RGRE Grafton Limited v Bewley's Café Grafton Street Limited and Bewley's Limited.
Introduction
The Court of Appeal (the "COA") has delivered two significant judgments concerning the ownership of six ornamental and decorative stained-glass windows (the "Works") created by Harry Clarke, a renowned early twentieth century artist. In doing so, the Court clarified the law on whether an object is a fixture and, if so, whether it is a landlord's fixture or a tenant's fixture in the context of s. 17 of Deasy's Act. Section 17 of the Deasy's Act allows tenants to retain fixtures of that nature even where they are very firmly annexed to the property of the landlord, subject to certain exceptions.
The central issue for determination before the COA was the beneficial ownership of the Works which were broken down into two separate categories, 'the Four Orders' and 'the Swan Yard works'. The former refers to four of the orders used in classical architecture depicted in Harry Clarke's design – Corinthian, Doric, Ionic, Tuscan. The Swan Yard works were named so due to their original position overlooking an alley called Swan Yard and are of a different design. The COA, as can be seen in Ms. Justice Costello's judgment to which Ms. Justice Pilkington agreed, confirmed that RGRE Grafton Limited (the "Landlord") was the party entitled to the 'Four Orders' windows. In addition, Ms. Justice Costello and Ms. Justice Pilkington overturned the High Court's decision on the 'Swan Yard' windows, ruling them also as part of the building's fabric and consequently, also the property of the Landlord. 1However, Ms. Justice Máire Whelan delivered a dissenting judgment disagreeing with the majority judgment.2 We discuss the details of the judgments in further detail below.
Background
The Landlord, the appellant in the COA, acquired the freeholder reversionary interest in the premises known as Bewley's Café on Grafton Street Dublin (the "Landlord's Property") on the 1st April 2015. Bewley's Café Grafton Street Limited ("BCGS"), the tenant and first named respondent, has been in continuous occupation and possession of the building for almost a century under a lease. BCGS subsequently sought to transfer its claimed interest in the Works to the second respondent, Bewley's Ltd (a subsidiary of BCGS), by an asset transfer and licence agreement in December 2020. The Landlord had argued that the Works comprised windows which formed part of the Landlord's Property that was original leased to the tenant. While the tenants had argued that the works were 'artworks', and that they constituted "removable fixtures of an ornamental or decorative nature intended to enhance the café in furtherance of the tenant's café trade".3
High Court
In a 2023 High Court judgment it was held that only four of the windows were the property of the Landlord, while the other two windows were the property of the tenant, BCGS and its subsidiary, Bewley's Ltd.4 Mr Justice Denis McDonald, in reaching his conclusion, placed particular emphasis on the differing physical evidence available.
On the Four Orders, McDonald J concluded that they operated as windows, admitting light and ventilation to the building and also weathering the building from the elements. On that basis he held that these four works "formed part of the external skin of the café building", and therefore formed "part and parcel" of the Landlord's Property. 5 In relation to the Swan Yard works, they had been moved to an internal wall in the building leading the judge to rule that they were not part of the external skin of the café and did not contribute to weathering it. McDonald ruled that these two stained glass panels were owned by the tenants.
Court Of Appeal – Majority Judgment of Ms. Justice Costello
Costello J started by considering the evidence surrounding the construction of the building, as well as subsequent changes to the building, and seeing what inferences could be drawn from the evidence available. Harry Clarke visited the site on numerous occasions while it was under construction. His keen desire to understand the café suggests that the Works were intended to be windows tailor-made for this building and not merely decorative panels which could be removed. More importantly, Clarke described the Works as "stained glass windows" in his correspondence rather than panels.6 While this is not decisive, Costello J treated it as indicative.
The Court quoted from Harry Clarke's letters regarding his designs and records how the Works were put in storage during World War II, with the Irish Times reporting in 1941 they were to be "restored to their proper places when all risk of damage through aerial activity is past".7Further, the lease dated 1928 of the building to BCSS made no reference to tenant's fixtures and didn't refer to the Works. If the Swan Yard works were tenant's fixtures and meant to serve the purposes of the tenant but not the Landlord, it would have been spelled out in the lease, which it was not.
Crucial to the Court's determination was the issue of whether the Works were part and parcel of the building, as contended by the Landlord, or fixtures, as contended by the respondents. Each party claimed that the trial judge erred in concluding that the windows were not all the property of one or the other party. Costello J considered the question, 'what is a window?' before concluding that it while a window may perform a variety of functions including illuminating, ventilating, and weathering a building, it is possible to have windows without these features.
a) The Four Order windows
Costello J observed that if the trial judge was correct in concluding that the Four Orders windows were part and parcel of the Landlord's Property, it was difficult to see why the trial judge went on to conclude that the Swan Yard windows did not serve any interest of the Landlord as they 'complimented and completed the vision for the café just as the Four Orders windows did'.8 In light of the physical evidence before Costello J, she set out that the trial judge was correct in his conclusion that the Four Order windows formed part of the external skin of the building. The fact that the Four Order windows were designed to open inwards in order to ventilate and protect the interior from the ingress of rain suggested that the windows were designed to function as the exterior windows of the building. This was sufficient for Costello J to reject the defendant's cross-appeal in relation to the Four Order
(b) The Swan Yard windows
Costello J noted that while the physical evidence in relation to the Swan Yard windows was different, like the Four Order windows, the Swan Yard windows opened inwards to provide ventilation for the building. In the opinion of Costello J, where the trial judge erred was in the question he asked himself – 'whether there was no possible reason why they might not be treated differently'. The trial judge answered this question by reference to speculation, rendering it erroneous.
The COA held that the trial judge failed to place sufficient weight on the fact the Swan Yard windows were designed to open inwards and help to ventilate the space. Costello J went on to state there was "no distinction between the Four Orders windows and the Swan Yard windows" and "just as the Four Orders windows were windows as a matter of law, so too are the Swan Yard windows" as they were also part and parcel of the Landlord's Property.9 For these reasons, Costello J allowed the appeal of the Landlord in relation to the trial judge's ruling as to the ownership of the Swan Yard works.
(c) Conclusion
The Court concluded that all the Works were originally 'windows' and as such formed part and parcel of the Landlord's Property notwithstanding that they could be easily moved/removed. While one, and perhaps even two of the stained glass panels later ceased to be a 'window' due to changes in location and function, they were still fixtures which remained the property of the Landlord and had passed to the Landlord upon acquiring the freeholder reversionary interest in the premises in 2015. Costello J held that all the Works were the Landlord's Property, reversing in part the High Court decision which found that the two Swan Yard windows were tenant's fixtures.
COA – Dissenting Judgment (Minority opinion & Non-determinative of the conclusion of the Court)
In Whelan J's dissenting judgment, she expressed her inability to agree with the judgment of Costello J before dismissing the Landlord's appeal and allowing the respondent's cross appeal. As a dissenting judgment, this is not determinative of the case, nor does it create any binding precedent. Whelan J held that the trial judge correctly inferred that there were six opes fitted with plain glass panels in 1927 and therefore, the building that was original leased to the tenants didn't comprise the panels. She contended that where the trial judge fell into error was in disregarding the ease of removing the panels and the common law, relaxed approach, to the removal of fixtures by a tenant provided that the Landlord's Property can be left in as good a state as at the commencement of the tenancy/lease.10
As the Works didn't exist when the café commenced to trade in 1927, Whelan J believed that they never comprised part of the original fabric of the Landlord's Property and the Landlord must demonstrate on the balance of probabilities that they were part of the original building or that they were original landlord's fixtures. Whelan J goes on to state that even if the Four Order panels ever became part and parcel of the building, it is well established at common law, that the tenant still has the continuing right to remove them by severance at any time prior to the end of the term.11
Whelan J affirmed the order of the High Court declaring the Swan Yard works were tenant's fixtures and further, Whelan J allowed the cross-appeal of the respondent and set aside the High Court order declaring the Four Order works to be part and parcel of the Landlord's Property. Whelan J held that the Four Orders works were tenant's fixtures of which Bewley's Ltd was now the beneficial owner.12 Therefore, Whelan J ruled that Bewley's Ltd was the owner of the Works.
Conclusion
The overall result from the COA was to allow the appeal from the Landlord while dismissing the respondents cross appeal. The Court concluded that the trial judge was correct in his decision regarding the Four Orders windows but erred in the judgment concerning the Swan Yard windows. It held that the Swan Yard windows were also part and parcel of the Landlord's Property and not tenant's fixtures, as they were designed and functioned as the exterior windows of the building. Therefore, the COA has confirmed the ownership by RGRE Grafton Limited of all six windows.
This article was written with the assistance of trainee, Elliot Allen.
Footnotes
1. RGRE Grafton Limited v Bewley's Cafe Grafton Street Limited & Bewley's Limited [2024] IECA 199 (Justice Costello).
2. RGRE Grafton Limited v Bewley's Cafe Grafton Street Limited & Bewley's Limited [2024] IECA 199 (Justice Whelan).
3. RGRE Grafton Ltd v Bewley's Café Grafton Street Ltd [2023] IEHC 25, [2].
4. [2023] IEHC 25.
5. [2023] IEHC 25 [150].
6. [2024] IECA 199 (Justice Costello) [98].
7. [2024] IECA 199 (Justice Costello) [44].
8. [2024] IECA 199 (Justice Costello) [82].
9. [2024] IECA 199 (Justice Costello) [133].
10. 2024] IECA 199 (Justice Whelan) [360].
11. [2024] IECA 199 (Justice Whelan) [367].
12. [2024] IECA 199 (Justice Whelan) [368].
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