The High Court has rejected a landlord’s claim to rescind a rent-reduction agreement and recover the reduced rent, finding that the tenant did not repudiate the agreement by seeking a new tenancy after the landlord terminated its lease.
Mr Justice Brian J. McGovern ruled that Stapleyside Company was entitled to rent at the lease rate of €309,500 a year up to the lease’s termination. He refused the plaintiff’s other relief. The court said it would hear counsel on the form of the order, including how the tenant’s claim for a new tenancy and any arrears should be dealt with.
Carraig Donn Retail Limited had leased Unit 25X at the Crescent Shopping Centre in Dooradoyle, County Limerick, under a 2002 lease. The rent had risen from €152,368.37 to €309,500 a year following a 2006 review. The tenant said it had invested about €400,000 in improvements, including a mezzanine level.
After the tenant sought rent relief amid adverse trading conditions, the landlord proposed two options in April 2009. The tenant appears to have accepted the second, paying €207,365—67% of the full year’s rent—in May. The landlord accepted the payment and issued credit notes. The option also referred to the landlord having an option to “take surrender” of the lease on 90 days’ notice, but the judge found that wording lacked legal clarity.
In November 2009, the landlord served a termination notice, and the tenant later gave notice of its intention to seek relief under the Landlord and Tenant (Amendment) Act 1980. The landlord argued that the tenant had repudiated the rent-reduction agreement by not yielding up possession, and sought rescission and sums due under the original lease. The tenant maintained it could seek a new tenancy after the landlord ended the lease.
The judge distinguished a surrender by a tenant from a termination notice served by a landlord. Applying the rule that ambiguity should be construed against the party that drafted the wording, he found the option did not clearly give the landlord a right to terminate without regard to the tenant’s statutory right to claim a new tenancy. He also rejected the landlord’s argument that the tenant’s conduct amounted to a repudiatory breach.
The judge held that the old lease had been terminated and that the parties were free to negotiate a new tenancy. The court did not determine the tenant’s entitlement to a new tenancy: it noted that the claim appeared to be for the Circuit Court to deal with and deferred the form of the order for submissions from counsel.