Ickendel Limited Limited v Bewleys Café Grafton Street Limited [2014] IESC 41

The Supreme Court judgment given on the 1st July 2014 has ruled in favour of Ickendel Limited, the landlord, holding that Bewley’s, the Tenant, must now pay €1.464 million rent. The previous High Court ruling of Charlton J, which held in favour of the tenant, saw the rent reduced from €1.464 million to €728,000 following arbitration.

The High Court case was initiated by Bewley’s after the rent for their Grafton Street premises doubled to €1.464 million at the last rent review on 1st January 2007, coinciding with the peak of the property bubble. Bewley’s had sought an acknowledgement of the economic realities, fair treatment and a rent that reflects current market values.  The High Court judgment[1] given by Charlton J refused the reliefs sought by the landlord and ruled in favour of Bewley’s finding that the preceeding period referred to the period from the commencement of the term, 22nd September 1987, up to and including 31st December 1991.

The High Court had considered the meaning of the expression “the preceding period”, found in clause two of the Commercial lease dated 22nd September 1987[2].

The construction put forward by the tenant, that the rent payable from the 1st January 2012 was equal to the greater of: (a) the rent payable initially under the lease for the period of the commencement of the term up to and including 31st December 1991 or (b) the revised rent payable from the 1st January 2012 ascertained in accordance with the relevant provisions identified in the reddendum.

By contrast the interpretation put forward by the landlord was that on review of the rent for the five years of the term commencing on the 1st January, 2012, the rent payable is to be equal to the greater of: (a) the rent payable for the period from 1st January 2007 to 31st December 2011 or (b) the revised rent for the five years from the 1st January 2012 ascertained in accordance with the relevant provisions identified in the reddendum.

It was held by the Supreme Court that the preceding period must mean the period preceding the relevant period of five years which is subject to review. No other interpretation was open which would allow the preceding period to construed as referring to the period prior to the first review date, 6th August 1987 to 31st December 1991.

The crux of the landlord’s Supreme Court appeal focused on whether or not Charlton J had erred in finding a supposed ambiguity in the lease and in moving on from so finding to finding in favour of the construction advanced by the tenant over that advanced by the Landlord.

In considering the appeal the Supreme Court cited the judgment of McKechnie J in Marlan Homes Limited v Walsh[3] “when faced with a construction issue a court should focus its mind on the language adopted by the parties being that which they have chosen to best reflect their intentions”. The Supreme Court upheld the landlord’s interpretation of the lease and found no ambiguity in or between the provisions of the lease.

In conclusion it is still unknown what effect the ruling will have on the commercial property market in Ireland as this case turned on a specific clause in the lease agreement. The ruling is likely to have less impact as time moves on as upwards only rent reviews were outlawed by the Oireachtas in 2010.

Rory Dunne is a Trainee Solicitor with FitzGerald Solicitors. FitzGerald Solicitors are located in 6 Lapps Quay, Cork. Please note that you should contact your Solicitor for specific legal advice tailored to your needs as each case is different and the foregoing article is not intended to provide legal advice.

[1] [2013} IEHC 293

[2] Royal Insurance Public Limited Company, as landlord, of the first part, Bewley’s Café Limited, as tenant, of the second part, and Campbell Catering Limited, as guarantor, of the third part.

[3] [2012] IESC 23


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