The Court of Appeal has dismissed Foot Locker Retail Ireland Limited’s appeal over rent for its Grafton Street store during Covid-19 closures, rejecting its claim that the lease was temporarily or partially frustrated while trading was prohibited.
The judgment, delivered by Court of Appeal President David Barniville on 22 March 2024, upheld the High Court’s decision dismissing Foot Locker’s claim against landlord Percy Nominees Limited. The appeal court held that Irish law does not recognise the form of partial or temporary frustration Foot Locker advanced. It also concluded that even if such a doctrine existed, the circumstances would not justify applying it to this lease.
The store at 44 Grafton Street was required to close for a total of 253 days between March 2020 and May 2021 under Covid-19 restrictions. Foot Locker argued that it should remain in possession but not pay rent for the periods when it could not trade. Percy disputed that position and sought rent arrears.
The lease began in March 1990 for a 35-year term and was due to expire in March 2025. By March 2020, annual rent was €750,000. Its terms required rent to be paid without deductions, while a separate clause provided for rent suspension if the premises were damaged or destroyed by specified insured risks.
Foot Locker relied on clauses restricting the premises’ use to a high-quality retail shop and requiring it to remain open during reasonable local business hours. The Court of Appeal agreed with the High Court that these clauses imposed obligations on the tenant; they did not give it a right to trade or make rent conditional on trading. The lease also required compliance with laws and regulations, so the keep-open clause did not require the store to open when doing so was illegal.
The court said frustration, when established, ends a contract and discharges both parties’ future obligations. It would not allow Foot Locker to remain in possession without paying rent while the landlord remained excluded. The court also noted that the 253 days of closure had to be considered against the 35-year lease term, with almost four years remaining after restrictions were lifted. It concluded the interruption did not meet the test for frustrating the lease as a whole.
The court distinguished a possible excuse for not performing a particular obligation, such as keeping the shop open when that was unlawful, from a defence to the separate obligation to pay rent. It found that this distinction did not support Foot Locker’s rent claim.
The appeal was dismissed. The court’s stated view was that Percy should receive its appeal costs. That was a provisional costs view: Foot Locker could object within six days, with a short hearing to be listed if it did. The judgment does not state whether that objection was made or give a final costs order.