High Court: Dunnes Stores ordered to pay over €15m in settlement dispute

About this case:

• Judgment:
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Criticising Dunnes for overstating the requirements of the disputed agreement, Ms Justice Costello was satisfied that the company in receivership was entitled to all reliefs sought.

Background

In February 2008, Dunnes Stores agreed to acquire from Henry Crosbie “the anchor site” in a development known as Point Village in Dublin

Dunnes entered into an agreement with Point Village Development Ltd (In Receivership) for the construction and development of a retail store on the site.

Unfortunately, agreements between the parties were overtaken by the economic crisis of 2008-2009 and disputes arose in relation to the development.

In June 2009, Dunnes commenced proceedings against Point Village and Mr Crosbie in the High Court in which the parties claimed and counterclaimed against each other in respect of obligations arising from the agreements.

A Settlement Agreement was reached between the parties in July 2010.

Despite the fact that the Settlement Agreement was intended to dispose of the 2009 proceedings, further disputes arose between the parties.

Receivers were appointed to Point Village in 2013, and following the release of relevant files in 2014 the receivers engaged with Dunnes with a view to completing matters which remained outstanding under the Development Agreement and the Settlement Agreement.

Construction of Clauses 6 and 11

It was Point Village’s case that, acting through its receivers, it has satisfied the requirements of Clauses 6, 11(b), and 11(c) of the Settlement Agreement; and that in accordance with the terms Dunnes, was obliged to release the sum of €500,000 (Clause 11(b)) and €15 million (Clause 11(c)) plus accrued interest.

Dunnes stated that it was “inappropriate” to release the sums payable pursuant to Clause 11(b) circumstances while the parties were otherwise in dispute. It denies that there has been compliance by Point Village with the provisions of Clause 6 or Clause 11(c); and therefore it is not obliged to release the sum of €15 million plus accrued interest from the monies deposited in the nominated account.

The evidence established that the agreements for lease were entered into in August 2015 and were exchanged with the tenants in September 2015. The confirmation in February 2016 identified nine ground floor units marked X on the ground floor of the Centre annexed to the terms of settlement of which at least four were internal units.

Clause 6

Clause 6 of the Settlement Agreement reads “The developer/landlord… will discuss with Dunnes… the tenant mix for the ground floor of the Centre prior to entering into binding agreements for lease with tenants.”

Dunnes argued that in order to have a meaningful discussion “…it must be informed as to the identity… and be furnished with the relevant information concerning each of the proposed tenants”. Justice Costello stated that Dunnes’ construction of Clause 6 “seriously overstate” its meaning and requirements.

Solicitors for Point Village wrote to Dunnes on no less than four occasions between April 2014 and July 2014 “to discuss progressing the proposed tenancies of the Centre”, and again throughout August 2015. Dunnes failed to reply to this correspondence, and did not seek further information.

There was a discussion of the tenant mix in July 2014, and Justice Costello did not accept that this did not comply with the requirements of Clause 6. The discussion was at a high level, four categories of tenant were discussed, and the fact that Dunnes failed to engage in discussions expressly called for in the aforementioned correspondence did not render the discussion inadequate – particularly in circumstances where Dunnes frustrated Point Village’s requests for correspondence.

Point Village complied with its obligations under Clause 6 and accordingly the receivers were free to enter into binding agreements for lease with the proposed tenants in August 2015.

Clause 11(c)

Clause 11(c) of the Settlement Agreement provided that:

“…€15,000,000 (plus accrued interest to date) shall be released within five working days of receipt by Dunnes solicitors of confirmation from that binding agreements for lease or leases have been exchanged with tenants in respect of at least seven of the ground floor units marked X on the annexed ground floor plan, four at least of which shall be internal units. The agreements for lease or leases may contain a clause that is a precondition to the tenant being obliged to enter into the lease that Dunnes should have commenced the fit out of the Store.”

In February 2016, in compliance with the requirements of Clause 11(c) of the Settlement Agreement, solicitors for Point Village sent a letter confirming that binding agreements for leases had been exchanged with tenants in respect of nine of the ground floor units.

Point Village had complied with the requirements of Clause 6 prior to entering into binding agreements for leases with tenants and therefore there was no impediment to Point Village entering into such agreements.

As such, Justice Costello was satisfied that Dunnes was required to release the sum of €15 million plus accrued interest.

Conclusion

In October 2017, Dunnes consented to the release of €500,000 (plus accrued interest) pursuant to Clause 11(b) – as such, Justice Costello was satisfied that there was no longer a dispute regarding Clause 11(b).

Justice Costello therefore ordered that Point Village was entitled to the reliefs sought.