BUSINESSMAN Denis O'Brien has brought a court action aimed at preventing BT Communications Ireland Ltd exiting a 25-year lease on a property at Dublin's Grand Canal Quay.
The lease contains an upward only rent review clause and more than €35m could fall due for rent over the 25-year term, Mr O'Brien claims.
The lease began in April 2001 and BT served 12 months' notice in May 2011 of its intention to exercise an option to surrender it. Mr O'Brien claims that option has not been validly exercised.
On the application of Paul Sreenan, counsel for Mr O'Brien, the proceedings were transferred to the Commercial Court yesterday by Mr Justice Peter Kelly.
In an affidavit, Richard Strappe, investment director for Mr O'Brien, said his client had demised the property at No 1 Grand Canal Quay to BT on May 27, 2002.
The lease was for a 25-year term beginning April 2001 and included a clause allowing BT to exercise an option to surrender the lease, he said.
BT had to serve at least one year's written notice of any intention to exercise the option, he said.
Having served that notice, BT also had to perform and observe all the lease convenants and, on the date of exercising the option, pay six months' rent by way of liquidated damages.
BT purported to serve a notice to exercise the option on May 16, 2011, but, on the date of exercising the option, failed to pay six months' liquidated damages as required and rather paid a sum of €1,178,927.40 on May 25, 2011, which was €5,000.10 less than the equivalent of six months' rent. Mr O'Brien's agent later received a cheque for that €5,000.10 sum on July 6, 2011, he said.
Mr Strappe also claimed, having served notice exercising the surrender option, BT failed to substantially perform and observe all the covenants in the lease up to the date of determination, including covenants related to repair and painting and decoration of the premises.
BT had on May 29 last returned the lease to his client, purporting to having properly complied with its provisions, he said.
Mr O'Brien did not accept the option to surrender the lease had been validly exercised and was seeking a declaration the lease continues to bind the defendant company, Mr Strappe said.