The Court of Appeal has allowed a landlord’s appeal and directed judgment for €189,736.80 against solicitor Paul Smithwick over arrears under a lease of offices in Dublin 2. The court overturned a High Court decision that had dismissed the claim after finding Smithwick surrendered the lease by conduct in 2004.
The dispute concerned the second floor of Duke House, 2-5 Duke Lane, leased to Smithwick for 35 years from September 1986. He left the premises in 2003 but continued paying rent until November 2004. In that month he granted Alias Tom Limited, a company associated with Thomas Kennedy, a short sublease running to June 2005, with an option to take an assignment of the remaining lease. The option was not exercised. Kennedy and companies associated with him remained in occupation and paid rent.
The landlord’s claim sought unpaid rent and insurance arrears after payments stopped in April 2011. Smithwick initially argued that Kennedy or A.T. Uniform Limited had taken over the lease, and that he was entitled to an indemnity. During the 2016 High Court hearing, he amended his defence to argue that he had surrendered the lease with the landlord’s predecessor’s consent.
The High Court accepted that a surrender had occurred and dismissed the landlord’s claim. On appeal, the landlord argued that the evidence showed a subletting, not a surrender. The Court of Appeal agreed. It said surrender by operation of law requires conduct that unequivocally shows the tenancy ended and the landlord accepted that end. Smithwick’s sublease, appointment of the landlord’s agent to collect rent on his behalf, and grant of an option to assign were consistent with the 1987 lease continuing, the court found.
The court also said there was no evidence that the landlord had accepted possession or that Kennedy or his companies became tenants directly under the landlord. Their occupation was under the sublease and subsequent monthly overholding. Smithwick’s earlier assertions that he had assigned the lease to Kennedy or his companies were inconsistent with his later surrender argument, the judgment said.
The appeal court held that the High Court had misapplied the legal test to the evidence. It allowed the appeal and directed judgment for the landlord for €189,736.80. It left outstanding the issues between Smithwick and the third parties, A.T. Uniform Limited and Kennedy, to be determined under the third-party proceedings in the High Court.