6 March 2024
|

Consequences of Leasing with Unauthorised Use, by Louise Wright published in the Conveyancing and Property Law Journal, Thomson Reuters, Round Hall – (Winter, 2023) Vol. 28, No.4

The article ‘Consequences of Leasing with Unauthorised Use’ was published in the Conveyancing and Property Law Journal, Thomson Reuters, Round Hall – (Winter, 2023) Vol. 28, No.4. The article is available on www.westlaw.ie  or alternatively in print via email TLRUKI.orders@thomsonreuters.com

conveyancing law

The article discusses the consequences of leasing with unauthorised use, particularly in the recent case of Tesco Ireland Limited v Stateline Transport Limited [2023] IEHC 587 (Stateline).

Permitted User

One of the most important terms of a leasing agreement, often considered a sine qua non, is the permitted user; if the permitted user cannot be agreed with the landlord, then the letting will not proceed. A landlord usually places restrictions on the user to protect the value of its premises. Fundamental to the tenant using the premises for its permitted user is confirmation that there is compliance with planning legislation, and restrictions and conditions on alterations with an obligation to produce all planning compliance documentation upon completion of the works. Furthermore, it is critical for a landlord to receive immediate notification of any notice or order so that it may take the required action to comply with its legal obligations and protect its investment, as it should be noted that breaches of the planning legislation are penal in nature.

Recent Case

The consequences of a tenant operating its business without the necessary planning permission/retention permission triggering an unauthorised use of the premises have been highlighted by the recent Stateline case. In this case, Tesco Ireland Limited (Applicant), the landlord, granted Stateline Transport Limited (Respondent), the tenant, a ten-year lease which was an unauthorised use of storing shipping containers. The Respondent went into occupation of the premises in January, 2020, and on the 7th December, 2020 Fingal County Council (Planning Authority) issued a warning letter, followed by an enforcement notice on the 5th August, 2021. The Applicant as owner/landlord of the lands then made an application to the High Court (Court) for a planning injunction ordering the Respondent to cease the unauthorised use on the 29th July, 2022. The Respondent then made an application for retention permission on the 29th November, 2022, which the Planning Authority refused on the 20th January, 2023. The Court was advised at the injunction hearing that the Respondent consented to the orders (Orders) i.e. a declaration to the effect confirming that the use of the lands was unauthorised and directing the unauthorised use to cease. The Applicant consented to a stay on the injunction for a period of up to twelve months to allow the Respondent the required time to relocate its business. The general purpose of granting a stay is to allow a developer the time to regularise the status of an unauthorised development. However, under Section 160 of the Planning and Development Act 2000 (2000 Act) the Court has a statutory discretion based on numerous factors, outlined in Meath County Council v Murray [2017] IESC 25, to defer, or even withhold, injunctive relief.

Decision

The application for a twelve-month stay on the Orders was refused. The Court granted the Respondent a six-week period to remove its shipping containers and vacate the premises, with any failure to comply constituting a contempt of court. The decision was reached on four main points: (i) public interest allowing the continued provision of shipping container storage could not prevail against the countervailing public interest to maintain and uphold the integrity of the planning and development system, (ii) breach of planning legislation, (iii) conduct of the Respondent in continuing the unauthorised use of the lands unabated notwithstanding the issuing of an enforcement notice, and (iv) the Planning Authority identified a number of material concerns when refusing retention permission including impact on residential amenity and the potential traffic hazard.

Takeaways

Some key takeaways from the Stateline case which comprehensively document the impact of unauthorised use include:

  • The importance of landlords and tenants complying with Section 32 of the 2000 Act, which obliges a person to obtain planning permission in respect of any (non-exempt) developments of land and retention permission for any unauthorised development, with failure to comply triggering a criminal offence;
  • Certain developments require an environmental impact assessment (EIA) before a development consent is granted pursuant to EU and national law. Article 6(3) of the Habitats Directive outlines the requirement for an appropriate assessment (AA). The 2000 Act has been amended to prohibit the grant of retention permission where an EIA, screening for an EIA, and/or an AA is required;
  • Necessary leasing provisions should be included in the lease, inter alia, the obligation of a tenant to notify a landlord of any planning notice or order received, the no warranty as to user clause which protects the landlord from being held accountable for a tenant’s unauthorised use, and an environmental compliance clause, binding both the landlord and the tenant, to comply with national and EU level environmental legislation;
  • Non-reliance upon the permitted user clause where the required planning permission/retention permission has not issued; and

  • The far-reaching consequences of entering into a lease for which there is no compliance with planning legislation i.e. an order to vacate the lands, costs, interruption of business operations, loss of earnings, and loss of time.

Conclusion

It is evident from the facts in the Stateline case that compliance with planning legislation and the permitted user clause in a lease are inextricably interwoven. It emphasises the need to ensure that the premises is planning compliant and that the permitted user clause aligns itself with the use granted. In the absence of planning compliance there are consequences for both a landlord and a tenant. Additionally, if a landlord or tenant intends to apply for retention permission, they should be cognisant of the fact that retention permission is prohibited where an EIA, screening for an EIA, and/or an AA is required. The importance of planning compliance is something which should never be overlooked.

 

This Moran & Ryan LLP material is not intended to provide, and does not constitute or comprise, legal advice on any particular matter and is provided for general information purposes only. You should not act or refrain from acting on the basis of any information contained in this material, without seeking appropriate legal or other professional advice.

Louise WrightLouise Wright
Partner
T: + 353 1 5450374
E: lwright@moranryan.com