The High Court has ruled that a menswear retailer and its guarantor remain liable for rent and insurance arrears despite Covid-19 restrictions that prevented the company trading from its leased Cork premises for a period. The court granted the landlord’s summary judgment application, but left the precise amount of judgment and final orders for a later hearing.
In a judgment delivered on 2 November 2022, Mr Justice Charles Meenan said the defendants’ reliance on frustration of contract could be decided on the summary application. He held that the temporary restrictions did not discharge the company’s obligation to pay rent.
The plaintiff, Kenneth Treacy, leased commercial premises at 45 Oliver Plunkett Street and the ground floor of 9 Marlboro Street in Cork to Lee James Menswear Limited under a 2007 lease. The annual rent was €222,500. James O’Regan, the company’s director and shareholder, separately guaranteed its performance of the lease, including payment obligations.
Treacy claimed the company had failed to pay rent and insurance premiums. His claim was €143,101.42 as of 1 December 2020 and had risen to €257,224.09 as of 1 June 2021, after allowing for a part payment. Those were amounts claimed by the plaintiff; the judge did not set the final judgment sum in this ruling.
The defendants argued that government restrictions had required the company to close the premises from March 2020 to May 2021. They relied on lease clauses concerning activities that could expose the landlord to statutory liability or expense, and use of the premises for an illegal purpose. They submitted that the restrictions frustrated the lease and relieved the company of rent and other payments. O’Regan’s affidavit also described attempts to secure a rent reduction and criticised the rent level. The judge said that criticism did not amount to a defence at law.
Meenan said frustration was a narrow doctrine and that the restrictions were temporary. Referring to Irish decisions on Covid-related commercial leases, he said there was no legal concept of partial or temporary frustration that would suspend rent while the tenant retained its rights under the lease. He concluded the cited lease clauses did not alter that position.
The judge was satisfied that the defence could be determined on the summary judgment application and that Treacy was entitled to recover the sums sought from the company and O’Regan as guarantor. He said his provisional view was that the successful plaintiff should receive the costs, including reserved costs. The case was listed for final orders on 17 November 2022, with submissions due by 11 November.