The High Court ruled that rent under Bewley’s Grafton Street café lease could rise or fall at review in line with the open market, but could not drop below the initial rent reserved in 1987. The court was asked to interpret the lease; it did not calculate or set the rent for the 2012 review.
The dispute was between landlord Ickendel Limited and tenant Bewley’s Café Grafton Street Limited over a lease made in 1987 for a 35-year term. Rent was reviewed every five years. The landlord argued that each review could not reduce the rent from the amount payable in the immediately preceding period. The tenant argued that the 1987 rent was the minimum, while later reviews should reflect market rent whether it rose or fell.
The rent was last reviewed in 2007, when it was set at €1,463,964. Ickendel claimed that figure for the 2012 review, relying on its interpretation that the lease barred a decrease. The judgment records counsel’s submission that rents for Grafton Street premises with a new tenant had fallen by 52%; the judge said he did not know whether that was typical and was not setting the rent.
Justice Charleton focused on the lease’s requirement that the reviewed rent represent the full open-market yearly rent, alongside wording that made the revised rent at least equal to the rent payable for the preceding period. He concluded that the initial rent provided the floor, while the market rent could thereafter rise or fall. He also noted that the lease lacked an express upwards-only provision for the rent review, despite containing such a provision for a different circumstance involving assignment of part of the premises.
The judgment resolved the construction question in the tenant’s favour: the rent review clause permits a fall in rent, subject to the 1987 minimum. It also said that if a review produces an increase and the review is delayed, the additional rent is payable from the review date. The court left the actual rent for the 2012 review to be determined through the review process.