The Supreme Court has allowed a landlord’s appeal over the interpretation of the rent-review terms in the lease for Bewley’s Café on Dublin’s Grafton Street, holding that the rent payable for the five years from 1 January 2012 was €1,463,964 a year.
The dispute concerned a 1987 lease between Royal Insurance Public Limited Company, as landlord, Bewley’s Cafes Limited, as tenant, and Campbell Catering Limited, as guarantor. The guarantor’s obligations had expired. By the time the case began, the landlord’s interest was held by Ickendel Limited, and the tenant’s interest by Bewley’s Café Grafton Street Limited.
The lease set two components of rent, each subject to review at five-year intervals. The issue was whether the phrase “the rent payable hereunder during the preceding period” meant the rent for the five years immediately before each review, as the landlord argued, or the initial rent under the lease, as the tenant had argued for the 2012 review.
Following a High Court decision in March 2013, the High Court refused the landlord’s requested declarations. The rent for 2007 to 2011 was €1,463,964 a year. After the High Court order, an arbitrator set a revised rent of €728,187.50 a year for the period beginning in 2012. The Supreme Court noted that the parties agreed this figure represented a 50.3% reduction from the prior rent.
In a judgment delivered by Ms Justice Laffoy on 1 July 2014, the Supreme Court concluded that the lease was not ambiguous on the point. Read in the context of the rent provisions as a whole, “the preceding period” meant the period ending the day before the relevant review date. The court said the lease’s formula therefore had an “upwards only” effect: if the revised rent was lower than the rent for the preceding period, that preceding rent continued to be payable.
The court allowed the appeal, vacated the High Court order and said declarations in the forms sought by the landlord should be made. It concluded that the annual rent of €1,463,964 payable for 2007 to 2011 continued for the five years from 1 January 2012. The judgment did not set out the text of the declarations in its final paragraph.