Bewley's landmark rent review case comes before Supreme Court
A LEGAL battle over a rent review for Bewley's Cafe in Dublin's Grafton Street has come before the Supreme Court.
The battle could have far-reaching implications for both commercial property owners and their tenants.
At issue is the interpretation of a lease and the rent on the storied cafe, which was set several years ago with built-in five-year reviews and which currently stands at €1.4m.
Last year, the High Court ruled that the €1.4m being paid annually for Bewley's to landlord Ickendel, which is part of the Treasury Holdings Group, must now fall to the market rate.
The move would see the coffee shop's rent almost halved.
Ickendel appealed that decision to the Supreme Court in what is regarded as a test case in the contentious issue of upward-only lease agreements.
Ickendel, owned by Johnny Ronan through Treasury – which had its loans transferred to NAMA – had argued before the High Court its 35-year lease with Bewley's only allowed for rent increases when it was reviewed every five years.
However, Judge Peter Charleton said to proceed towards ever-increasing sums every five years – despite of deflation – was to give an "unreal figure" for the rent.
Judge Charleton said it was no surprise that Bewley's wanted the rent cut, saying: "It is not in accordance with business sense that a rent appropriate to five years previously should govern a hospitality market markedly changed for the worse."
Yesterday, a five-judge Supreme Court reserved its decision on the appeal after hearing oral submissions.
Rent on the four-storey building, traditionally known as Bewley's Oriental Cafe, had gone from the equivalent of €213,000 in 1987 when the lease was first signed to €1.46m in 2007.
Counsel for Ickendel, Hugh O'Neill, said in the Celtic Tiger days when there was high rent inflation, landlords also lost out because their rents remained static for five years.
His side argued that when the Bewleys rent came for review in 2012 it was to relate back to the year ending 2011 and not the initial rent as had been contended by Bewleys.
Barristers for Bewleys, Gavin Ralston, said a clause dealing with sub-letting in the lease says the rent shall be upwards only. The barristers said the court would have to decide on the meaning of the lease.