The High Court granted North Quay Developments Ltd summary judgment for €156,888 against Niall Carty, holding that he was bound by a guarantee of rent obligations under a lease for retail premises in Arklow.
Mr Justice Hogan delivered the judgment on 15 October 2014. The dispute concerned a lease agreed in February 2007 between North Quay and Iverwell Ltd, which traded as Vienna Shoes. Iverwell entered the premises at the Bridgewater Centre and fitted them out as a shoe shop. The lease was held in escrow pending receipt of an architect’s certificate confirming compliance with Building Regulations after the fit-out.
The certificate was supplied to North Quay’s solicitors in December 2008, satisfying the condition for the lease to take effect. The lease should then have been released from escrow and formally delivered to Iverwell, but that did not happen. Iverwell later defaulted on rent payments and went into liquidation in June 2012. Carty, its principal director, had guaranteed the company’s payment obligations.
Carty argued that the lease had never become effective because it was not formally delivered. He also said the omission had practical consequences, including preventing the liquidator from selling the lease and allowing North Quay to recover the premises and benefit from Iverwell’s fit-out. North Quay relied on the liquidator’s letter of 5 July 2012, which said the lease had been disclaimed as an onerous contract under section 290 of the Companies Act 1963. A separate objection that the documents were unstamped had been overtaken after both were stamped.
The court applied the equitable principle in Walsh v Lonsdale that an agreement for a lease can bind the parties as if the lease had been granted. It held that the condition had been fulfilled in December 2008 and the lease took effect in equity despite the failure to deliver the document. The judge found no evidence that Iverwell had suffered prejudice: the liquidator wanted to disclaim the lease, and the claim that the missing formal lease impaired borrowing capacity was only a general assertion.
The court concluded that Iverwell was bound by the lease in equity and that Carty was bound as guarantor. Finding no realistic or arguable defence to the claim, it entered summary judgment for the sums claimed. The judgment does not report a trial of the underlying claim.