The High Court ruled that the landlords of Dublin’s Ilac Centre unreasonably withheld consent for Dunnes Stores to use part of its long-leased Dunnes 1 unit as a high-quality food hall. Mr Justice Clarke said the refusal breached the lease’s change-of-use clause and was, in material part, intended to strengthen negotiations for possession of the unit.
Dunnes had sought consent in November 2006. The landlords refused in March 2007, initially citing “good estate management”. They later said the food hall conflicted with their vision for the area as a primary fashion retail zone. Dunnes brought proceedings challenging that refusal.
The lease required the landlords to consider the centre’s interests and the desirability of maintaining diverse businesses. The judge found they had not considered diversity when assessing the application. He also found their stated policy of turning a substantial part of the centre into a largely single-purpose fashion area was inconsistent with that obligation. He concluded the landlords could not reasonably rely on a policy of little or no diversity to refuse consent under the clause.
The court also considered whether the refusal had been used as leverage in negotiations over Dunnes giving up possession of some or all of Dunnes 1. The judge found the landlords had a general commercial interest in regaining the unit for redevelopment, which was not itself improper. But he concluded, on the balance of probabilities, that obtaining possession formed at least part of the reason for refusing consent and that the refusal strengthened Mr O’Reilly’s negotiating position.
That conclusion drew on the judge’s findings about the decision-making process, negotiations while the consent application was pending, and documents not disclosed until further discovery during the proceedings. He found the original discovery failure was deliberate and that the omitted material could have supported Dunnes’ account of a link between consent and possession. Mr O’Reilly, whom the judge identified as the true decision-maker, did not give evidence.
The judge held that Dunnes was entitled to the declarations it sought on two independent grounds: the improper use of the refusal to pursue possession, and the failure to give proper regard to diversity under the lease. He also addressed the landlords’ concern that an “upmarket” food hall might become a supermarket, but that issue was not decisive to the outcome. The judgment did not itself grant a new use permission; it declared the refusal unreasonable.