Bewley's, the grand old cafe on Grafton Street that is losing more than €700,000 a year, is embroiled in a legal battle with a company controlled by businessman Johnny Ronan that could have a major impact on law relating to upward only rents.
The cafe, which gets an honourable mention in Dubliners by James Joyce, is subject to close planning scrutiny by Dublin City Council as an official cultural jewel in the capital.
But it is in serious trouble, according to documents laid before the High Court, and is being propped up by other companies in the Bewley's business.
The legal action between Bewley's Cafe, Grafton Street, and Ickendel Limited centres on the exact legal meaning of specific lease agreements in relation to rent.
Outline submissions by Bewleys' legal team headed by A&L Goodbody state: "The issues before the court could not be of more vital importance to the financial survival of the Respondent [Bewley's] which is paying an annual rent of €1.5m established by the award of an arbitrator as at January 1, 2007, and also to other tenants holding leases under similar terms, paying rents which were struck at the height of the property market bubble."
The central issue in the case now being considered by Mr Justice Peter Charleton, who has reserved judgement in the case, is over the interpretation of the lease.
The landlord is now Ickendel Limited, which is controlled by Johnny Ronan, whose Treasury Holdings empire – which he headed up with partner Richard Barrett – is now in liquidation. Treasury's loans have been transferred to Nama.
Ickendel is seeking a declaration that the terms of the lease mean that the rents cannot be reduced after any rent review.
Bewley's contend that this interpretation is incorrect and that on a true interpretation the rents, on review, cannot be reduced below the initial rents [signed in this case as far back as 1987 when the landlord was Royal Insurance PLC] but otherwise can fluctuate up or down.
In their submission, Bewleys points out that commercial retail rents have fallen by over 50 per cent in recent times and there is a recent judgement of the then President of the Circuit Court fixing a new rent under the provisions of the 1980 Landlord and Tenant Act for a property in Grafton Street representing a 53 per cent reduction in the previous rent.
As well as Joyce, Patrick Kavanagh, Samuel Beckett and Sean O'Casey frequently took coffee in Bewley's which is owned by the Campbell Bewley Group.
But the Group's profits slid by 68 per cent last year to €495,000. The decline in profits has been blamed on the €1.5m-a-year rent on the property, which was set in at the height of the property bubble in 2007, as well as individual customers spending less money, though footfall has remained high.