The High Court ruled that a conditional agreement between Tanat Limited and the Medical Council for a 20-year lease was an “agreement for such lease” made before the statutory ban on upward-only rent reviews took effect. The ruling meant the rent review terms were unaffected by the ban in section 132 of the Land and Conveyancing Law Reform Act 2009.
The judgment, delivered by Mr Justice O’Neill on 16 May 2013, followed Tanat’s claim for declarations and damages. The court’s conclusion on section 132 resolved the central issue. It did not make a damages award in the concluding order set out in the source.
The dispute concerned Kingram House, Kingram Place, Dublin 2, which the Medical Council occupied as its headquarters. The parties had completed a five-year lease beginning on 1 January 2008, alongside options concerning a share purchase and a later 20-year lease. The Medical Council did not exercise its option to buy Tanat’s shares. Tanat exercised its “Put” option by notice dated 22 December 2011, requiring the Council to take the long lease, which commenced on 1 January 2013.
The long lease provided for an initial rent of €820,000 a year and upward-only reviews. Section 132, effective from 28 February 2010, generally required rent reviews in covered business leases to allow rent to go down as well as up. The Council argued that the Put option was not an agreement for a lease within the statutory exception because it was not enforceable when the section came into force.
Justice O’Neill found that the Put option was a conditional contract within a linked set of agreements. Although it was not then enforceable because the relevant option period and notice conditions had not yet been met, those conditions did not prevent it from being an agreement for a lease. Applying the exception, the court held that the upward-only review clause was unaffected by section 132.
The judge also addressed the initial rent as an alternative issue. He held that €820,000 a year was fixed by the Put option agreement, rather than being a rent review. Even if section 132 applied to the long lease, he said, the initial rent would remain €820,000. On estoppel, the court rejected Tanat’s argument that the Council was barred from relying on section 132, finding no basis for estoppel by convention or unconscionable conduct.
The source gives the court’s conclusions on these issues but does not include a separate formal order or state the disposition of the damages claim.