Crowley & Anor v Sheehan & Anor (Approved)

Factual and Procedural Background

This Supreme Court appeal concerned an application by Respondents (sub-lessees) to acquire by purchase the fee simple (and any intermediate interests) in a residential property at [Number] Main Street, The City under the Landlord and Tenant (Ground Rents) Acts scheme, in particular Part II of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 (“the 1978 Act”), which supplements the Landlord and Tenant (Ground Rents) Act 1967 (“the 1967 Act”).

The Respondents held under a long sublease granted in 1940 (“the 1940 Lease”) for a term of 150 years at a small annual rent, which included a covenant to erect a dwelling house within a specified period; it was accepted that the dwelling house was built. The immediately superior interest was a long head lease granted in 1893 (“the Head Lease”) over a larger parcel of lands at a higher annual rent; the Head Lease contained various repair/improvement covenants but, critically for the dispute as it evolved, no covenant to erect buildings.

In 2022, Appellant acquired the head leasehold interest and served a forfeiture notice alleging disrepair; the Respondents obtained relief against forfeiture in the High Court on conditions, with the practical effect suspended pending this appeal.

Separately, the Respondents served a notice of intention (under s. 4 of the 1967 Act) to acquire the fee simple. The County Registrar held the Respondents’ 1940 Lease satisfied the qualifying criteria (ss. 9 and 10 of the 1978 Act), rejected the Appellant’s reliance on s. 16(2)(f) as advanced at that stage, permitted the buy-out, and fixed a purchase price of €1,000 (apportioned equally between the Appellant’s head leasehold interest and unknown superior/freehold owner(s)). The Circuit Court affirmed. The High Court ([2024] IEHC 695) dismissed the Appellant’s further appeal, adopting a statutory-interpretation approach that treated s. 16(2)(f) as aimed at commercial/supermarket developments and not intended to exclude domestic sub-lessees.

The Supreme Court granted direct leave ([2025] IESCDET 63) on the basis that issues of general public importance arose regarding the proper interpretation of s. 16(2)(f). Notice Party (the Attorney General) participated because constitutional interpretation issues could potentially arise.

Legal Issues Presented

1. What is the proper interpretation and application of s. 16(2)(f) of the 1978 Act, which restricts a sub-lessee’s right to acquire the fee simple where the superior lessee is not “a person to whom” Part II applies?
2. Whether the High Court was correct to construe s. 16(2)(f) as effectively confined to commercial/supermarket developments, thereby excluding domestic/residential leases from its scope.
3. In light of the way the appeal was advanced in the Supreme Court, whether the Appellant could succeed on a newly-emphasised contention that the Respondents failed to prove the Head Lease was a qualifying lease (and thus that the superior lessee was entitled to acquire the fee simple), where that point had not been properly litigated in the courts below.

Arguments of the Parties

Appellant's Arguments

• Statutory interpretation: The High Court erred by relying on the Law Reform Commission’s 1998 report to confine s. 16(2)(f) to “large commercial developments” or supermarkets; the 1978 Act makes no residential/commercial distinction, and such a limitation would be vague and judicially amend the statutory text.
• Literal reading and Interpretation Act 2005: s. 16(2)(f) was said to be clear and unambiguous; recourse to s. 5 of the Interpretation Act 2005 was argued to be permissible only where genuine ambiguity/absurdity arises.
• Property rights / constitutional approach (interpretive): The Court was urged to interpret s. 16(2)(f) so as to protect the Appellant’s constitutionally protected property rights, relying on the presumption of constitutionality and the “double construction” approach referenced in prior authority.
• Head lease qualification (as ultimately advanced in the Supreme Court hearing): Once the “commercial-only” interpretation fell away, the Respondents were said to be required to prove the Head Lease was qualifying; it was argued no evidence had been adduced to establish compliance with s. 10 conditions (particularly those dependent on rateable valuation and building history), and the application should therefore fail.

Respondents' Arguments

• Head lease qualification: The Appellant (as head lessee) was said to be a person to whom Part II applies, because the Head Lease lands were under a long lease with permanent buildings and (on the Respondents’ case) satisfied at least one s. 10 alternative condition—primarily Condition 2 (rent less than rateable valuation, with a presumption that buildings were not erected by the lessor) and arguably Condition 1.
• No “building covenant” prerequisite: The absence of a covenant to build in the Head Lease was said to have no linguistic or logical basis as a disqualifier under ss. 9, 10, or s. 16(2)(f); the Appellant’s “building covenant required” proposition improperly added a new requirement.
• Wylie commentary: The Respondents argued the Appellant’s reliance on the textbook passage was misplaced and, in any event, did not support treating a head lease as non-qualifying merely because it lacked a building covenant.
• Procedural fairness / case conduct: Given the way the case had been run below (focused on the alleged necessity of a building covenant and, in the High Court, on a “commercial-only” construction of s. 16(2)(f)), the Respondents sought either (i) inferences, (ii) permission to adduce fresh valuation evidence, or (iii) remittal, if the Supreme Court considered further proof necessary regarding s. 10 compliance by the head lessee.

Notice Party's Arguments

• Interpretation of s. 16(2)(f): The “commercial-only” limitation was rejected; on a literal reading of s. 16(2)(f) together with s. 16(3), any sub-lessee is disqualified where the superior lessee does not qualify, and the shopping-centre example in the 1998 report did not justify narrowing the statutory text.
• Head lease qualification: The Head Lease was submitted to be prima facie qualifying; the High Court was said to have proceeded on an erroneous assumption that absence of a building covenant made it non-qualifying.
• Constitutionality: No party challenged constitutionality; the Notice Party submitted a constitutional ruling was unnecessary (and cautioned against issuing gratuitous constitutional commentary). If required, the provision was defended as addressing a lacuna and preventing artificial creation of property rights, with transitional protection for those who invoked rights prior to 27 February 2006 under s. 16(2)(f)(ii).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wanze Properties (Ireland) Ltd v. Mastertron Ltd [1992] ILRM 746	Identified (obiter) the potential for a non-qualifying lessee to grant a qualifying sublease enabling the sublessee to acquire the fee simple, undermining the superior landlord’s intention.	Treated as the background “mischief” that prompted the Law Reform Commission recommendation and the subsequent enactment of s. 16(2)(f); the Supreme Court accepted that the legislative text nonetheless contains no commercial-only limitation.
Heather Hill Management Company CLG v. An Bord Pleanála and Others [2022] IESC 43, [2024] 2 I.R. 222	Principles of statutory interpretation (focus on statutory text and context); discussion of when Interpretation Act 2005 tools are engaged.	Discussed in the High Court and parties’ submissions; the Supreme Court ultimately emphasised that the words of s. 16(2)(f) do not support a commercial-only limitation.
DPP v. Brown [2018] IESC 67, [2019] 2 I.R. 1	Endorsed approach that the “first and most important port of call” is the statutory text given its ordinary meaning.	Relied on in submissions supporting a literal reading of s. 16(2)(f); consistent with the Supreme Court’s rejection of the High Court’s commercial-only gloss.
Shirley v. O'Gorman [2012] IESC 5, [2012] 2 I.R. 170	Presumption of constitutionality and the “double construction” approach in statutory interpretation affecting property rights.	Cited in submissions to support an interpretation protecting property rights; the Supreme Court did not determine a constitutional challenge (none was brought).
Salaja v Minister for Justice, Equality and Law Reform [2011] IEHC 51	Courts should not provide gratuitous advice on legal issues to the legislature/government.	Invoked by the Notice Party to argue the Supreme Court should not rule on constitutionality where not necessary to decide the appeal.
Lofinmakin v Minister for Justice [2013] IESC 49, [2013] 4 I.R. 274	Reinforced limits on courts giving gratuitous constitutional guidance; procedural propriety in constitutional issues.	Relied on to submit that constitutional validity need not be addressed in this appeal.
Blehein v Murphy [2000] 2 I.R. 231	Point that constitutional arguments not raised at first instance should not ordinarily be determined on appeal.	Cited to support the position that constitutionality of s. 16(2)(f) should not be decided because it was not raised in the High Court.
ESB v. Good & Ors [2025] IESC 27	General proposition that expropriation/divestment of private property without compensation is usually unconstitutional absent exceptional circumstances.	Cited by the Notice Party in outlining (if necessary) why s. 16(2)(f) was nonetheless constitutionally defensible on the submissions presented.

Court's Reasoning and Analysis

The Supreme Court held that the appeal had become procedurally and substantively distorted by the parties’ shifting positions. Two central points that had driven the litigation were abandoned at the Supreme Court hearing: (i) the Respondents no longer maintained that s. 16(2)(f) was confined to commercial/supermarket developments, and (ii) the Appellant ultimately conceded that a covenant to build in the Head Lease is not a prerequisite to qualifying under Part II (ss. 9 and 10) of the 1978 Act.

Interpretation of s. 16(2)(f): The Court rejected the High Court’s construction that limited s. 16(2)(f) to commercial/supermarket leases. While the legislative history (the Law Reform Commission’s 1998 report following Wanze) explained why the problem was first illustrated in commercial settings, the Supreme Court held that the statutory language of s. 16(2)(f) contains no such limitation and cannot bear that restricted meaning on a literal construction. The Court noted that it was therefore correct for the Respondents to abandon the “commercial-only” argument. The Court further reaffirmed the core effect of s. 16(2)(f): where the lease relied on is a sublease, the sub-lessee cannot acquire the fee simple unless the head lessee is “a person to whom” Part II applies (subject to statutory carve-outs which were not relevant on the facts).

No building-covenant prerequisite: The Court held the Appellant’s long-running contention that the Head Lease must contain a building covenant was misconceived; nothing in the ground rents legislation makes such a covenant a necessary requirement for qualification. The absence of a building covenant is not determinative of entitlement under the statutory scheme.

Whether the appeal could succeed on a new “lack of evidence” ground: Having abandoned his original basis of objection, the Appellant sought to succeed on a different contention—that the Respondents had never proved that the Head Lease satisfied s. 9 and at least one s. 10 condition, and thus had not shown that the superior lessee qualified for Part II, meaning s. 16(2)(f) would bar the Respondents. The Supreme Court declined to allow the appeal to be determined on that newly-emphasised basis. It reasoned that the case had been run throughout before the County Registrar, Circuit Court, and High Court on the “building covenant required” theory, and the High Court’s decision (and the grant of leave to appeal on an issue of general public importance) had been engaged by a separate interpretive issue that also fell away. None of the earlier decisions had determined whether the Head Lease in fact met a s. 10 condition (for example, the rateable valuation condition), because the litigation had proceeded down what the Supreme Court described as a cul-de-sac driven by the arguments actually advanced.

The Court considered it would be unfair and impermissible litigation conduct to allow a party, having pursued one argument through multiple levels and obtained leave to appeal to the Supreme Court on a public-importance issue, to concede that issue and then “change tack” to pursue a different ground not properly argued below (and which, standing alone, would not have supported Supreme Court jurisdiction as a public-importance appeal). The Court concluded it could not accede to the Appellant’s request to allow the appeal simply by setting aside the lower orders on the basis of the new point.

While the Supreme Court acknowledged the absence of evidence on matters such as rateable valuation (relevant to s. 10, Condition 2), and discussed possible procedural options that had been suggested (inference, admission of new evidence, adjournment, or remittal), its ultimate disposition was driven by the impropriety and unfairness of the Appellant’s attempted re-framing of the appeal at the final stage.

Holding and Implications

DISMISSED. The Supreme Court dismissed the Appellant’s appeal and affirmed the High Court order permitting the Respondents to proceed with the acquisition of the fee simple, notwithstanding that the Supreme Court held the High Court’s “commercial-only” interpretation of s. 16(2)(f) was incorrect.

The direct effect is that the Respondents retain the benefit of the orders made below allowing the fee simple acquisition to proceed on the terms fixed in the statutory process. The Court also clarified that (i) s. 16(2)(f) is not confined to commercial leases, and (ii) the absence of a building covenant in a head lease is not, of itself, a statutory bar to qualification. The decision did not determine (on the evidence as litigated below) whether the Head Lease satisfied a particular s. 10 condition; rather, it refused to permit the Appellant to succeed by advancing a materially different case at the final appellate stage.