Irish News

Tuesday 30 September 2014

Bewley's cafe loses rent-hike fight

Published 01/07/2014 | 13:02

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Bewley's coffee shop on Grafton Street, Dublin, has lost a battle with its landlord over a rent rise

Bewley's cafe has lost its long-running fight to stop its landlord hiking the rent for the famous Grafton Street premises.

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A landmark victory secured in the courts last year has been turned on its head by the Supreme Court, leaving the renowned business facing a rent bill of 1.5 million euro.

Bewley's said it was immensely disappointed at the verdict in the case - widely seen as a test for other businesses to mark the end of upward only rent reviews.

Group chief executive John Cahill said all he wanted for the business was economic reality.

"The landlord has managed to achieve an oppressive rent of 1.5 million euro which was set in 2007 at the height of the unsustainable property bubble, and which is double the market rent set at January 1 2012," he said.

"All we have sought to achieve is an acknowledgement of economic reality and fair treatment with a rent that reflects market values."

Bewley's management said they will now consider the judgement with lawyers.

The cafe premises is owned by Ickendel Ltd, a company controlled by the developer Johnny Ronan as part of the Treasury Holdings group. Loans associated with it were transferred to the National Asset Management Agency (Nama).

Bewley's rent doubled to 1.5 million euro at its last rent review date on New Year's Day 2007 - around the peak of the property bubble.

Five years later it was up for review again and a dispute broke out between the landlord and Bewley's, which claimed the rent should fall due to the recession and collapse in property values.

The High Court ruled in Bewley's favour last March - the rent was due to come down to 728,000 euro - only for the decision to be overturned in the Supreme Court today.

The Supreme Court found that it was dealing with a narrow matter related to the five yearly reviews contained in a lease signed in 1987 which allowed for upward only rent movements.

It said the lease did not bargain for revisions that could rise and fall according to market conditions.

Business lobby group Retail Excellence Ireland said the court's decision is bad for jobs and investment in the domestic economy.

Chief executive David Fitzsimons said: "This decision will simply undermine a potential return to stability in the domestic economy and will lead to the loss of vulnerable jobs in the Irish retail industry.

"The decision of the Supreme Court to apply the terms of this onerous lease proves how out of kilter legacy commercial leases are with a turbulent domestic economy."

Retail Excellence Ireland claimed that in the seven years to 2007 commercial rents increased by 240% while consumer prices increased by 30%.

In the lengthy and complex ruling on the tenancy contract, Ms Justice Mary Laffoy, on behalf of the five judges sitting in the Supreme Court, found specific clauses in the agreement focused solely with upward-only rents.

"They did not bargain for a rent revision arrangement based on a 'market rent' that can rise and fall in respect of different review periods," it said.

Andrew Muckian, partner and head of the property department at William Fry, said the verdict will further boost recovery in Ireland's property market.

"The Supreme Court decision will be greeted with relief by NAMA and all landlords and investors and is likely to act as a further stimulus to international and domestic investor interest in Ireland's recovering commercial property sector," he said.

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