The High Court has ordered the Murphy brothers to pay Gowan Distributors rent and service charges owed by Westland Company Limited up to the end of its sublease and a further month’s notice period. It also ordered Gowan to pay rent and service charges to the six co-owners of the Liffey Valley premises, with a set-off permitted against the Murphy brothers’ share but not against the two outside investors’ shares.
Mr Justice McMahon delivered the judgment on 5 April 2011 in two linked proceedings. The first was brought by the Murphy brothers, Chris Giblin and Patrick Doyle against Gowan under the head lease. In the second, Gowan pursued the Murphy brothers under personal covenants in Westland’s sublease and sought a new lease of the premises.
Westland entered liquidation in February 2009 and stopped paying rent. The brothers argued that the dealership agreement had ended earlier, releasing them from further liability; they also alleged bad faith and misrepresentation by Gowan. The judge rejected those arguments. He found the dealership agreement remained in force until 31 May 2010, when it expired after Westland gave notice that it would not renew. The sublease’s one-month termination notice therefore took effect from that point. The brothers remained liable for rent and service charges through the lease end and the additional notice month.
The judge also found that the brothers had an obligation, if called upon, to take a new lease for the remaining term. Since that term had passed and the brothers were ordered to pay rent for the same period, he said an order requiring them to execute a new lease would serve no purpose.
On the allegations against Gowan, the judge found no refusal to allow Westland to take on another car brand, no actionable misrepresentation, and no evidence that Gowan caused the lender to withdraw Westland’s credit line. He attributed Westland’s failure to longstanding business problems, including difficulties in its after-sales and used-car operations, increased overheads and unresolved management and IT issues.
In the first case, the judge ordered Gowan to pay rent and service charges under the head lease through the judgment date, with the total to be quantified by the parties. The claim had calculated €381,086 in arrears through July 2010 for rent and June 2010 for services. Gowan could set off sums owed by the Murphy brothers, but not amounts due to Giblin or Doyle, each of whom held a one-sixth share and had not guaranteed Westland’s rent. The judgment did not determine the disputed three-year cap on the brothers’ liability because Gowan’s claim was for less than three years’ rent.