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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> The Point Inn Ltd. v. Donegal County Council [2002] IEHC 54 (8 May 2002) URL: http://www.bailii.org/ie/cases/IEHC/2002/54.html Cite as: [2002] IEHC 54

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THE HIGH COURT

ON CIRCUIT

2002 108CA

Northern Circuit

County of Donegal

IN THE MATTER OF AN APPLICATION

FOR COMPENSATION FOR MALICIOUS

INJURY TO PROPERTY

AND IN THE MATTER OF THE MALICIOUS

INJURIES ACTS, 1981 TO 1986

BETWEEN/

THE POINT INN LIMITED, FRANK SHORTT

AND SALLY SHORT

Applicants

and

THE COUNTY COUNCIL OF THE

COUNTY OF DONEGAL

Respondent

Judgment of Mr. Justice Geoghegan delivered the 8th day of May 2002

1.      By order of the Circuit Court dated the 22nd of February, 2002 it was ordered and decreed that the applicants should recover from the respondents the sum of £261,850 together with costs in an application under the Malicious Injury Acts.

2.      There is a slight defect in the order as drawn up in that the party recovering the compensation is described as "the plaintiff" whereas in the title of the proceedings and in other parts of the body of the order the expression "applicants" is used and, of course, it is intended to cover three different applicants. It appeared to be accepted at the hearing of the appeal, however, that it was intended that all three applicants were to recover the sum. It was equally accepted that while in point of fact this was the position, in point of law it would be incorrect in that there was and is no suggestion that Frank Shortt and Sally Shortt personally had any ownership interest or any possessory interest in the property the subject of the application. They were merely shareholders in the Point Inn Limited which was the owner. Each side has served a notice of appeal and in each notice the title has actually been altered so as to insert only the Point Inn Limited as applicant. For the purposes of this appeal I am treating that company as the only applicant though Mr. and Mrs. Shortt must still be regarded as parties to the appeal. I will deal with the other two original applicants at the end of this judgment.

3.      Donegal County Council was the first party to serve notice of appeal. There being no issue on liability, the appeal relates to the amount awarded by the learned Circuit Court judge which in the view of Donegal County Council is too much. To a large extent this appeal centres around the issue as to whether if a public house is maliciously burned down, as in this case, the measure of damages should be based on reinstatement or on market value. The Circuit Court decree was based on reinstatement.

4.      A cross-appeal was brought a few days later by the applicant. The applicant agrees that the compensation should be assessed on a reinstatement basis and does not disagree with the figures worked on by the learned Circuit Court judge but it is argued on the applicant's behalf and not really disputed that the Circuit Court judge mistakenly made a deduction from the reinstatement figure presented to him without realising that the particular deduction had already been built into that figure.

5.      Obviously, the first question which I have to address is whether reinstatement value or market value should be adopted. Counsel for the applicant, Mr. McGonigal, S.C. says that the answer to this question is not necessarily to be found in the decided authorities but rather in the wording of section 5(4) of the Malicious Injuries Act, 1981. After giving the general right to compensation in section 5(1) the following provision is then contained in subsection (4).

"The right to compensation given by this section shall be limited to compensation for the actual damage caused and shall not extend it to compensation for any loss consequential on such actual damage and, in particular, shall not extend to compensation for the loss of the use of the property damaged."

6.      Mr. McGonigal attaches significance to the words "the actual damage caused" and says that having regard to those words a reinstatement measure is the only appropriate measure and that a market value measure would be inappropriate. In considering this submission it is perhaps helpful to examine the wording contained in section 135 of the Grand Jury (Ireland) Act, 1836 the section which was the original basis for malicious injury claims. The relevant words were:

"... in all cases of maliciously or wantonly setting fire to, burning, or destroying any ... building, ... any person or persons injured by any such offence, and intending to apply for compensation for any loss or damage sustained thereby, shall serve notice in writing..."

7.      While it is true that there are differences in wording, I do not think that they are significant and I am unable to accept Mr. McGonigal's submission in this regard. By that I mean that I cannot accept that the words "compensation for the actual damage caused" necessarily mean reinstatement costs rather than loss of market value. The words used in the subsection are intended, in my view, merely to contrast with items such as consequential loss which are referred to in the second part of the subsection.

8.      It is therefore necessary to turn to the traditional case law to determine what measure should be used. Obviously, a very helpful case in this regard is Barrett v. Donegal Co. Council, unreported judgment of Barrington J. in the High Court on Circuit, delivered the 21st of December, 1982. That case concerned a malicious injury claim by the owner of the Central Hotel in Bundoran which had gone on fire. In considering the question of whether the measure of compensation should be reinstatement value or market value Barrington J. adopted the principle set out in the judgment of Henchy J. in the Supreme Court in Munnelly v. Calcon Limited [1978] I.R. 387 at 400. Henchy J. was addressing the question of damages for tort but Barrington J. took the view that the same principles applied to the assessment of damages for malicious injury. The two cardinal principles to be applied according to the judgment of Henchy J. were first that the damages should be such as would so far as money could put the plaintiff in the same position as he would have been in had the tort not been committed and secondly, that the damages to be awarded should be reasonable, that is to say, reasonable as between the plaintiff on the one hand and the defendant on the other hand. The learned judge then goes on to cite the following passage from the judgment of Henchy J.:

"I accept that those two principles as being basic to, although not necessarily exhaustive of, the concept of restitutio in integrum on which the law of damages rests in cases such as this. It is in the application of those principles that difficulty may arise, for a court, in endeavouring to award a sum which would be both compensatory and reasonable, will be called on to give consideration, with emphasis varying from case to case, to matters such as the nature of the property, the plaintiff's relation to it, the nature of the wrongful act causing the damage, the conduct of the parties subsequent to the wrongful act, and the pecuniary, economic or other relevant implications or consequences of reinstatement damages as compared with diminished value damages."

9.      Barrington J. then makes the following comment:

"It is clear from the report that Mr. Justice Henchy took the view that reinstatement damages would not be appropriate if the effect would be unreasonably to enrich the plaintiff and mulct the defendant."

10.      Later on in the judgment Barrington J. refers to the judgment of Kenny J. in the Munnelly case and in particular to the following passage from the judgment of Kenny J.

"There may be some cases in which damages equal to the cost of restoration are the only way to put the plaintiff back into the same position as he was before the accident, but they are special cases and the onus lies on the plaintiff to establish that his is one of them."

11.      It is clear that Murray J. did award reinstatement damages in the Northern Ireland case of Grennan Lodge Company v. Secretary of State [1979] NI 65 and in doing so he purported to follow Harbutt's Plasticine Limited v. Wayne Tank and Pump Company Limited [1970] 1 Q.B. 447. I am not convinced that there is any real conflict between the principles set out in Munnelly v. Calcon Limited and which bind this court and the principles followed in the Grennan Lodge case and Harbutt's case. It is quite clear from the authorities that there is no hard and fast rule that either basis of assessment is in all circumstances the correct one. To that extent I agree with the submissions made by Mr. McGonigal. But there is no need for me to go into already cited or, indeed, many other reported cases in any greater depth because I am absolutely satisfied that the proper application of the principles in this case clearly requires an assessment of compensation on a market value rather than a reinstatement basis. In my view, the learned Circuit Court judge was not correct in adopting a reinstatement basis.

12.      There may well be instances of public houses which are going concerns being maliciously burned down where reinstatement value is the only fair method of compensation but clearly this is not one of them. This was a case where the applicant who had an unfortunate history in the criminal courts was at all material times intending to sell the premises and, indeed, at the time of the fire there was no insurance nor was there any liquor licence in force. If ever there was a case in which the market value measure should be adopted this must surely be it. However, there is one problem about it to which I will be referring. But before I do so, it is necessary to determine first what was the loss. For this purpose I intend to disregard completely the evidence of Mr. William McCartney. In the Circuit Court he apparently told the court that he had made an offer of £400,000 for the Point Inn after the fire and that he would have increased this figure to £425,000. In the High Court he again stated that he had made the offer for £400,000 though he alleged he was prepared to increase it to £430,000. But there was one vital difference between the evidence given by Mr. McCartney in the High Court and the evidence given by him in the Circuit Court. In the High Court he said that his offer was on the basis that he would receive whatever monies would be coming from the insurance company and that he was unaware that the property was uninsured. Since these offers would not in any case have created binding contracts it is perfectly obvious that the offers would have been quite different had Mr. McCartney known that there were no insurance monies coming through. In reality the offers were probably in the order of £200,000 in real terms. In fairness to Mr. McCartney he does appear to have told his solicitor and counsel about the insurance monies in consultation prior to the Circuit Court hearing but for some reason or other it never came up at the hearing itself. But quite apart from the discrepancy between the evidence of the Circuit Court and the evidence of the High Court, I am of opinion that I should have no regard to these offers because as Mr. Arthur, the chartered surveyor, retained by the County Council points out in his report, in valuation practice an offer is not considered to be evidence of value.

13.      There is a sharp difference of opinion between Mr. Arthur and Mr. Doherty, the estate agent retained on behalf of the applicant, as to how a potential purchaser would have approached the question of value of the public house for the purposes of making an offer. I have very little doubt that the method put forward by Mr. Arthur is the strictly correct and prudent method but I would also accept the evidence of Mr. Doherty that to some extent more rough and ready methods may be used in a Donegal country area.

14.      Commonsense would indicate to me, however, that whatever kind of offers might be thrown around orally, no potential purchaser would have signed a contract without some solid evidence establishing profitability. If that exercise was carried out, I strongly suspect, on the evidence which I have heard, that Mr. Arthur's suggested figure of £182,000 for the capital value of the undamaged property is not far off the mark. A post fire sale did in fact take place but it included a caravan park in the adjacent area as well as the Point Inn itself. The price achieved was £152,000 and the evidence is that £40,000 of that can be attributed to the caravan park. There was no great dispute about this and I accept that figure. If one was to accept Mr. Arthur's figure of £182,000 and then deduct £112,000 being the sale value of the premises the diminution in market value works out at £70.000. Of course, Mr. Doherty estimated the pre-damage value at £500,000 but for the reasons carefully put forward by Mr. Arthur, I am unable to accept that figure. I prefer the evidence of value of Mr. Arthur.

15.      I now turn to the problem which seems to me to arise if I am to award fair compensation to the applicant. Under the Malicious Injuries Amendment Act, 1986 the applicant was not entitled to bring his malicious injury application until he had received the appropriate certificate from the gardaí which he did not receive that until February, 1998. By a document of the 20th of February, 1998 Chief Superintendent Fitzpatrick expressed the opinion that the damage caused on the 27th of March, 1995 to the Point Inn resulted from acts committed maliciously by persons acting on behalf of or in connection with an organisation referred to in section 5(1)(a) of the Malicious Injuries Act, 1981 as substituted by section 2 of the Malicious Injuries (Amendment) Act, 1986. Although having regard to the unreported judgment of Barr J. in Marks and Spencer (Ireland) Limited v. Dublin Corporation delivered 14th January, 1993 and with which I agree, interest on the compensation cannot be awarded by this court, I think that the applicant would not be correctly compensated under the Act if I measured the compensation solely by reference to market value as of the time of the fire. I must at the very least take into account that this application could not have been brought until after the certificate was issued by the Chief Superintendent. Taking all these circumstances into account, I have come to the conclusion that a fair award would be IR £100,000 and that, of course, should be converted into euros for the purposes of the order when drawn up.

16.      I will, therefore, set aside the order of the Circuit Court in its entirety. I will substitute an order awarding the Point Inn Limited only and not the other applicants a sum of IR £100,000 compensation. The net result will be that there will not be any decree in either the Circuit Court or this court in favour of Frank Shortt and Sally Shortt.