff Ministry (“the Minister” or “the Department” as may be appropriate) to obtain a foreshore licence to develop a marina at Fahan, Co. Donegal, approximately 10 miles from the town of Buncrana. The Defendant company (“Figary”) was incorporated following these events on the 2nd March 1989. On the 22nd August 1990 the Defendant took an assignment of a lease dated the 9th June 1980 (“the Yacht Club lease” or “the Lough Swilly lease”) over a plot comprising approximately 8 acres, for a term of 99 years from the 1st June 1980, with an annual rent of IR£200, subject to seven yearly reviews. Nothing in particular turns on this lease; all rent owed in respect of it having been paid.
3. An application for planning permission for a marina development was successfully made by the Defendant to Donegal County Council on the 14th July 1989. On the 8th February 1990 the grant was upheld by An Bord Pleanála, subject to certain conditions. It is claimed that this planning permission lapsed on the 8th February 1995, five years after its grant, and required renewal at a later date.
4. The Defendant went into possession of the property, by agreement of the parties, on the 1st January 1993. A lease was subsequently agreed on the 26th April 1993 (“the lease” or “the 1993 lease”). This lease is now the principal subject matter of the action herein.
5. The 1993 lease relates to an area of 10 hectares of foreshore, and is made under s. 2 of the Foreshore Act 1933. The demised lands are identified in a map attached to the lease and are described in the First Schedule thereto. The lease specifies the purpose of the lease as being:
6. Both the Plaintiff and Defendant have relied upon a number of clauses and covenants in the lease explicitly. These are:-
“To pay the yearly rent hereby reserved (and any additional rent as may be defined or fixed or assessed in accordance with the provisions hereinafter contained) at the times and in the manner aforesaid.
(a) the sum payable immediately prior to the Review Date;
(b) such yearly amount as shall be agreed between the Lessor and Lessee … PROVIDED ALWAYS and it is hereby agreed that nothing herein contained shall operate to have effect so that the yearly rent for any period of the term hereby granted shall be less than £18,000 or than the amount of the revised rent payable in respect of any payable preceding period of the said term. The revised yearly rent payable as aforesaid in respect of any of the period herein mentioned may be agreed at any time between the Lessor and Lessee or (in the absence of agreement) be determined not earlier than the date of commencement of such period (the Review date) by an Arbitrator …”
ii) Clause 17 is a repairing obligation;
iii) Clause 18 requires access for ministerial officials onto the site;
iv) Clause 19 deals with the cost and expenses of removing building works and materials which are dilapidated;
v) Clauses 22, 23 and 24 deal with the requirements to provide for a healthy method of dealing with sewage discharge from boats accessing the marina;
vi) Clauses 25, 26 and 27 deal with operational matters relating to the marina.
7. As stated, the First Schedule contains the description of the property. The Second Schedule contains “Technical Specifications”. These include that:
4. The Lessee shall provide the Lessor with:
(i) detailed cross sections of the breakwater …
(ii) an analysis of the current regime in the creek on which the scour protection design is based;
(iii) an analysis of the likely effect of the construction of the marina on the morphology of the creek;
(iv) the Lessee shall not commence with the construction of the breakwater until the Lessor indicates that the plans, drawings and specification are satisfactory.
5. The Lessee shall be required to submit technical specification of the proposed works for the approval of the Lessor prior to the commencement of the development.
9. The Lessee shall provide for sage navigational access to and from the marina …”
9. A meeting took place on the 26th February 1998 at Leinster House between, inter alia, representatives of the Defendant, namely Catherine Heaney, John McDaid and Michael McDaid, and the then Minister for the Marine, Dr. Michael Woods. What occurred at that meeting is disputed. The Defendant claims that it received permission from the Minister himself to commence works. It confirmed this understanding in a letter sent the next day, the 27th February 1998, in which the Defendant to the Minister which stated:
10. The Plaintiff denies that such consent was given. On the 6th March 1998, Dr. Michael Woods T.D. replied stating:
All five of us who attended that meeting concurred at that time that you had given consent for work to begin on March 2. Deputy Cecilia Keaveney independently confirmed this at a later date. …
On the basis of your word on February 26, work commenced and substantial finance was committed to the development.”
11. In relation to the meeting of the 26th February 1998, the Plaintiff has noted that the Defendant originally claimed that it had secretly recorded the meeting, and prepared a transcript therefrom. However, such never materialised and it is thus alleged, that this may in fact have been posturing by the Defendant. At that meeting there was also a discussion about rent which subsequently became the source of heated debate between the parties. In its Replies to Particulars, dated the 21st June 2006, the Defendant stated that the Minister:
The Prohibitory Notices:-
12. Following the correspondence between the Defendant and the Minister throughout February and March 1998, on the 8th April 1998 the Plaintiff served a Prohibitory Notice under the Foreshore Acts 1933 and 1992 on the Defendant. The Notice stated, inter alia, that:
AND WHEREAS the said area of foreshore belongs to the State.
NOW, THEREFORE, the Minister for the Marine in exercise of the powers vested in him by Section 7 of the Foreshore Act, 1933 as amended by Section 4 of the Foreshore (Amendment) Act, 1992 hereby prohibits you from removing beach material of any kind from the said area of foreshore and from disturbing the beach material of the said foreshore by entering upon the said foreshore with any vehicle or mechanical or manual excavator.”
1. The determination by the Minister for the Marine and Natural Resources of what remedial works (if any) are required to ensure the structural stability and general safety of the breakwaters and any other structures already in place;
2. The submission to and acceptance by the Minister of agreed plans for phase one of the marina development as per second schedule to the lease.
We also undertake to comply with the terms of the Prohibitory Notices issued in relation to the site pending resolution of the matters referred to at 1 and 2 above.”
14. Nonetheless, the Plaintiff took issue with this undertaking, noting in a reply dated the 8th May 1998 that:
15. The works on site were inspected on the 7th and 8th May 1998 by Ian MacKenzie, Consulting Engineer, at the invitation of the Defendant. His views are recorded in a letter of the 14th May 1998. In particular he noted that in order to ensure the structural stability of the marina, and to ensure that it would not silt up, further investigations were required, and, to wit, boreholes and surveys would be necessary. He continued:
16. The Defendant, in a letter dated the 25th May 1998, particularly sought consideration, as against rental respite, for the fact that works had to cease, and for the costs of both the inspections conducted by Mr. MacKenzie and the carrying out of works suggested by him. However, replying to this request, the Plaintiff noted that the works suggested by Mr. MacKenzie should have been undertaken prior to the erection of the breakwaters, and consequently would have to have been carried out by the Defendant in any event. In both letters the issue of “completion” of the lease arose; however, the Plaintiff was adamant that the Minister would not be in a position to consider such completion unless he could be satisfied as to the stability and safety of the existing structures.
17. Following this letter further correspondence was exchanged between the parties in relation to safety warnings in and around the marina, the technical specification of the breakwaters and the “completion” of the lease. However, it is unnecessary to go into these in any detail.
18. On the 26th May 1998, the Royal National Lifeboat Association wrote to the Minister asserting that the submerged section of the sea wall being developed at the site represented a serious hazard to water users unfamiliar with the area. In this regard they concurred with Mr. MacKenzie that the breakwaters should be raised to a level 5 metres above chart datum. The Plaintiff replied, on the 9th June 1998, that, for reasons already conveyed to the Defendant, it could not agree to a proposal to raise the height of the breakwater; instead interim navigational markers could be used.
19. A substantial matter which also arose between 1998 and 2000 was the Plaintiff’s insistence on the Defendant obtaining a bond; that is to say that an insurance company would be in place to indemnify the Minister should the quality of works be substandard. The bond was to be for an amount of IR£250,000. Note the lease covenant in this regard was for a “restorative” Bond. This was referred to in numerous correspondence between the parties over this time. On the 29th January 1999, Aon MacDonagh Boland (“Aon”), insurance brokers and consultants, wrote to the Plaintiff stating:
20. The Plaintiff’s response was to write to Michael Galbraith on the 2nd March 1999. Having noted a meeting of the 11th February 1999, and also its request to the Chief State Solicitor’s Office (“CSSO”) to examine the wording of the proposed Bond, the Plaintiff continued:
21. Michael Galbraith sent a further letter to Declan O’Rourke, Assistant Principal Officer with Coastal Zone Division in the Department, dated the 16th April 1999, referring to his of the 23rd March and subsequent telephone conversations, wherein he noted that:
22. Following the alleged agreement in May 2000 (para. 36 infra), issues in relation to the provision of a performance bond, as opposed to a bond to ensure restoration of the foreshore, existed between the parties. In particular it would appear that the provisional wording for the bond as suggested by either side was not acceptable; in particular the Department would appear to have sought a bond which was payable on demand without recourse to arbitration. In February 2002 Declan O’Rourke, wrote to Michael Galbraith, raising issues with regards to the marina in general, but in particular with regards to the performance bond; he stated:
As you stated in previous correspondence, this project has had a somewhat troubled history associated with it; however, with the resignation of the former directors work at the marina has moved forward unimpeded and Phase I has been completed to the highest possible standard. There is currently floatation in place for 110 boats. On any given day there are between 70 and 100 boats moored at the marina and public support has been overwhelming. In these changed circumstances we would appreciate it if you would forward wording acceptable to the Department that takes account of the current situation and which reflects the high standard of work already carried out. Hopefully this will prevent any unnecessary delays in acquiring the new Bond.”
24. For the sake of clarity it should be noted that two different types of bonds are at issue in this case:
ii) post-May 2000, a performance bond for the completion of the marina pursuant to the alleged agreement of the 19th May 2000.
ii) A schedule of works and a bond were submitted in May 2000, but there was no response in relation to the same until March 2001, when new requirements in relation thereto were added by the Plaintiff, in particular that the bond be “on demand” and not subject to arbitration;
iii) Once these requirements were dropped, the Defendant again attempted to submit a bond, but the Plaintiff made acceptance of such, conditional on a schedule of works; the matter therefore continued to be outstanding.
26. Going back in time slightly, shortly following the issuing of the Prohibitory Notices (paras. 12 and 13 supra.), the Plaintiff served a Forfeiture Notice, dated the 12th June 1998, under s. 14 of the Conveyancing Act 1881 on the Defendant. In the covering letter, dated the 16th June 1998, the Plaintiff stated:
ii) the failure to construct the marina in accordance with the Second Schedule and in accordance with planning permission;
iii) the failure to obtain prior consent for excavation, removal or stockpiling of beach material, and breach of, additionally, the Prohibition Notice;
iv) the construction of the breakwater in an unstable and dangerous way;
v) the failure to pay all stamp duties exigible (now done by the Defendant);
vi) the excavation by the Defendant of beach material otherwise than where it is necessary, disturbing, removing and interfering with beach materials;
vii) the failure to procure the bond of IR£250,000, despite repeated requests;
viii) carrying on works and development without first seeking or obtaining a Grant of Planning Permission;
ix) failing to carry out works in accordance with planning permission (Record no. PL 5/5/80113, P.A. reg. ref. T.883/88) which was granted by An Bord Pleanála on or about the 8th February 1990 and which has withered and ceased to be of any effect or force in law; and,
x) failing to keep the premises in a good and proper state of repair and in proper condition and free from all defects injurious to navigation or the adjacent land or the public interest.
29. In July 1998, Irish Geotechnical Services Ltd. (“IGS”) carried out a site investigation, comprising seven boreholes put down from the existing foundation level of the breakwater. Its findings were communicated to the Defendant, which had retained it, in a letter dated the 24th July 1998. It was of the opinion that “the settlement of the finished structure is not a concern” and “[t]he stability of the rock fill breakwater … is expected to be very good”.
30. Matters after this seemed to have stalled, with little progress of consequence occurred until 2000. There was correspondence in that year wherein the parties debated whether planning permission was ever necessary for areas of the foreshore. The Minister accepted that such permission was not required for development below the high watermark, but nevertheless noted that there was a contractual obligation on the part of the Defendant to be planning permission compliant in relation to the developments on the site, or adjacent site; the fact that planning permission is not required for areas of the foreshore did not mean that there were no obligations in relation to the other portions of land they occupied. Further, significant correspondence was exchanged between the parties in relation to the engagement of specialist marine consultants and the necessity to provide to the Plaintiff appropriate designs and structural drawings for its approval. The Plaintiff at all times denied an assertion that previously it had accepted any such plans, or consented to any works on foot thereof.
31. Notwithstanding these matters, a meeting took place in May 2000 with the then Minister for the Marine, Mr. Fahey T.D.; this following his letter of the 2nd March 2000 which, whilst noting that the planning permission had lapsed and that works had not been completed, sought to put in place an appropriate set of arrangements that would meet the impasse between the parties. He referred to an earlier aide-mémoire dated the 3rd of February 2000 by Thomas Tobin which sets out the Minister’s formal position regarding facilitating the completion of the marina. Three requirements were set out therein:
2. Performance Bond (£250,000) requires to be approved by DoMNR and to be precisely related to the satisfactory completion of works / structures in accordance with detailed designs approved by DoMNR.
3. Promoters to provide written confirmation from Donegal Co Council that Planning Permission is not required for any works / structures below the High Water Mark (HWM) (it being understood that the promoters will seek Planning Permission for works / structures above HWM as soon as possible).”
- the rockfill breakwaters which form the marina were constructed in basic form
- the rock armouring to the breakwaters has been completed on the outside flank of the south-east and north-west breakwaters and appears to be of reasonable quality
The rock armouring to the outside of the south-west breakwater (the most exposed) has still to be done, as the armouring to the inside face of all the breakwaters.
Due to the incompleteness of the armouring, some erosion of the rock fill core material has occurred on each of the breakwaters – particularly on the outside face of the south west breakwater.
- the work which remains to be carried out includes:
- completion of the breakwaters – i.e. final shaping and armouring
- finalisation of the entrance channel through the south-west breakwater
- excavation/dredging of the marina basin, and use of the excavated/dredged material to fill the area between the rear embankment of the marina and the shoreline
- installation of the floating walkway system
- construction of the shore facilities building
- installation of drainage and services”
33. The Plaintiff acknowledged receipt of the above correspondence and report by letter dated the 23rd March 2000, and by letter dated the 11th April 2000 noted that its engineering division had requested that “Arup provide sufficiently detailed drawings, Plans, Cross Sections etc.”.
34. In mid-2000 drawings were sent by the Defendant to the Minister for approval, but final approval, he said, would not be furnished until the outstanding matters identified were addressed. The Plaintiff notes that at this point what it was seeking was confirmation from Arup with regards to quantities of material for works to be carried out on the marina. This was not ultimately done until August 2005.
35. On the 12th May 2000, Arup gave further details of various items of works to be carried out at the marina, in particular:
ii) The excavation and dredging of the marina basin;
iii) The installation of a proprietary floating walkway system;
iv) The construction of the marina shore buildings and access roads in accordance with specific drawings;
v) The construction of services to the shore facility;
vi) The construction of a slipway and boat lift.
36. On the 19th May 2000, Declan O’Rourke, wrote to Michael Galbraith, indicating that:
(a) the acceptance and clearance of the design and specification of the marina and a schedule of works which are to be agreed between the Department and the engineering consultant to the project, Ove Arup Engineering consultants within the next seven days;
(b) the provision of a performance bond of suitable duration and which specifies the cover of all of the works set out in the schedule of works to be agreed;
(c) the provision within seven days of confirmation by the engineering consultants to the project that all of the works set out in the schedule shall be carried out under their direction and supervision and in accordance with the design and specifications to be agreed;
(d) that in the event of an agreement not being reached between Ove Arup Engineering Consultants and the Department within seven days all works on the site shall be suspended and will not recommence until such agreement is reached.
Subject to the receipt of the above written confirmation the Department will affirm in writing that the Lease is active.”
37. Drawings were received in 2000, and in mid-2000 it was envisaged by the Defendant that there would be storage of some surplus dredge material or spoil in the lease area at the north west of the marina basin; however the drawings furnished showed no in-fill area at this point, as the Defendant envisaged only reclaiming the area between the basin and the shore.
The Disposal of Dredged Material and Later matters:-
38. Between 2001 and 2002 the main agitation between the parties in correspondence was how dredged sand, which the Plaintiff alleges was effectively dumped on the foreshore, was to be treated. A letter from Arup dated the 28th February 2002, indicated, inter alia, that:
39. In September 2002 the marina opened and become operational. It was at that stage still only partially complete. Planning permission for a new access road was refused by Donegal County Council.
40. The Plaintiff has indicated that it was never understood or agreed that a partially completed marina would be tolerated. There were ongoing difficulties because of the failure to provide onshore facilities, such as toilets, showers and sewage pump facilities, for the healthy disposal of sewage etc. These are regarded by the Minister as having been, and still being, breaches of Clauses 22 and 24 of the lease.
41. In this period and into 2003 the Plaintiff continued to have concerns about the operation of the marina because:
ii) The schedule of works was still outstanding, which was an essential prerequisite for the provision of a performance bond;
iii) Consequently there was no performance bond in place;
iv) There was no planning permission in place for works above the high watermark, planning having stalled because of an issue concerning the suitability of the junction of the access road onto the site;
v) A substantial amount of unauthorised excavation of dredge soil had taken place on site, and the Defendant had no permission for its proper removal off-site, in breach of Clause 10 of the lease;
vi) The way the marina was being operated gave rise to concern, in particular because of the pumping of dredge material directly from the marina basin onto the foreshore beside the lease area.
43. The quantity of material involved was approximately 96,000m3 which the Defendant insisted it could not move without authorisation from the Plaintiff. The Plaintiff stated in Court that it was entirely for the Defendant to find an appropriate recipient for this and to organise itself in a way which was compliant with the waste management legislation. In December 2002 there was further correspondence between the parties in relation to this issue. On the 12th December 2002 Nancy Doherty, on behalf of the Defendant, wrote to Joe Ryan, the then Principal of the Department, Coastal Zone Division, stating, inter alia:
… As stated in our correspondence of the 5th of December and verbally to John McHale on that same day, we propose to store the dredge spoil at Michael McDaid’s quarry, which is nearby and easily accessible. Perhaps you would be good enough to specify the terms and conditions under which such excavation, removal and stockpiling will be permissible. We have met with Donegal County Council’s Area Manager for Roads and Transportation, Patrick J. Gillespie, and enclose a copy of his correspondence confirming they have no objection to our proposal. …
Finally, as inferred in our correspondence of the 5th of December, we likewise have very serious concerns about the level of cooperation and assistance we received from the Department and hope that the New Year heralds a new beginning in this regard.”
You will be aware also that one of the possibilities identified is the placing of the material on the North Western Golf Course. It is our understanding that this would need the approval of Donegal County Council under waste management legislation: we would suggest that the Company pursue the matter directly with the local authority.
I must take issue with the suggestion in you letter of 12 December that the Company has concerns about the level of cooperation and assistance it receives from the Department. As we made clear at the meeting on 22 November, the Department’s objective is to secure the orderly completion of the development in accordance with the terms and conditions of the Lease. You may be assured that the Department will, for its part, continue to pursue this objective in a positive and proactive way.”
45. The Defendant replied on the 14th January 2003. It said that it would not be in a position to provide a revised Schedule of Works until the issue of “surplus beach material” has been dealt with. In particular it stated:
In any event, we would be grateful if you would comment on the position with regard to the proposed dredged material at Rathmullan and Buncrana as outlined in our earlier correspondence of the 6th January. In the Donegal County Council newsletter appended to both Environment Impact Statements the council states
‘Further to discussions with the Environmental Protection Agency, a waste licence for the use of dredged material will not be required due to the inert nature of the sediments…’ Therefore, perhaps you could explain why one would be required in our case.
We also understand that dredged material from Lisahally in Derry is transported around Donegal for various purposes. We would therefore be grateful if you would confirm by return the requirements and governing regulations in relation to this material or refer us to the appropriate Department or Agency to whom we can direct our queries.”
46. Shortly afterwards, letters were also sent by the Defendant in relation to a proposed buy-out of the lease; the Defendant noting the value placed on the leases by the Plaintiff was excessive, especially given that no one from the Valuation Office had even attended at the site.
47. The Defendant wrote again concerning the performance bond on the 26th February 2003, indicating its wish to put such in place; it also referred to the preparation of a Schedule of Works however:
48. Following this, the Plaintiff replied by fax dated the 6th March 2003, attaching a note of a meeting between the Chief State Solicitors Office and John Barton of Aon, and an e-mail from John Barton confirming the note’s contents. The e-mail recorded that:
Also, McDaid Quarries have submitted a planning application for production of concrete products in Burnfoot and already have a plant with full approval in N. Ireland.
As it is now our intention to export this material we feel that an EPA study or waste disposal licence is no longer required, as is the case with the sand moved from Lisahally by the Port and Harbour Commissioner and in line the EIS carried out by Donegal County Council for their proposed marinas at Rathmullan and Buncrana.”
50. A further, and lengthy, letter was sent by the Plaintiff to the Defendant on the 27th May 2003. This set out in detail the Department’s position as it then was, inter alia, in relation to: rent arrears; the buy-out of the lease; completion of works; disposal of dredge; the performance bond; and, marking of the foreshore outside the leased area. The Department on the rent issue was clear that it “was not possible to write off monies that are properly owed and due”, and that the valuation of the site, for a buy-out, given by the Valuation Office was as already indicated. In relation to the schedule of works the Department did not accept that such could not be finalised until the question of the disposal of the dredge soil was dealt with; a schedule with dates contingent would be acceptable. With regards to the dredge soil, the Department reiterated that the finding of a suitable site for disposal and the obtaining of the necessary permits or licences for its transport were, and were always, a matter for the Defendant. In relation to the sites mentioned at Buncrana and Rathmullen, and as to why a disposal licence would be needed, the letter states:
51. A more comprehensive reply to the Department’s letter of the 27th May 2003 was sent on the 18th June 2003. The Defendant stated in trenchant terms:
Our understanding … was that the Department would have an input into any proposed location for the breach material. Further, the fact that the Department refused our request in July 2001 to remove the material further reinforced this view. It’s unfortunate that it has taken nearly two years for the Department to clarify the position unequivocally. Had the Department made this clear in July 2001 we would not have been labouring under an illusion for over the past two years. It should also be noted that when we were first advised verbally that we should identify a location we did so, immediately naming Michael McDaid’s quarry. This location was satisfactory to the Department’s engineers at the time, but as soon as we provided the local council’s authority to transport the material the Department objected.”
52. On the 25th September 2003, the Defendant wrote to the Department with the names of, and letters from, companies interested in purchasing the sand. These included:
ii) B Mullan & Sons Contractors;
iii) J. J. McDaid (Haulage) Ltd;
iv) J. Barr & Sons Manufacturing Ltd;
v) City Concrete Limited; and
vi) J & J Transport Limited.
53. I would just note that the letters of interest last referred to were opened before the Court, as were the test results mentioned. It would seem to be accepted by both parties at this stage that the sand was of high quality with low impurity.
54. Little correspondence of note passed between the parties from September 2003 until early 2004. On the 18th March 2004, the Defendant wrote to the Department stating:
Please be assured that once the Department makes a determination that the beach material may be removed from the marina for the manufacture of concrete products, then we will ensure that anyone collecting the material has the appropriate permit.”
55. Further letters were sent to the Department following this indicating the urgency with which these matters needed to be resolved. On the 2nd December 2004, the Department wrote to the Defendant with a list of outstanding works. In relation to the dredge material, the Department’s position was that:
56. Going into 2005, the Plaintiff continued to express concern with the Defendant’s failure to pay rent, provide a schedule of works, provide a performance bond, and further was concerned with encroachment beyond the demised area and the disposal of dredge spoil in the location of the site.
57. Ultimately a schedule of works was received by the Plaintiff in 2005, but such was unsatisfactory because it had been prepared by the Defendant itself, and not by an independent consultant engineer; in non-compliance with the undertaking of the 19th May 2000 (para. 36 supra.). Furthermore the information supplied failed to quantify the cost of the remaining physical work on site, and the bond was not provided; the schedule of works being the sine qua non for its production.
58. In September 2005, Paul O’Sullivan of the Engineering section of the Department carried out a survey of the development and observed encroachment of some 4,030 m2 at the south west breakwater and 316 m2 at the south east breakwater. There was further encroachment into the foreshore and sand fill area to the north of the marina basin which involved 492 m2. The total encroachment, and thus area of trespass the Plaintiff contends, is 4,840 m2, or 0.48 hectares. Such is still ongoing.
59. The stalemate between the parties continued, with the instant proceedings issuing in October 2005. The present position is that it will be necessary to carry out substantial works on the site in order to provide safe and appropriate breakwaters and restore portions of the foreshore. It is estimated that the costs of completing the marina properly is somewhere in the region of €2.7 million including VAT, however that would not include construction supervision costs or any cost attached to the removal of sand off site. If the marina were to be wholly removed it is likely to cost €1.18 million including VAT, and again that does not allow for any cost associated with the disposal of rock off site, or the maintenance and storage of material off site. As of the 21st April 2006, the construction of the marina had cost the Defendant over €2.8 million. Since becoming operational in 2002, the marina has made the following profits:
• End of March 2004 – €1,204
• End of March 2005 – €1,793
60. Interreg is an EU funding programme designed to stimulate co-operation between member states by providing funding to projects particularly with a cross-border element. The Scheme in Ireland was set up under the Good Friday Agreement, and was the first time EU funding had been managed outside of Government. Interreg IIIA was the programme which ran from 2000 to 2006.
61. Once Interreg Programmes are approved by the European Commission, the implementation of the programmes is co-ordinated by Steering Committees, consisting of representatives of the authorities responsible for Cohesion Policy measures in each Member State. The Special EU Programmes Body (“the SEUPB”) was the Managing Authority for Interreg IIIA, and was required to work closely with government departments and the relevant local authorities and statutory bodies, as well as other sectoral and social partners. Article 34 of Council Regulation EC No. 1260/1999 of the 21st June 1999 lays down general provisions in relation to Structural Funds, and requires the Managing Authority to put in place adequate and appropriate procedures to ensure compliance both with the EU Regulations and relevant national requirements. During the course of the hearing evidence in relation to Interreg IIIA and its operation was given by Mr.McKinney, who was the Chief Executive of the SEUPB until May 2003.
62. Certain functions under Interreg IIIA were delegated to Implementing Agents in the Members States. In the case of Ireland, the Plaintiff in this action was the Implementing Agent for this purpose. The key roles of the Implementing Agent were, inter alia, to:
ii) Receive, process and assess applications;
iii) Manage project proposals, including providing support for project development;
iv) Monitor project progress and collect financial and performance data ensuring eligibility of expenditure; and,
v) Promote the Programme and Structural Funds in line with the Information and Communications Strategy set out in the Programme Complement.
64. It is important to note that the monies actually received would be linked to a percentage of the expenditure actually incurred; in this case 26%. The applicant would not receive a lump sum. It was possible for a grantee to receive less than the amount granted if the project turned out to be cheaper, since payment was related to vouched expenses; however, a sum greater than that allocated could not be received, as the money available within the Scheme was specifically apportioned.
65. In the present case, the Defendant submitted an application in September 2003 to the Plaintiff, as Implementing Agent under the scheme, for funding of €2.46 million, plus a top up from the State of €630,000 (although the Plaintiff now contends that the latter amount was included in the former). That application received a score of 64.6 marks from the Assessment Panel, with 60 being the threshold, and thereafter was submitted to the Steering Committee in December 2003, It was, however, unsuccessful due to a lack of a cross-border element. Nonetheless, the Defendant successfully appealed the refusal in February 2004; with the Review Panel finding, according to the Defendant, that the decision not to award was unreasonable, that systems had not been properly adhered to, and that due process had not been followed. The Defendant also contends that the Review Panel agreed that had more direct support been given earlier the need for a review may not have arisen, and it criticised the Plaintiff for failing to provide support and assistance to the Defendant, as required under the programme.
66. Subsequent to these events the Defendant obtained a partner from Northern Ireland (Seaton’s marina) in order to satisfy the cross-border element, and submitted an amended application to the Plaintiff. It was the Defendant’s understanding that this application would be submitted to the Steering Committee in September 2004, however shortly before this meeting was due to take place, the Plaintiff requested further information. It stated in a letter of the 13th September 2004 that such information was sought to afford the Defendant’s project the optimum prospect of success before the Steering Committee. However, the Defendant alleges, that the Plaintiff, in or about this time, was actively considering not to submit the application to the Steering Committee (see an inter-departmental e-mail exchange dated the 17th September 2004), but it neglected to inform the Defendant of this fact.
67. The Defendant gathered the requested information and forwarded it to the Plaintiff. The Plaintiff then advised that the application would be submitted to the Assessment Panel in December 2004. At that meeting, the Panel gave the Defendant’s application a score of 66.6; two additional points being awarded by virtue of the cross-border partner. The Panel thus recommended that the Defendant’s application be forwarded to the Steering Committee for consideration. As part of this process the application was then considered by the Joint Technical Secretariat of the SEUPB, which considers applications from a “higher level objective”; considering compatibility with EU and national policies. No score is given by the Secretariat, but information is compiled and provided to the Steering Committee.
68. Following this, the Plaintiff informed the Defendant of the positive recommendation and informed it that its application would go back in front of the Steering Committee. The Plaintiff was not, at that time, in a position to indicate at which meeting, but the Defendant was aware that a Steering Committee meeting was scheduled for the 27th January 2005, and as there appeared to be no more hurdles to cross, the Defendant presumed its application would be presented then.
69. However, as stated the Defendant alleges, the Plaintiff in or about that time had in fact decided not to submit the application to the Steering Committee due to issues unrelated to the Interreg application or the Scheme; the issue being in particular those relating to the alleged breaches of the foreshore lease and the construction of the marina. The Plaintiff in fact communicated this position to the SEUPB, which replied by e-mail dated the 18th January 2005, that their understanding of the process was that:
70. Despite this, the Department did not forward the application to the Steering Committee meeting of the 27th January 2005. On the 23rd March 2005, the Chief State Solicitor’s Office wrote to Brophy Solicitors, who were acting for the Defendant, stating that they would not progress the Interreg application due to outstanding issues. This therefore stalled the process.
71. The Defendant subsequently wrote to the European Commission complaining that its application had not been submitted to the Steering Committee. Esben Poulson of the Directorate General for Regional Policy wrote to Mr. O’Connor, who was the Director of the SEUPB, on the 3rd October 2005, seeking information in relation to the refusal to sent forward the application. In particular:
I have taken note that the selection process has not yet been concluded two years after the original application was submitted. In view of this it would be useful if you could explain the reasons behind the delay in the treatment of this application and also explain to which extent this is normal practice in your programme.”
“Reason for not having application presented to Steering Committee
The lead [Implementing Agent], DCMNR, has responded as follows:
Advice from DCMNR to the [Managing Authority] is not to proceed with the project selection process until the legal issues have been addressed.”
The [Managing Authority] has taken all steps that it can to progress this application to a concluding stage.
The selection process has been transparent and has been applied equally to both projects referred to above [the other project being a marina at North East Inishowen]. DCMNR made the decision to seek further guidance in relation to both projects, and as legal proceedings are underway, the [Managing Authority] has been advised that it is inappropriate to take the project back to Steering Committee until these issues have been satisfactorily addressed.
It is most unusual for the selection process to take almost two years but as there are issues involved in the Figary project beyond the MA’s control, there is no other option at present.”
72. Throughout 2006 correspondence was exchanged between the Defendant and the Commission, and between the Commission and the SEUPB in which an explanation was sought for the Department’s failure to process this matter, whilst at the same time it forwarded an application to the Steering Committee in relation to a development by Donegal County Council of a marina at Bunrana, despite it having no foreshore lease at all. This in fact was approved (although ultimately did not receive any monies). In relation to the former, for example, Elisabeth Helander of the Directorate General of Regional Policy wrote to the SEUPB on the 10th April 2006, noting:
74. On the 8th February 2008, Dirk Peters, Directorate General for Regional Policy, e-mailed Pat Colgan of the SEUPB. Having noted the extensive history of the Defendant’s complaint and the documents received from the Department which purported to explain the legal basis for its refusal to re-submit the application, he noted:
It is not considered best practice for good cooperation in a spirit of partnership to send a bulk of 150 technical pages without ANY indication, what exact point on what page explicitly or implicitly prevents DCMNR to represent the application. … Independently of the Chief State Solicitor’s advice, we still would like to know what are the legal basis (regulations or guidelines, both at national or programme level) that prevents an application to be submitted if certain conditions are not fulfilled, in this case for non-compliance with the terms and conditions of the foreshore lease. …
In case of late or still not sufficient answer, the Commission services could consider this lack of cooperation in breach of Article 10 of the Treaty.”
I cannot point you to any one rule or procedure either under the INTERREG IIIA Programme or the Department that prohibited them from re-submitting the application other than their duty as accounting department to manage public monies in accordance with best practice of governance. I believe that the Department had no choice but to take on board the legal advice it received.”
(ii) that the original objection by the Steering Committee (the project did not meet the cross-border criteria) had been remedied;
(iii) that the further objections raised by the Department above should have been signalled to the Steering Committee for it to take a decision to approve/reject the project;
(iv) in effect, the Department has assumed to itself the decision of the Steering Committee.
The Commission also is of the opinion that the examination of this complaint has taken too long. In particular, voluminous documents were sent that finally turned out to be irrelevant.”
I presume that you would largely be in agreement with us on these matters, but there are issues of transparency and correct procedures to which it is in all our interest to part correct attention.”
78. Although a Grant of Planning Permission was obtained on the 8th February 1990 (para. 3 supra.), that permission lapsed without the works being completed. The Plaintiff alleges that notwithstanding such failure of the part of the Defendant, it has a continuing obligation to carry out the works in accordance with the terms of a valid planning permission. The Defendant has failed, neglected and omitted to seek a further grant of permission, and has caused or permitted the said works to become, at least in part, an unauthorised development or a material change of use, in respect of which retention permission or a valid grant of permission is required.
79. By virtue of the terms of the Second Schedule, the Defendant did covenant, inter alia, to submit technical specification of proposed works for approval by the Plaintiff prior to the commencement of such works. Despite being called upon to furnish to the Plaintiff a clear and specific schedule of works intended to be effected for the purposes of satisfactorily completing the construction of the Marina, the Defendant has failed to so do.
80. In purporting to carry out the works specified in the lease, in particular the construction of the marina, the Defendant encroached beyond the area demised in the lease. In particular, the breakwater extends and trespasses outside of the demised area. Further, the Defendant has advanced a proposal to locate a retaining wall outside the boundary of the demised property. The prior approval of the Plaintiff has not been sought in respect of such a wall, and none of the necessary statutory consents have been obtained in this regard. Such works amount to an unauthorised act which create a permanent trespass by encroachment.
81. The Plaintiff further alleges that, by virtue of the covenants and conditions in the lease contained, in particular, in Covenants 10, 11, 12 and 15, the Defendant did covenant to effect the suitable disposal of dredge spoil not otherwise disposable in the immediate vicinity of the marina, and it did not obtain prior written consent for excavation, removal or stockpiling of beach material.
82. Under the terms of the lease, the Defendant did covenant and agree to procure a Bond in the sum of IR£250,000 (€317,434.52) for the due performance by it of restoration works in the event of any premature termination of the works or in the event of unsatisfactory completion or abandonment of the works.
83. The Plaintiff claims that it has legitimately forfeited the lease on foot of a Forfeiture Notice dated the 12th June 1998, which was served pursuant to s. 14 of the Conveyancing Act 1881. This it did because of the non-payment of rent and rental sums by the Defendant, and due to ongoing breaches, non-observance and non-performance of the covenants and conditions as specified under the lease. These breaches have continued since the service of the Notice of Forfeiture and continue to this date, despite significant accommodations of time on the part of the Plaintiff. In particular, notwithstanding these accommodations, the Defendant has failed, neglected and omitted to comply with the specifications, plans and drawings agreed between the parties, as embodied in the 2000 drawings.
84. Reliance is placed upon the Northern Irish Court of Appeal decision in McIlvenny v. McKeever  NI 161 to the effect that even if there had had been a waiver of the Forfeiture Notice, there were still good grounds to treat the issuing of the proceedings as an act of re-entry under the terms of lease, by reason of the continuing and ongoing nature of the breaches by the Defendant. Thus even if the proceedings could not be grounded upon the Forfeiture Notice, there is still an action for re-entry in its own right, and in any event it has a case for rent arrears of over a year under s. 52 of Deasy’s Act. Reliance is also placed on the decision of Laffoy J. in Moffet v. Fribsy  IEHC 140 and G.S. Fashions Ltd. v. B. & Q. plc.  1 W.L.R. 1088.
85. The Plaintiff notes that technically the Defendant has not sought any relief against forfeiture, and thus the Notice of Forfeiture may still be relied upon. Nonetheless, even if the Court should give the Defendant latitude in this regard, it should only be granted on very strict terms, and would have to include the following:
ii) Restoring of the foreshore where sand has been removed, or else paying the Minister the appropriate cost of so doing; and,
iii) Provision of a proper Schedule of Works and a realistically costed bond.
87. In essence the Plaintiff is seeking:
ii) Rent arrears due from the 1st January 1993 to date;
iii) The procurement of a Bond from an insurance office for the sum of €317,434.52 (IR£250,000) as covenanted for in the lease;
iv) The removal of structures, including breakwaters and/or rock armour, which project beyond the boundaries of the premises demised in the lease;
v) To prevent any unauthorised encroachment by the development on the foreshore;
vi) The transportation and disposal of material removed from the site, including dredge spoil and other materials, such as allowed, in accordance with all consents, licences, permits and authorisations;
vii) Damages for breach of covenant, nuisance and trespass;
viii) In the alternative, possession of the property on foot of a Forfeiture Notice dated the 12th June 1998, pursuant to s. 52 of the Landlord and Tenant Amendment (Ireland) Act 1860 (“Deasy’s Act”), there being more than one year’s rent in arrears;
ix) Further in the alternative, mesne rates and/or mesne profits in such amount as the Court determines to represent the open market value, up to date or until possession is delivered to the Plaintiff.
88. Furthermore, in relation to any question of the Statute of Limitations running on the monies owed under the lease, the Plaintiff draws attention to a number of letters which it says are, or are capable of being construed as, acknowledgement on the part of the Defendant. In particular:
ii) Letter of the 8th April 1998;
iii) Letter of the 11th May 1998;
iv) Letter of the 4th December 2002;
v) Letter of the 12th December 2002;
vi) Letter of the 14th January 2003;
vii) Letter of the 18th June 2003;
viii) Letter of the 1st April 2005.
90. The Defendant claims that it was an implied term of the lease, as varied or otherwise, that, in order to give the contract business efficacy and/or to represent the intention of the parties, the amount of rent payable thereunder would be predicated upon, and be fairly and reasonably ascertained by reference to, the development costs, grant availability and commercial activity of the marina. In those circumstances, the rent now claimed by the Plaintiff is neither fair nor reasonable.
91. The Defendant alleges that by virtue of representations made, the Plaintiff has warranted that:
ii) The lease was subsisting;
iii) The Defendant would be entitled to carry out the works; and,
iv) For that purpose, the Plaintiff would not unreasonably withhold such consent and permissions as were necessary.
92. Furthermore, the Defendant alleges in its counter-claim, that the Plaintiff is liable to it for damages, inter alia, for breach of covenant, breach of contract and misrepresentation, and the Defendant is entitled in law and/or equity to set off the said damages, when ascertained, against such sum of rent as may be due and owing to the Plaintiff under the lease. In support of such deduction or set-off, reliance is placed upon s. 48 of Deasy’s Act.
93. As an aside it might be noted, regarding rent reviews, the Defendant denies that it has any liability for revised rent in circumstances where the Plaintiff has not served any notice in respect of such, where there has been no agreement relating to revised rent, and where no reference of the question to arbitration has been made. Further, under the construction of the rent review clause, contained in the lease, time is of essence for the service of the notice for rent review. The Plaintiff, having failed to call for a rent review within three months prior to the previous review dates, has consequently lost the right to call for same.
94. In any event, the Defendant claims that the Plaintiff’s claim for rent herein, prior to six years before the commencement of these proceedings, is barred by the provisions of the Statute of Limitations as amended.
95. The Defendant denies that it has a continuing contractual obligation to carry on the works in accordance with the terms of a valid grant of planning. It therefore denies that it has failed, neglected or omitted to seek a further grant or that it has caused or permitted to exist, in whole or part, an unauthorised development or a material change of use, for which retention permission or a valid grant is required. Without prejudice to this, the Defendant notes that no planning permission is required for any development below the high water mark, and the Plaintiff has expressly acknowledged and affirmed such by letter dated the 2nd March 2000.
96. Further and in the alternative, if the Defendant was required to obtain a valid grant of planning permission, its failure to do so was caused in whole or part by the wrongful acts, including delays, of the Plaintiff.
97. The Defendant denies that the Plaintiff called upon it to furnish technical specifications of proposed works, and thus denies that it failed, neglected or omitted to do the same. On the contrary, the Defendant has at all times faithfully and diligently furnished such specifications when requested, yet the Plaintiff, in breach of its obligations under the lease and despite repeated reminders over a protracted period, has failed, neglected and omitted to act on the same.
98. In relation to allegations that the Defendant failed to seek or obtain prior contractual approval for works from the Plaintiff or obtain required statutory consents, the Defendant claims that it did at all times faithfully and diligently seek such approvals and consents, but the Plaintiff failed, despite repeated reminders, to act on the same. Furthermore, the Defendant denies that the breakwater, or any other part of the marina, encroached outside of the boundaries of the demised premises, or otherwise created a permanent trespass. In relation to drawings these were created by the Defendant at its expense and at the request of the Plaintiff, and thereafter provided to the Plaintiff. However, for reasons wholly extrinsic to the contractual relations of the parties, the proposal was not accepted by the Plaintiff or put into effect, and therefore the proposal did not result in any works. Furthermore, the Defendant alleges, the Plaintiff has acted with mala fides by later claiming that the proposal was in breach of the provisions of the lease.
99. In relation to the excavation material, the Defendant denies that it has failed to effect suitable disposal of such, or that it has failed to obtain the prior written consent of the Plaintiff for excavation, removal and/or stockpiling of beach material; the Defendant has at all times sought the required consent, but the Plaintiff, in breach of its obligations under the lease and despite numerous reminders, has failed, neglected and omitted to act on the same.
100. The Defendant claims that the Prohibitory Notices have expired. However, without prejudice to this, the Defendant has at all times contested their validity; moreover following discussions it was agreed that the lease was subsisting and that the Notices should be disregarded so as to enable the Defendant to construct the marina in accordance with the terms of the lease and the then agreement of the parties.
101. In relation to an alleged requirement to obtain a performance bond, the Defendant states that such is no longer required having regard to: the substantial completion of the works; the significant investment of the Defendant in the marina; and, the demonstrated commitment of the Defendant to complete the works.
102. In relation to the Forfeiture Notice, the Defendant claims that such was withdrawn by the Plaintiff on or around the 19th May 2000 on terms where it was agreed that: the Defendant would be entitled to carry out the works; to facilitate this, the Plaintiff would furnish the Defendant with all necessary consents and permission; and, such permissions would not be unreasonably withheld. The Plaintiff also recognised that the lease was subsisting. The Defendant denies that the effect of the 2000 drawings was only to modify the Forfeiture Notice as alleged. Rather the Notice is no longer valid and has no legal effect. Notwithstanding this, the Defendant claims that it did not commit any breach of covenant or conditions in the Forfeiture Notice. It specifically denies that it has failed to perform its obligations under the agreement as reached or under the 2000 drawings.
103. The Defendant denies that the Plaintiff is entitled to mesne rates or mesne profits. The conduct of the Plaintiff has prevented the operation of the marina to its commercial potential and this reduced the profits of the Defendant. In those circumstances it would not be equitable to impose any liability for mesne rates and/or profits on the Defendant.
104. The Defendant makes two further allegations with regards to the lease in its counterclaim, in particular that it was an express or implied term of the lease that the Defendant would be permitted to construct the marina on the premises and that the Plaintiff would furnish to the Defendant all necessary consents and permissions for that purpose. It was also implied that the Plaintiff would not derogate from its grant to the Defendant. Secondly, the Defendant states that it has faithfully and diligently sought to perform its obligations under the lease, and has worked tirelessly to do so, but it has been frustrated by the Plaintiff, which has unreasonably withheld and delayed furnishing the required consents and permissions.
105. The Defendant is also seeking damages for the actions of the Plaintiff in frustrating the Interreg IIIA application. It claims that such is an actionable breach of statutory duty, relying on the test enunciated in Glencar Exploration plc. v. Mayo County Council (No. 2)  1 IR 84 (“Glencar”), and that the Plaintiff’s actions were ultra vires its statutory role. Even if it is not an actionable breach of statutory duty, the Plaintiff was negligent, or else negligently misrepresented that it would resubmit the application, and such representations were reasonably relied upon by the Defendant to its detriment (Wildgust v. Bank of Ireland  1 IR 570). It did not re-submit, so the Defendant lost its chance of funding. In this context it states that the Court should take a two stage approach as borne out by the case law. As a result:
ii) the Defendant is entitled to damages, which will be measured through an evaluation of the probability of that chance, with the quantum of damages being calculated accordingly (see Chaplin v. Hicks  2 K.B. 786; Davies v. Taylor  A.C. 207; Allied Maples v. Simmons & Simmons  4 All ER 907; First Interstate Bank of California v. Cohen Arnold & Co.  P.N.L.R.; North Sea Energy Holdings HV v. Petroleum Authority of Thailand  EWCA Civ 1953; Paul & Others v. Ogilvy  Scot CS 19; Redmond v. Minister for the Environment  IESC 24); Quinn (A minor) v. Mid-Western Health Board  IESC 19).
106. In summary, the Defendant alleges that the Plaintiff is in breach of covenant and statutory duty in that, inter alia:
ii) It has imposed unreasonable or irrelevant requirements in relation to the Schedule of Works;
iii) It has imposed unreasonable requirements for the certification of subcontractors, and has unreasonably sought to restrict the Defendant’s freedom to contract in relation thereto;
iv) It has imposed unreasonable requirements in relation to the preparation of an Environmental Impact Statement, and has unreasonably insisted upon the securing of a waste collection permit from the EPA where none was required;
v) It has prevented the Defendant from negotiating and securing a performance bond in respect of its works, it insisted upon such a bond in circumstances where the agreed purpose of such had been met and where it was no longer required, and it imposed unreasonable requirements in relation to the amendment thereof;
vi) It had a duty to adequately and properly inspect or survey the boundaries of the leased premises, in circumstances where it has accused the Defendant of transgressing those boundaries;
vii) It has failed to respond to and determine the Defendant’s requests for the removal of beach material within a reasonable time or at all, despite being furnished with all relevant information in that regard;
viii) It has failed to assist the Defendant in its dealings with Donegal County Council;
ix) It has prevented the Defendant from securing and/or failed to reasonably assist the Defendant in securing funding under relevant EU structural funds;
x) It has consistently declined to deal with the Defendant in relation to the possible purchase of the leasehold interest in the premises based upon objective criteria consistent with the sale of similar lands and resources elsewhere in the State.
107. As a consequence of the alleged breaches by the Plaintiff, the Defendant claims that it has suffered loss and damages in respect of over €2.8 million invested in the marina, and also has been prevented from developing and/or operating the marina. The Defendant notes that other marinas in the area have received authorisations, permissions and funding without the constraints imposed or delays caused by the Plaintiff. The Defendant has thus suffered substantial and ongoing loss of profit.
108. In reply, the Plaintiff responds that:
ii) The Defendant itself is guilty of delay with regards to its allegations of unlawful conduct – in particular its failure to act sooner with regards to the alleged unreasonable withholding of consent;
iii) The case law with regards to non-derogation from grant is distinguishable and non-applicable;
iv) With regards to the issue of the definition of “waste”, and the issue of dredge spoil, no explanation is forthcoming as to why the Defendant did not engage an expert in relation to same when problems were initially encountered;
v) Regarding the Schedules of Works, the Plaintiff notes that there were issues with regard to:-
a) the May 2000 Schedule of Works in a memo sated the 18th January 2001, and later in a letter from the Plaintiff dated the 27th July 2001,
b) the October 2003 Schedule of Works was a one page note from Arup and not in fact a Schedule of Works at all,
c) the April 2005 Schedule of Works was incomplete and insufficiently detailed, despite having the Plaintiff’s template which was drafted in May 2004 and sent to the Defendants with a letter dated the 2nd December 2004,
a satisfactory Schedule of Works was thus not furnished until the 15th August 2005;
vi) With regards to the Interreg grant:-
a) the €2.46 million was inclusive of the €630,000 top-up, not in addition to it;
b) the Defendant has failed to identify the specific statutory provision claimed to have been breached in respect thereto;
c) Statutory entities should not be held liable for the honest and bona fide discharge of their legal duties (Pine Valley Developments v. Minister for the Environment  I.R. 23 (“Pine Valley”));
d) the Interreg system is not statutory, nor does it amount to an acte claire as to be directly enforceable – the system is effectively ad hoc;
e) the Defendant’s own actions prevented the matter from going before the Steering Committee;
f) the Plaintiff obtained legal advice from the Attorney General’s office with regards to the procedure;
g) in any event, the Defendant only had a speculative chance of getting the grant, because the purported cross-border element which the Defendant sought to rely upon was of only a very minor nature (an investment of €162,000), and because of the irregularities identified in the grant application and the Defendant’s failure to comply with many basic conditions, including the regularity of its title to the marina.
109. The starting point with regards to forfeiture must be s. 14 of the Conveyancing Act 1881. Subsection (1) states that:
110. Although s. 14(1) requires the notice to specify “the particular breach complained of”, the Northern Ireland Court of Appeal in McIlvenny v. McKeever  N.I. 161 at 175 held that “a notice under s 14 referring to several breaches is not invalidated in toto, because some of them never took place and have to be abandoned.” Furthermore, the notice need not go into specific details of the breach provided that it indicates to the lessee that he effect a remedy, if the breach is capable of remedy (Wylie, Landlord and Tenant Law (2nd Ed.), at paras. [24.14] – [24.15]). Wylie notes, however, that courts have in recent times taken the view that almost all breaches are capable of remedy, with regards to both positive and negative obligations, even where the covenant has stated that “time was of the essence” in the performance of the obligation (ETS Vehicles Ltd. v. Fargate Developments Ltd  N.I. 25). A distinction should be drawn between a notice to terminate or quit, which has the effect of terminating the tenancy, and a notice of forfeiture which rather is a statutory warning which, in the event of non-compliance, may result in the termination of the tenancy by further action. Thus, in this regard, the right of re-entry or forfeiture is not enforceable unless and until the lessee fails to remedy the breach within a reasonable time. If a lessee is not given a “reasonable time” to remedy the breach, the proceedings for possession will fail.
111. Once the above requirements are complied with by the lessor and the lessee fails to remedy the breach, the former is entitled to re-enter the premises peaceably (Bank of Ireland v. Lady Lisa Ireland Ltd.  1 I.R. 404), or else issue proceedings for ejectment.
112. Considering the Notice of Forfeiture issued in this case on the 12th June 1998 it would appear to me that at the time of its issue it was a valid Notice because:
ii) It was addressed to the Defendant and its directors;
iii) It recited the alleged breaches of covenant;
iv) It called upon the Defendant to remedy the identified breaches, as far as they were capable of such, “within a reasonable time”; and,
v) It called upon the Defendant to pay compensation.
113. Before considering in detail whether the Forfeiture Notice is still valid, a number of basic and uncontroverted principles with regards to forfeiture notices and their effect can be stated. Firstly, once a forfeiture notice has been served upon a lessee, the lessor may no longer rely on any remedies based on the continuance of the lease (Law Reform Commission on Consolidated Landlord and Tenant Acts (LRC 28 2003) referred to in the judgment of Laffoy J. in Moffat v. Frisby  4 I.R. 572 (“Moffat”)). Thus, as stated in Wylie On Landlord and Tenant (2nd Ed.), at para. [24.25], referring to the judgment of Henchy J. in O’Reilly v. Gleeson  I.R. 258:
114. Laffoy J. in Moffat, considering, inter alia, the above passage in Wylie and the cases relied upon, noted at para. 25 that:
116. Recently Laffoy J. gave a detailed consideration of the case law in this area in Foley v. Mangan  IEHC 404. A number of issues were considered in that case, in particular: whether there was a default by the lessee in his obligation to pay rent, so as to give rise to an entitlement on the part of the lessor to re-enter under the terms of the lease or at common law; if there was a breach of covenant in the lease, whether the forfeiture notice was valid for the purposes of s. 14 of the Conveyancing Act 1881 (“the 1881 Act”), and if so whether the breaches were remedied prior to the initiation of the proceedings; if the initiation of proceedings did effect a forfeiture was this waived by the lessor’s subsequent conduct; or alternatively if the lessor was entitled to forfeit the lease when proceedings were initiated, whether the lessee was entitled to either equitable relief or statutory relief (under s. 14 of the 1881 Act) against forfeiture.
117. Ultimately if the Notice of Forfeiture is valid then the landlord cannot rely on any remedies based on the continuance of the lease after the date of its service. This is a long-established position. Once a lessor elects to treat the lease as void, having done so by virtue of conduct on the part of the lessee which has rendered in voidable, he may not rely on any of its provisions. If successful the lease will be void as and from the date of the service of the Notice. It is not possible to partially void the lease, as in practice such would involve rewriting the lease, thereby producing a contractual relationship and a leasehold estate different to that originally envisaged by the parties and expressed in the lease (O’Reilly v. Gleeson  I.R. 258 at 274). If the forfeiture is upheld then the lessor may not rely on any breach of covenant or non-payment of rent under the lease after the issue of the Notice; instead being entitled to mesne profits or rent from the then trespassing former tenant.
118. There are however two ways in which the lease will be subsequently held to have not been forfeited, either (i) the Court grants relief against forfeiture, or (ii) through agreement of the parties. With regards to relief against forfeiture, Kennedy C.J. in Whipp v. Mackey  I.R. 372 at 385 emphasised that (i) the relief is a matter for exercise of judicial discretion; (ii) a very strong case should be made for refusal where the forfeiture is based solely on the non-payment of a sum of money; (iii) where the forfeiture is only to secure payment of that money, and no injury has resulted from the delay in payment or only such injury as payment of interest, plus costs, would be full compensation, the equitable relief against forfeiture should not be refused. Wylie notes that these principles were subsequently applied by Hamilton J. in Trustees of Bective Rangers v. Trustees of Merrion Cricket Club (Judd v. McAlinden) (High Court, Unrep., 28th March 1980):
119. This issue will only arise under s. 14(2) of the Conveyancing Act 1881 if the Notice of the 12th June 1998 has forfeited the lease. Even if not, relief may have to be considered if re-entry has taken place under s. 52 of Deasy’s Act, but first the effect of the parties’ conduct on the Forfeiture Notice. Firstly, it is clear from looking at the correspondence subsequent to the service of the Notice that the parties were actively engaged in attempting to gain compliance with the covenants contained in the lease. In this regard the Plaintiff continually sought to rely on these covenants. As stated, once a Notice of Forfeiture is served the lessor may no longer rely upon the terms of the lease. It is patent that the Plaintiff continually sought to rely on these after the service of the Notice, whilst it is equally clear that the Defendant never accept the notice. In those circumstances it could be inferred that there was some agreement between the parties that the lease, and thus the covenants therein, continued to be active. In my opinion, it would ordinarily be necessary that a continuing intention on the part of the lessor be shown (notwithstanding the special circumstances considered in G.S. Fashions). This could not be said to be the case here. Furthermore, having considered the correspondence between the parties, notwithstanding the above, the Plaintiff stated in a letter dated the 19th May 2000 that “your clients are hereby authorised to commence works on site forthwith. As indicated in the concluding paragraph of my letter, the Department confirms that the Lease is active.” The full context of this letter is set out at para. 36 supra. Whatever the Plaintiff’s intention: the wording of its correspondence and the Defendant’s acceptance of the stipulated conditions are clear: on and from the 19th May 2000, the lease was active: the Forfeiture Notice as such ceased. It is thus clear that the Department considered that, by this stage at least, the lease was active and enforceable. However, I would note, that notwithstanding such express admission, and independent of it, I would still be inclined by virtue of the overall dealings between the parties, to infer that the lease was active, and the Notice effectively abandoned by consent of the parties.
120. Even if it could not be held that the Notice ceased to have legal effect, I would be disposed to grant relief against forfeiture having regard to general equitable principles as applied to the most unusual, even unique, circumstances of this case. It has long been established that delay defeats equity; vigilantibus, non dormientibus jura subveniunt (see e.g. Lennon v. Hanly  I.L.R.M. 84; Howard v. Commissioners of Public Works in Ireland (O’Hanlon J., High Court, Unrep., 3rd December 1992); and, Smith v. Clay (1767) 3 Bro. C.C. 639, 640n). Indeed in the current circumstances, it is relevant to consider that when a Notice of Forfeiture is served, a lessee must be given a reasonable opportunity to remedy any breaches identified within a reasonable time, should such be possible. It must, in my opinion, be a corollary of this that, once a reasonable period has been allowed, the lessor must then act upon such failures if not remedied within that time. It could not be equitable for a lessor to hold the threat of forfeiture over the head of the lessee indefinitely; like the sword of Damocles. Where a considerable time has elapsed between the service of the Notice and any attempted enforcement thereof, such must weigh strongly in favour of relief; if indeed not also regarding its continuing validity. In this case over seven years elapsed between the service of the Notice and the commencement of the within proceedings. This could not be considered a reasonable period. The equitable principles of laches and delay must necessarily apply to any application based on this Notice, and I would therefore also, or in the alternative, grant relief against forfeiture on this ground.
Re-entry for rent arrears (s. 52 of Deasy’s Act):
123. With regards to the alleged representations by various Ministers on behalf of the Plaintiff, it is clear that discussions were had between the parties with regards to the possibility of waiving all or a portion of the back rent due. Although I have no doubt that the Minister had the power to remit the rent, the representations must be seen in the context in which they were given; namely discussions with regards to the completion of the marina. In any event all discussions as to rent were of the nature of representation that “it would be looked into”. At no point was it expressly represented to the Defendant that the rent due would be waived; only that it might. It was therefore part of a negotiation. Whilst I accept that the Defendant may have expected something to come from these negotiations, the actual representations made were not such that the Defendant can rely on them in law so as to bind the Plaintiff. Even taken at their highest, the representations made to the Defendant were conditional and of a tentative nature. I would therefore hold that there were no representations capable of binding the Plaintiff, which the Defendant could legitimately rely upon, to remit or waive all or any portion of the rent. Nor could the representations of the Minister amount to an implied term that the rent would be “predicated upon and be fairly and reasonably ascertained by reference to development costs, to grant availability and to the commercial activity of the Marina” and that it would therefore not commence until 2002, when the marina became active, as suggested by the Defendant in its letter of the 4th December 2002. It is thus the case that rent began to be due under the lease from 1993.
124. Notwithstanding that rent technically began to run from 1993, the period under the Statute of Limitations 1957 for the recovery of debts is six years (s. 27). This period will recommence if there is acknowledgment (ss. 56 and 58) or part payment of the debt (s. 65). With regards to the rent in this case it is alleged that the Defendant made several acknowledgments in relation to back rent owed (para. 88 supra.). In this regard the Plaintiff has sought to rely on acknowledgments from 1998 and 2006. I have considered the correspondence in which these were given and it is clear that at no point were they express acknowledgments. Despite my previous finding, that there was no agreement to waive back rent, any statement by the Defendant in relation to rent owed must also be seen in light of its ongoing negotiation to get all or part of the rent remitted; something which, as stated, I have no doubt could have been done by the Minister had he wished – although he did not in fact so do. I am therefore satisfied that the alleged acknowledgments of debt in 1998 cannot be considered acknowledgments for the purposes of ss. 56 and 58 of the Statute of Limitations 1957. With regards to the alleged acknowledgments in 2006, there was that time a clear dispute as to what rents exactly were due; the Defendant was clear that it was only accepting that rent started to fall due from 2002. It could thus also not be the case that the payments made by the Defendant, in the circumstances, could have been taken by the Plaintiff to be part payment of rents prior to that period (which were not admitted by the Defendant), for the purposes of s. 65 of the Statute of Limitations 1957. The Plaintiff could not be entitled, as it has suggested, to allocate such monies to such debts as it wished; they discharge those debts, or part of those debts, which are admitted only.
125. Even should I be incorrect with regards to the acknowledgments of 1998, I should note that such could not have any effect since although they would restart the Statute of Limitation period of six years at that time, therefore covering all rent pre-1998, the period of six years would have run in 2004. Since these proceedings were not commenced until 2005, the acknowledgments from 1998 cannot be relied upon. I would thus hold, in any event, pursuant to the six year limitation period, the Plaintiff is entitled only to rents accruing on or after six years prior to the commencement of these proceedings; that is since 1999. In light of my findings with regards to the representations to remit rent, the amounts due from this time would be at the full yearly amount (IR£18,000 / €22,855.29 per annum), as the lease commenced in 1993. The amount due therefore between 1999 and 2005 is IR£108,000 / €137,131.71, or to date IR£198,000 / €251,408.14.
126. Given the above conclusions, the first part of s. 52 of Deasy’s Act would seem uncontroversial in the present case. It is patent that in excess of a year’s rent, howsoever measured, is currently due and owing to the Plaintiff. It is also uncontroversial that a tenancy exists, or at least existed, between the parties, and that the Plaintiff is the person entitled to rent in respect thereof. It should also be noted that unlike forfeiture, there is no requirement, by virtue of s. 53 of Deasy’s Act, to prove the making of any demand for the rents due, or any intention to re-enter.
127. It would seem to me that once the Plaintiff has shown that the Defendant is a tenant who has failed to pay at least one year’s rent, howsoever measured, the Plaintiff is entitled to an order of possession under s. 52. Nonetheless, it should be borne in mind, and the Plaintiff should be aware, even had possession been ordered, the Defendant could have obtained a stay of execution by tendering, at any time before execution, the rent stated as due in the decree.
128. In light of this and noting my other findings herein, and in the exercise of my discretion, I would therefore refuse relief under s. 52 of Deasy’s Act and allow relief against forfeiture on this ground, subject however to the orders of the Court outlined infra.
129. The Defendant has also noted that s. 48 of Deasy’s Act provides:
Unreasonable withholding of Consent:
131. What constitutes “unreasonable withholding” has been considered in numerous cases over the years, particularly in relation to the right of a lessee to assign, and in relation to changes of use by the lessee. The Court has repeatedly noted however that it is not possible, nor desirable, to give any exhaustive definition as to what would be in every conceivable case unreasonable withholding (see for example Bates v. Donaldson  2 Q.B. 241 at 243). As stated by Warrington L.J. in Houlder Bros. & Co. v. Gibbs  Ch. 575 at 584:
134. Certain matters have been considered to be unreasonable in a technical manner; so that although reasonable from an objective standpoint, they could not be considered reasonable in the context of the relationship between the parties. In Houlder Bros. & Co. v. Gibbs  Ch. 575, the lessor refused to permit the lessee to assign his lease to another on the ground that the assignee was also a tenant of his, and thus should the lease be assigned to him, the lessor would lose good tenants from the adjoining premises, and would have great difficulty re-letting them. The lessor otherwise had no other objection to the assignee. Pollock M.R. noted that such a reason was, however “one which is independent of the relationship between the lessor and lessee”. In those circumstances:
136. The Supreme Court here considered, per Maguire C.J., in Rice v. Dublin Corporation  I.R. 425 that:
However, I do not think that a balancing of the positions of the landlord and tenant is quite the test although the special circumstances of the tenant must be taken into account to some extent. The real question is whether the landlord is unreasonably withholding its consent contrary to the term implied in the covenant restricting user …
The onus is on the tenant to establish that the landlord is unreasonably withholding its consent. Some of the cases would suggest, that in order to do this, the tenant would have to show that the landlord is acting capriciously or arbitrarily but each case must depend upon its own facts. What the tenant has to show in this case is that the landlord is unreasonably withholding its consent to a change of user from a retail outlet as a fruit and vegetable shop to a building society. This involves primarily a consideration of the landlord’s position without, on the other hand, ignoring the tenant’s special circumstances.”
139. To summarise, therefore, it is not possible to outline in the abstract what circumstances will amount to unreasonable withholding of consent, however, in considering whether, in a particular case, such has occurred, account should be taken of all the circumstances of the relationship between the parties, as well as their respective interests. Although there would seem to be some suggestion that for a refusal to be reasonable it must relate directly to the relationship between the parties, and the lease in question, nonetheless where the lessor is involved in the leasing of multiple properties the Court may have cognisance of “estate management” in considering whether a refusal will be reasonable. In this regard, I feel that in O.H.S. v. Green Property Co. Ltd.  1 I.R. 39, an important consideration was that the lessor had in fact built the shopping centre; this was not a case where the lessee had covenanted to build.
140. In the present case, a number of refusals or decisions by the Plaintiff have been alleged to be unreasonable. These are:
ii) The requirements which the Plaintiff sought in respect of the Performance Bond;
iii) The refusal to consent to the proposed Schedule of Works or plans;
iv) The insistence upon the Defendant obtaining planning permission;
v) Questions as to the adequacy of the breakwater as constructed.
142. Dealing firstly with the refusal to consent to the removal of sand. Having reviewed the correspondence, I have concluded that ultimately consent in this regard was unreasonably withheld. The relevant clause of the lease, clause 10, states that the lessee shall obtain prior written consent for the excavation, removal and stockpiling of material, and that it shall be for the lessor to specify the terms and conditions of such. The Plaintiff took a somewhat peculiar position in relation to this. Whilst steadfastly holding to a requirement that prior written consent was required for the exact method and placement of the dredge material, it stated that it was for the lessee to find a site which was suitable to the lessor. The only suggestion forthcoming from the lessor in this regard was to dispose of the material on a nearby golf course. This was unacceptable to the Defendant since it was clear that the golf course was not willing to pay even the transport costs of such. On the other hand, the Defendant put forward several suggestions which would have allowed it to sell the sand, which it was later accepted was of a high quality, with a low silt content; ideal for construction purposes. It is clear that there was significant confusion on the part of the Plaintiff as to both the status of the sand, in that they appear to have regarded it as waste for the purposes of transportation and storage, and as to who required what certificates in relation to its transportation and acceptance, and from which body (the EPA, or Donegal County Council) such should be obtained from. Although it now appears that at least one remover did in fact have such permits, but the Defendant did not inform the Department of this fact.
143. It seems to me that it is unreasonable to request the Defendant to provide waste licences for transportation. If such was required it would be a matter for the carrier. From my understanding it would not be required by the Defendant, nor, in circumstances where the sand was being utilised in construction, would the recipient of such sand require a waste licence. It is not a matter for the Plaintiff to enforce the relevant licences. It was not the regulatory agent: it was a contractual lessor. It should therefore have been sufficient for the Defendant to undertake to obtain relevant licences, should such have been needed by it, which is unclear, and that any person transporting such material would be suitably licenced to so do. If non-compliance was at issue, it was for others, but not the Plaintiff, to enforce. The proposed sites put forward by the Defendant should have been sufficient for the Plaintiff. Additionally, as stated, the one site put forward by the Plaintiff was wholly unreasonable from the Defendant’s point of view. In these regards I am therefore satisfied that the Plaintiff unreasonably withheld its consent with regards to the removal of the dredge material from the marina to a site identified by the Defendant. Their refusal in this regard continued for years, and I remain unsure why this matter was not more expeditiously dealt with.
144. The consequence of this is that the refusal of consent by the Plaintiff to allow the removal of sand, and its course of dealing with the Defendant in relation thereto, was unreasonable, and the Defendant is entitled to such damages as are appropriate in the circumstances and resultant thereon.
145. The next issue is the performance bond. There is no doubt that the Defendant was required under the lease (clause 12) to obtain a Bond from an Insurance Office of repute in the sum of IR£250,000 for the restoration of the property, if the lessor so required. It should be noted that this is not a compulsory clause. It forms part of the lessee’s obligation to restore the site to its former condition in the event of premature termination or abandonment. The dealings between the parties in this regard should therefore be viewed in this light.
146. I would firstly note that looking specifically at clause 12 it strikes me that the Bond envisaged in the lease and that later requested, and referred to as a Performance Bond, are not one and the same thing. Reading clause 12 it is clear that the Bond envisaged is to “restore the foreshore to its former condition”, in the event of “unsatisfactory completion or abandonment”; what might be termed a “remedial” or “restorative” Bond. This is a Bond of an entirely different nature to that later insisted upon by the Plaintiff, which was a Performance Bond for the completion of the works. These are therefore two wholly different requirements; one is to remove unfinished or poorly built structures and restore the foreshore to its prior condition, whereas the other is to complete the structure in the event of a failure by the Defendant to properly so construct. Clearly the type of insurance, and indeed the scale of such, will vary incredibly. Indeed as was noted in the aforementioned note of the 6th March 2003, “it was unlikely that the Bond would cover more than a fraction of the remaining costs”. Such would seem logical. It has been noted that the Defendant has already spent well in excess of €3 million on the project, with at least another €3 million required for completion. A Bond of IR£250,000 (€317,434.52) would therefore not even scratch completion, but it might be sufficient for removal. It would therefore be my opinion, upon a literal reading of clause 12, that the Defendant is not in breach of covenant in this regard; the Plaintiff only being entitled to a Bond for the restoration of the site, not for its completion.
147. However, the requirement was modified by the correspondence of the 19th May 2000 in which the Defendant agreed to provide a “performance bond of suitable duration and which specifies the cover of all works set out in the Schedule of Works to be agreed.” Relative to this type of bond one must consider the requirements which the Department put in place for the terms of such a Bond, some of which were later abandoned; these were:
ii) Payment on demand; and,
iii) No recourse to arbitration in the event of a call for payment.
150. That is not to say that the Department is not entitled to a Bond. It is entitled to the type of Bond agreed upon, and the Defendant must provide such, if still required by the Plaintiff. I would therefore direct that the Defendant provide a Bond in the sum of IR£250,000 (€317,434.52), if so required by the Plaintiff, of suitable duration and which specifies the cover of all other works set out in the Schedule of Works to be agreed. The general terms of such a Bond are to reflect existing commercial construction norms.
151. The next issue between the parties, is that relating to the provision of a Schedule of Works. In the lease there are a number of requirements relative to this matter: Covenant 3 requires the marina to be constructed in accordance with the terms and conditions of the Second Schedule; paragraph 3 of the Second Schedule states that such must conform with the plans and drawings to be submitted and approved; paragraph 4(iv) of the Second Schedule states that no work on the breakwater shall commence until the lessor approves the plans and drawings; and, paragraph 5 of the Second Schedule provides that the technical specifications of the proposed works must be approved by the Plaintiff. In the events which occurred, the Defendant gave an undertaking on the 6th May 1998 not to recommence works pending the submission and acceptance of agreed plans. According to Michael Galbraith, the architect for the project appointed by the John McDaid of Figary, following a meeting on site with Department engineers, John McHale and Paul O’Sullivan, it was agreed that full detailed drawings were to be provided by the 6th November 1998. Such drawings were submitted to the Department on that date.
152. In any event and notwithstanding what Michael Galbraith says it is clear that no plans were provided, in any form, to the Department for a protracted period, and the Defendant would appear to have recommenced works, despite its undertaking to halt such. In March 2000, Arup were appointed as marine engineers to the project, and by mid-2000 detailed drawings were sent to the Department for approval. However, the Department refused final approval until the outstanding matters of the Bond and quantities of material were complied with. The latter condition was not ultimately satisfied with until August 2005.
153. Throughout correspondence the Schedule of Works was often linked to the request for a Performance Bond. It was noted that no such Bond could be obtained until a detailed Schedule of Works was provided; this is understandable given the nature of such a Bond. Although I have found that the insistence upon a Performance Bond was unreasonable in the circumstances, the insistence upon a properly detailed Schedule of Works is not so. The lease expressly, or implicitly, is clear in this regard: prior to the commencement of works the approval of the Plaintiff is required for such works. This was not done, and such continued to go unfurnished for many years despite persistent calls on behalf of the Department. Nonetheless the Defendant continued to construct the marina following the receipt of consent from the Department, on foot of an undertaking given by the Defendant, on or around the 19th May 2000. I would therefore find that approval for such a Schedule was not unreasonably withheld, and indeed the Defendant was in fact in breach of covenant, in this regard.
154. The next issue is that of planning permission. It is clear that where development takes place below the high watermark, no planning permission is required; the relevant authority being the Department of the Marine from whom a foreshore lease is obtained. Both parties would seem to accept this, and such would appear to be common knowledge. It is therefore surprising to find repeated requests by the Department for the furnishing of planning permission in relation to the development. When challenged by the Defendant in correspondence, the Department does two things. Firstly it states that what it is requesting is the planning permission for any development above the high watermark, and secondly nonetheless it seeks a letter of confirmation from Donegal County Council that in fact no planning permission is required for the development below the high watermark. Nonetheless, it would seem from correspondence that the Defendant confirmed that it would obtain planning permission in respect of any parts of the development which so required. In any event, I do not feel that this was a major causative factor in the case herein, and I do not believe that any great reliance could be placed on this provision by either party. It was undoubtedly a condition of the lease that the lessee obtain and comply with planning permission in relation to the site where necessary. I have considered the Planning Report of Tom Phillips and Associates, prepared on behalf of the Defendant. In his opinion the marina is in full compliance with all relevant planning laws.
155. Similarly, with regards to the construction of the breakwaters, it would appear that initially there were concerns at the manner in which they were being constructed, and the fact that they would appear to have constituted a marine hazard. However, it would seem that IGS was satisfied, as far back as July 1998, that the breakwaters were constructed in a proper and safe manner. Nonetheless, as with the Schedule of Works, it would not appear that the Defendant supplied sufficiently detailed drawings, plans and technical specifications in relation to the breakwaters for some time. In that regard they were in breach of covenant, although, as stated, there was in fact no issue with the quality or safety of the breakwaters.
156. To summarise, therefore, in relation to the alleged unreasonableness of certain refusals/decisions by the Plaintiff, I have concluded that the refusal of the Plaintiff to consent to the removal of the dredge material, by the imposition of conditions and the insistence upon certain unnecessary licences, was unreasonable. So too was the insistence upon a Performance Bond; on the terms and conditions so laid down. However, the failure of the Defendant to provide sufficiently detailed plans, drawings, Schedule of Works and Quantities, for a significant period of time was in breach of covenant, and the Department’s complaints in this regard were not unreasonable. Neither the requirements as to planning permission, nor the quality of the breakwaters could be said to be major contributory factors in the delays caused herein, or to the overall dispute between the parties; this notwithstanding my comments in relation to compliance with those covenants relating thereto.
158. In the event of such a finding the Plaintiff says that “it is open to the Court to deal with the matter in the overall context of a determination of the issues between the parties”. I propose to adopt that approach. Therefore, in tandem with the lease, the Defendant should obtain similar title to the encroached lands. The consideration therefor should be agreed, or, in default of agreement, determined by this Court.
Loss of Chance – The Interreg IIIA Grant:
160. In reply, the Plaintiff contends that the Defendant has failed to properly identify the statutory duty which it is alleged to have breached; the only duty the Defendant can point to is Article 34 of Council Regulation EC No. 1260/1999, which lays down general provisions on Structural Funds and which makes provision, inter alia, for the responsibilities of managing authorities involved in implementing the objectives of the Regulation. This Regulation cannot give rise to an enforceable statutory duty which supports a claim in damages. Even if the Defendant could show that the Plaintiff has acted in any way ultra vires, this of itself will not provide a basis for damages. No case of abuse of Public Office or any mala fides on the part of the Plaintiff in the discharge of its functions has been made or pleaded. Statutory entities will not be held liable for the honest and bona fides discharge of their legal duties; this principle is essential to a fair and effective system of governance (Pine Valley; Kennedy v. Law Society (No.4)  3 IR 228 (“Kennedy”); Hayes v. Minister for Finance  IESC 8 (“Hayes”)).
The Amount of the Grant Application:-
161. Before continuing to consider further the issue of the Interreg grant, there is one issue of fact which should first be dealt with. The Plaintiff, in its submissions, now alleges that the €2.46 million is inclusive of a top up from the State of €630,000, rather than in addition to it. This is a novel assertion, not put before any witness. Having reviewed the extensive correspondence in relation to same, and the transcripts of the hearing, the uncontroverted evidence, of Mr. McKinney and Ms. Doherty, is that the amount was in addition to the €2.46 million. Ms. Doherty expressly stated this in her evidence (Day 7, 27th March 2009, p. 84 of the transcript):
A. I think that our application was for €2.4 million and the top up was on top of that.”
Liability of the Department – Breach of Statutory Duty:-
162. Finlay C.J. in Pine Valley at p. 36 adopted with approval the “clear summary” of Wade (Administrative Law (5th Ed) (1982)):
1. If it involves the commission of a recognised tort, such as trespass, false imprisonment or negligence.
2. If it is actuated by malice, eg personal spite or a desire to injure for improper reasons.
3. If the authority knows that it does not possess the power which it purports to exercise.” (Emphasis added)
163. Henchy J., in Pine Valley sated:
165. Kelly J. in the High Court in Glencar, echoing the words of Finlay C.J. in Pine Valley, noted that:
166. In order for a statutory duty to be actionable it is clear that the provision(s) relied upon must have been created for the protection or benefit of a specific person, or class of persons, rather than the public at large. Kelly J. in Glencar (pp. 99-100) stated, citing the decision of Finlay C.J. in Pine Valley:
‘The Minister in making his purported decision to grant an outline planning permission was exercising a decision-making power vested in him for the discharge of a public purpose or duty. The statutory duty thus arising must, however, in law, be clearly distinguished from duties imposed by statute on persons or bodies for the specific protection of the rights of individuals which are deemed to be absolute and breach of which may lead to an action for damages.’
In other words, if the duty is owed to the public at large then no action for breach of duty lies.” (Emphasis added)
169. I would immediately note that in the present case, although it would seem to be accepted that the Department acted wholly ultra vires, judicial review of that decision would, at this time, afford no comfort to the Defendant herein. This Court cannot remedy through injunction or declaration the damage which the refusal to send forward the application to the Steering Committee is alleged to have caused.
170. Furthermore in the present case, leaving aside the question of whether the provisions and duties in question could be considered as “statutory” for this purpose, it is clear that they are not of a public nature. They do not impose duties or powers in relation to the public at large, but instead are directed at a very focussed group; namely those making applications under the Interreg IIIA Scheme. This is, by all accounts, a very narrow and defined group. This can be contrasted very sharply with the duties considered in both Pine Valley (planning decisions) and Glencar (development plans). There were no wider considerations in the public interest to be taken account, nor was any duty owed by the Department to the public in the discharge of its duties under the Scheme; their duty was owed only to those applying for a grant thereunder.
171. Keane C.J. in Glencar suggests, albeit obiter, that the decision of the Court of Justice in Francovich v. Italy (Case C-6/90 & C-9/90)  ECR I-5357:
172. As stated, the above considerations, up to this point, have not considered whether or not the Interreg Scheme could be said to impose “statutory duties”. The Department has urged that the system is not based on any statute, and is in fact an ad hoc arrangement, which is not of a sufficient nature to give rise to “direct effect”, so as to be enforced against it. In those circumstances a breach of the Scheme, should such be found, cannot be said to be a breach of a statutory duty.
173. In Emerald Meats the Court considered, inter alia, whether the decision of the Minister not to forward an application of the plaintiff for an import licence to the Community, for a decision under Council Regulation 3889/89/EEC and Commission Regulation 4024/89/EEC, which was found to be incorrect in law, could give rise to damages for breach of statutory duty. I need not detail the Court’s findings in relation to the interpretation of the Regulations, except to note that the Court found that the Minister had been wrong, as a matter of law, not to forward the application; the Minister had, in the circumstances, a duty to forward such application.
174. Having so found, Blayney J. stated:
32. Furthermore, it has been consistently held that the national courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals (see in particular the judgments in Case 106/77 Amministrazione delle Finanze dello Stato v. Simmenthal  ECR 629, para. 16, and Case C-213/89 Factortame  ECR I-2433, paragraph 19).
33. The full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible.
34. The possibility of obtaining redress from the Member State is particularly indispensable where, as in this case, the full effectiveness of Community rules is subject to prior action on the part of the State and where, consequently, in the absence of such action individuals cannot enforce before the national courts the rights granted to them by Community law.
35. It follows that the principle whereby a State must be liable for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty.
36. A further basis for the obligation of Member States to make good such loss and damage is to be found in Article 5 of the Treaty, under which the Member States are required to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law. Among these is the obligation to nullify the unlawful consequences of a breach of Community law (see, in relation to the analogous provision of Article 86 ECSC, the judgment in Case 6/60 Humblet v. Belgium  ECR 559).
37. It follows from all the foregoing that it is a principle of Community law that the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible.”
176. One other issue which arose in Emerald Meats was whether the plaintiff was entitled to both general and special damages. The trial judge had held that the plaintiff was only entitled to recover special damages, however, Blayney J. in the Supreme Court, rejected this proposition:
‘As a general proposition, it is true to say that neither the State nor any other public authority enjoys any special position in the law of torts. The general law — trespass, negligence, nuisance, breach of statutory duty etc. — applies in substantially the same way as to a private person.’
I am satisfied in the circumstances that Emerald is entitled to general damages, in addition to the special damages already awarded to it …”
177. Having regard to the foregoing, in summary I am satisfied that:
ii) If the duty imposed is one which is imposed for the benefit of the public, the breach is not actionable unless:-
a) it involves the commission of a recognised tort,
b) it is actuated by malice,
c) the authority knew it did not possess the power it purported to exercise;
iii) Breach of a duty under European law will give rise to an action for damages as if it were a breach of statutory duty;
iv) Damages for breach of duty under European law will give rise to both general and special damages.
179. I am therefore satisfied that the duty in question was one which was owed directly to the Defendant, and that it was entirely foreseeable that in failing to forward its application to the Steering Committee, loss of chance would be suffered by the Defendant. I would therefore find that the Defendant is entitled to damages as a breach of statutory duty. I shall consider the extent to which the fact that the breach resulted in a loss of chance, rather than a direct loss, affects the recovery of such damages at para. 190 infra.
Liability of the Department – Negligence:-
180. Despite my findings in relation to the above, I shall nonetheless consider, although admittedly obiter, whether the Plaintiff was negligent in the handling of the Defendant’s application.
181. As stated in relation to breach of statutory duty, the mere finding that a respondent has acted ultra vires will not ground a claim in damages. As Finlay C.J. in (p. 38) stated:
(b) It is material in all cases for the court in reaching its decision on the existence and scope of the alleged duty to consider whether it is just and reasonable that a common law duty of care as alleged should in all the circumstances exist.”
184. Considering the above decision, and having extensively reviewed the law in relation to negligence (in particular the English cases of: Donoghue v. Stevenson  AC 562; Anns v. Merton London Borough  AC 728; Junior Books Ltd. v. Veitchi Co. Ltd  1 AC 520; Caparo plc. v. Dickman  2 AC 605; Stovin v. Wise  AC 923), both simpliciter and in relation to acts of public bodies, Keane C.J. in Glencar came to the conclusion that:
185. With regards to recovery of purely economic loss, he noted that it was settled, that such was recoverable in cases of negligent misstatement, as in Hedley Byrne v. Heller and Panners Ltd  AC 465, and was recovered for the cost of remedial works in both Ward and Siney for which the respondents were held to have been responsible for. As to economic damages generally, he observed:
186. Nonetheless, one other issue which arises in the present case in relation to negligence is the fact that the Department relied upon legal advice received from the Chief State Solicitor’s Office. It has frequently been the case that the question of legal advice has been considered in the context of negligence where it has not been taken. The Courts have consistently held that the failure to seek or obtain legal advice will not necessarily be negligent. Thus Fennelly in Glencar stated:
187. However, in the present case, we are presented with a novel question: can a public body be negligent in the discharge of its functions despite obtaining legal advice? A number of considerations must also be considered in this case. It is clear that the Department knew that the SEUPB had issues with regards to it not forwarding the application, and informed it of the same in correspodence in 2004 when the Department was so considering. Furthermore, when requested by the Commission to provide the legal basis upon which it had so refused, it initially did not identify the basis upon which this was done. The legal advice obtained by the Department was never presented to the Commission, nor was it tendered before this Court; although the substance is aparent from the letter of the SEUPB to the Commission in 2008. This advice, in any event, turned out to be entirely incorrect. The Commission was expressly critical of the way in which the Department handled its investigation, and at one point even threatened to bring proceedings under the Treaty for failure to comply with its requests. All of these facts point to a reprehensible attitude of the Department in its dealings with the Interreg application.
188. Nonetheless, I do not feel that it would have been open to me, as a matter of law, to find that the Department was negligent in this case. It would be a dangerous precedent if a government department could be held negligent even though it sought and obtained legal advice, even though, I would note, that advice was wholly incorrect and was not properly presented to either the Court or, in this case, the European Commission. The Plaintiff could not there be guilty of negligence, although in light of my finding that it was in breach of statutory duty such a finding would, in any event, have been superfluous.
Loss of Chance:-
189. Having regard to my findings supra, only two issues remain in relation to the Interreg grant:
ii) If so how does this affect the quantum of damages?
ii) This extends to showing that there were not actions which, on the balance of probabilities, would have prevented that chance from being real and substantial;
iii) Once this is done, the Court will assess the quantum of damages based on the likelihood of that chance.
193. With regards to the quantum, I think that a reasonable assessment, having regard to all of the above, in particular my consideration of the working practice of the Defendant in the construction of the marina to date, and baring in mind the difficulty of drawing any exact conclusions upon hypothetical cases, that a figure of 50% with regards to loss of chance is a reasonable one. I would therefore grant special damages in relation to the Defendant’s counterclaim for loss of chance arising out of the Plaintiff’s breach of statutory duty in the amount of €1,045,000. I will reserve any decision as to general damages pending further submissions from the parties in light of the judgment herein.
a) it was abandoned by agreement, either express or inferred; or,
b) even in the absence of any agreement, the length of time between its issuance and the reliance placed thereupon was such that it would be inequitable to allow the Plaintiff to rely on it, and I would therefore grant relief against forfeiture in relation thereto;
c) even however if I was wrong in this regard I would exercise my discretion to allow relief against forfeiture;
d) in consequences of these findings the terms and conditions of the lease remain binding on the parties hereto.
ii) Although the rent began to be due from 1993, as there were no representations by the Minister upon which the Defendant can rely upon to remit any or part of the rent, it is only recoverable since 1999 because of the operation of the Statute of Limitation 1957 – the amount outstanding in this regard is therefore €115,328.14 (IR£90,828.29);
iii) In light of my other findings, I would exercise my discretion to allow relief against forfeiture despite more than 1 years’ rent being due, subject to the payment of the outstanding rent identified at (ii);
iv) The Plaintiff unreasonably withheld its consent by refusing to consent to the removal of the dredge material;
v) The Plaintiff was unreasonable with regards to its demands for a performance bond on terms that were impossible to reasonably obtain, although the Plaintiff is entitled to a bond in accordance with the agreement of the 19th May 2000, if the Plaintiff so requires, in the sum of €317,434.52 (IR£250,000), of suitable duration and which specifies the cover of all works set out in the Schedule of Works to be agreed, the general terms of which are to reflect existing commercial construction norms;
vi) Neither the issue of planning permission nor the quality of the breakwaters were major factors in the delay considered herein or in the overall dispute between the parties, and therefore those issues have weighed little in the Court’s determination;
vii) The Plaintiff’s actions were not unreasonable with regards to:
a) Provision of a Schedule of Works,
b) Provision of detailed drawings, plans and technical specifications with regard to the breakwaters;
viii) The Defendant trespassed outside the leased area;
ix) The Plaintiff was guilty of a breach of statutory duty giving rise to a loss of chance with regards funds from the Interreg IIIA Scheme grant, to a level, in my opinion, of approximately 50%.
196. I also reserve to a later date the issue of general damages in relation to the Plaintiff’s unreasonable withholding of consent and breach of statutory duty, and with regards to damages, if any, for the Defendant’s trespass, or breaches of covenant.