The Gazette 1975

erroneously included a particular area in the property

demised, does such denial of the landlord's title in

effect work a forfeiture of the lease? From the evidence

submitted, the Court held that, even if the defend?nt's

conduct amounted to a disclaimer of the lessor's title,

it would not have worked a forfeiture of the lease, as

there is no provision in the lease to support this con-

tention. Obviously in such a case a tenant is estopped

from disclaiming his landlord's title. If the relationship

of landlord and tenant is repudiated, then the tenrnt

cannot insist on the necessity for a notice to quit. In

any event the disclaimer, if any, must be of the land-

lord's whole title

as landlord.

Here there was in fact

an affirmation of th?t relationship, coupled with a

proviso as to an error in the area demised. It is clear

from the authorities that, if the defendant's conduct

had in fact produced a forfeiture, it would have been

a forfeiture of the lease in toto. Many of these author-

ities were not cited in the High Court. The defendant's

appeal is accordingly allowed by the Supreme Court.

(O'Reilly v Gleeson

— Supreme Court (O'Higgins

C. J., Henchy and Griffin JJ.) per Henchy J. — un-

reported — 20 January, 1975.)

Tenant, who, having signed new business lease,

cannot be put into occupation by the landlord, is

entitled to full damages for loss of profits. Dam-

ages are not restricted to costs of investigating

title. The question whether tax is to be deducted

is reserved.

Negotiations relating to a new lease of the Gaiety

Theatre premises took place between representatives of

the plaintiffs and the defendants in March 1972.

At the time the defendants had the theatre leased to

Eamonn Andrews Productions for 3 years to expire on

23rd September 1972.

On I June, Andrews Productions applied to the Cir-

cuit Court for a new tenancy of the theatre, under the

Landlord and Tenant Act 1931; this was duly granted

on 12 July 1972, and affirmed on appeal by the High

Court on 26 April 1973.

The result of this application by Andrews Produc-

tions was that the tenancy granted to the plaintiff had

never been able to come into effect. As a lease was

actually granted, the plaintiff's cause of action arises

from a breach of the covenants in the lease, which, if

observed, would have provided for the plaintiff's quiet

njoyment of the premises.

Wh en the lease was granted to plaintiffs in March

1972, the defendants were the freehold owners, and no

gal question could arise as to their granting this lease

pon the expiration of the Andrews lease. It w?s not

due to a defect in title that the defendants could not

honour this lerse, but to the orders of the Circuit Court

and of the High Court granting a new tenancy of the

theatre to Andrews Productions.

Mayne and McGregor on Damages, 12th Edn., p.422

states "Breaches of contract by a lessor, fall into two

categories corresponding to the division of the trans-

action into two categories relating to the agreement of

lease and the execution of the lease. Thus, breach hv

failure to execute the lease and breach by delay in doing

so, fall within the first category, while into the second

fall breaches of the covenants in the lease as executed.

The distinction has great practical as well as analytical

importance, since solely to the first category".

It follows that the Rule in

Bain v Fothergill,

(1874)

by which damages are alleged to be restricted to the

cost of investigating title and preparing the lease, does

not apply to this case.

The normal measure of damages where a tenant fails

to get possession, is the value of the unexpired term.

This does not mean however that, in a proper case,

consequential losses cannot be recovered. In appro-

priate circumstances, a tenant might recover loss of

profits in a business which the landlord knew he was

to carry on upon the premises. This sum has already

been determined to amount to £29,500, and the profits

lost by the breach are clearly recoverable as part of

the damage.

The question whether in awarding this sum, account

should be taken of income tax or of Corporation Tax

was raised. It was contended that the plaintiff earned

the estimated profits included in the damages. Reliance

was placed on

British Transport Commission v Gourley

— 1956 Ac. which decided this in England, and which

Kenny J. approved of in

Glover v BLN

(No. 2 )—( 1973

IR 432 but its application to this case has been ad-

journed for further discussion.

Irish Leisure Industries Ltd., v Gaiety Theatre

Enterprises Ltd.,

— H i gh Co u rt ( O ' H i g g i ns J.)

u n r e p o r t ed — 1 2 th F e b r u a ry 1975.

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