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A LANDMARK HIGH Court judgement, which is likely to see the rent that Bewley’s pays for its Grafton Street premises fall, could have far-reaching implications for upward only rent reviews (UORR) in Ireland.
In a judgement issued today Justice Peter Charleton said that the amount of rent Bewley’s pays to its landlord Ickendel Limited must fall in line with current market conditions, a ruling that could have significant repercussions for upward only rent reviews.
Upward only rent reviews – where commercial leases were subject to occasional reviews where rent could only rise or remain flat but never fall – have been a contentious issue in recent years with the decline in property prices.
The coalition promised in its programme for government to abolish such lease agreements altogether – they were abolished for new leases in 2010 – but ran into difficulties over fears that any law could violate the Constitution.
In this case, Ickendel, owned by developer Johnny Ronan’s Treasury Holding Group, had taken a case against Bewley’s arguing that it could not reduce rents because its lease agreement only permitted UORR.
The court had heard that the parties entered into a lease agreement in 1987 when the rent was set at around €213,000 and that there had been rent reviews every five years since then with 2007′s review, at the height of the property boom, seeing rent fixed at €1.46 million.
In 2012 that same figure was claimed despite it having been fixed “at the height of the property price inflation that undermined the Irish economy” the judge said today.
Bewley’s had claimed that the rent review was “ambiguous” according to the judgement and its legal team had argued that the lease agreement did have a provision to allow rent to fall as long as it was not below the €213,00 threshold set in 1987.
The judge ruled that a clause in the lease agreement concerning rent review could only be construed to allow for rent to fall just as long as it did not fall below the figure initially agreed in 1987.
In his judgement, he said: “The parties bargained so as to agree never to fall below that initially agreed rent and I cannot see that they bargained thereafter for anything other than a fair open market rent. That can rise and that can fall.”
Judge Charleton said that it was not in accordance with “business sense” that a rent agreed five years ago “should govern a hospitality market changed for the worse”.
The Irish Commercial Tenants Association, a lobby group for commercial tenants in Ireland which has campaigned for UORRs to be abolished, welcomed the ruling, describing it as a “milestone”.
ICTA’s John Corcoran said: “In essence this is very positive news, not only for Bewley’s which should result in a reduction of the company’s rent bill on Grafton St by up to 50 per cent, but also for commercial tenants and the economy in general.
“The ruling today will enable Bewley’s, an iconic business to continue trading on one of Dublin’s most important retail streets, where other businesses over the past number of months have failed due to oppressive rents.”
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We’ve just exited a level 5 lockdown and people are being told by the government to…. “stay away from crowded shops”…. obviously shops will be thronged with people now after being cooped up for a month not being able to buy a shirt or a dress or god forbid….a tie…also deemed non essential when I went looking for one in Tesco. That statement is what my late grandfather would call….complete bolloxology.
@Billy Big Baws: And the first pop up I see on my device as I wake is from RTE about QUEUES forming outside shops this morning , and all this before 7 am.
Maybe I’m wrong but I think putting a senior civil servant out in front of the media and telling us how to behave is bizarre ,what qualifies her to pontificate to the Irish people, has she more qualifications than George Lee by any chance?
Christ..It will.be like the last helicopter out of Saigon when the shops open .
@Donal Desmond: Miss Saigon live from Mary Street !
I love how they chose a photo of Penneys for this article. You can guarantee they will have a queue from Mary St to the Spire tomorrow…
@Dobby Dooo Dooo: i am in the queue already
@Dobby Dooo Dooo: already a queue before 7 am .
@Terry Cahill: People going in for “essentials” and coming out with bags full of cr@p they don’t need…
How do people stay away from crowded shops, if they are already in a crowded shop :-/
@Kevin O’Brien: and if we all shopped off-peak…
Me alarm clock set, mask ready to go, hand sanitizer in me pocket, not taking the bus going to walk it. Penny’s here i come. NOT.
@Paul Gorry: as a penneys employee I think your in the minority….unfortunately. they should of sent us for zookeeper training during the lockdown.
@deisecelt: “should of” ?
Reading down through the articles here on the Journal & all I’m seeing is the word “avoid”. Avoid public transport, avoid crowded shops, avoid putting on special offers. Avoid, avoid, avoid.
@Kevin O’Brien: in other words avoid picking up the contagious virus and passing it on to others.
The shops are now open to help the economy back on it’s feet and keep people in jobs.
Also don’t go to the shops.
Is this the same headline i read last March, without the Christmas bit?
@Paul Gorry: Reduce reuse recycle….
Consume! Consume! Consume! Retail shopping slaves to the system of controlling your life. Stress over getting stuff and overstretch those cards…… Sad really. I hope everyone eventually wakes up and stops the unnecessary stresses around this time of year. Remember all those toys that will be gathering dust in a month or 2 and all that food that goes to waste cost hours of your life to pay for. Right now off to ques outside Smyths…… Lol
People are already queueing so best of luck with that advice.
@Ed: Hope they’re doing what most people are doing and queuing 2 m apart, outdoors.
but the retailers say the complete opposite, pack in and everyone get out and shop till ye drop, who should we listen to. :-)
Stay away from crowded shops????its christmas time
Ya, but you see “Christmas” you cannot avoid these things. The air must be thin up there.
I will wait a few days and then stroll the shops at my own leisure. I got 95pct of my Christmas shopping done online and feel good about not being frantic this month. I did miss the in-person Black Friday sales this year, to be honest.
have your say