The Supreme Court has ruled that Carraig Donn Retail Limited’s lease of a shop at Limerick’s Crescent Shopping Centre remains in force at an annual rent of €309,500, after finding that a 2009 notice from its landlord did not end the tenancy.
In a judgment delivered on 9 July 2015, Mr Justice Clarke said Stapleyside Company’s notice could not terminate the lease. Under the parties’ May 2009 agreement, the landlord could require Carraig Donn to surrender the lease on 90 days’ notice, but the tenant did not surrender and was not ordered by a court to do so.
The dispute followed negotiations over rent during the financial crisis. Carraig Donn agreed to pay 67% of the 2009 rent, €207,365, and the agreement included a term giving Stapleyside an option to “take surrender” of the retail unit on 90 days’ notice, with a refund of rent paid in advance. The parties accepted that their agreement was binding, although neither signed a later draft contract intended to formalise it.
Stapleyside served a notice in November 2009 stating that it intended to terminate the lease on 16 February 2010. Carraig Donn treated the notice as ending the lease and sought a new tenancy under the Landlord and Tenant (Amendment) Act 1980. The Circuit Court later set the rent under a new lease at €230,000 a year.
The High Court had upheld Carraig Donn’s position, reasoning that the notice and the tenant’s acceptance ended the original lease. Stapleyside appealed, arguing that the notice was ineffective or required Carraig Donn to surrender, and that the original lease continued. It had abandoned its earlier claim for specific performance, which could have sought a court order requiring surrender.
The Supreme Court held that the May agreement created an obligation on Carraig Donn to surrender if Stapleyside gave the required notice. But the notice purported to terminate the lease, and the landlord had no independent right to end it that way. Even if the notice were treated as a demand for surrender, no surrender occurred and Stapleyside had abandoned its claim to enforce that obligation.
Mr Justice Clarke concluded that the lease remained in existence at the reviewed annual rent of €309,500. Because it had not ended, there could be no valid application for a new lease under the 1980 Act. The judgment did not settle the final appeal orders or costs: the Court proposed to hear further submissions on both.