By Caroline Browne, Partner
On 25th March 2013, Bewley’s Café secured a landmark victory preventing the landlord from increasing the rent.
Bewleys Café entered into a lease for the famous Grafton Street restaurant in 1987 at a rent €213,000 but this rent had increased to almost €1.5 million by 2007 under the terms of the lease which made provision for rent reviews every 5 years. Bewleys Café sought to prevent any increase on the rent imposed in 2007 at the height of the property bubble.
The case centres on the interpretation of a clause in the lease agreement in 1987. Beweleys Café claimed that rent can fluctuate up as well as down provided the rent cannot be reduced below the initial rent as set out in the lease agreement, while the landlord, Ickendel Ltd, claimed that the rent cannot be reduced after any rent review.
Mr Justice Peter Charleton in a very important judgement ruled that the rent must be allowed to drop to a level to reflect the state of the market. The current rent is believed to be valued at 50% less than the rent agreed in 2007.
This case is likely to be appealed.
This decision may have far reaching consequences for landlords and greatly assist tenants tied into long leases with upward only rent review clauses.
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