Lindat Ltd v The PW Plaza Café Bar Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Nolan
• Judgment Date: 18 June 2024
• Neutral Citation: [2024] IEHC 355
• Court: High Court
• Docket Number: [Record No. H.P.2024.0000172]

Between

Lindat Limited

Plaintiff

and

The PW Plaza Café Bar Limited

Defendant

[2024] IEHC 355

[Record No. H.P.2024.0000172]

THE HIGH COURT

JUDGMENT ofMr Justice Nolandelivered on the 18 ^th day of June, 2024

Introduction

1 . The Plaintiff is a company which was originally part of Harcourt Developments Group, which is a large property company. However, in 2023, the ownership of the shares of the company changed. It owns a public house known as the Donaghmede Inn at Grange, Baldoyle, Dublin 13, part of the Donaghmede Shopping Centre and is its landlord.

2 . The Defendant is a company which presently holds the licence and is still part of the Harcourt Development Group.

3 . In September of 2020, the Plaintiff entered into a lease with the Defendant, in the middle of the COVID19 pandemic.

4 . On the 19 ^th of July 2023, a new company Marisola Ltd, took ownership of the shares of the Plaintiff and acquired its interest in the lease. On the 8 ^th of August 2023, it served a Notice of Forfeiture on the Defendant, in circumstances where there were significant arrears of rent, service charges and insurance premiums, totalling €441,948.44.

5 . The Defendant says that the Notice of Forfeiture is invalid due to one of two side letters, the second of which, dated the 23 ^rd of September 2020, the day after the signing of the lease, suspended the payment of any monies until the public house had been refurbished and was up and trading.

6 . Further, acting on that and other representations, the Defendant says it expended monies in excess of €255,000, upgrading the premises and therefore the Plaintiff is estopped from claiming the rent, rates and charges and from seeking possession, since the Forfeiture Notice is invalid. It says that it was and still is willing to pay the rent, once the Plaintiff permits it to open, something it has prevented up to now.

7 . These proceedings seek the return of the 7-day licence which is in the hands of the Defendant and without which, the Plaintiff cannot lease the premises to a new tenant.

Background

8 . On the 22 ^nd of September 2020, a lease was granted by the Plaintiff in respect of the premises for a term of 10 years at a market rent of € 80,000 per annum. The lease was entered into in unusual circumstances, in that on the 15 ^th of March 2020, public houses in the State were requested to close due to COVID-19. They remained closed for almost 2 years.

9 . On the 9 ^th of July 2020, a liquidator was appointed to Donaghmede Inns Limited, the former tenant of the public house. The affidavits say that the then directors of Lindat Limited were concerned that the liquidator might sell the licence to allow a third party to extinguish it pursuant of Section 18(2) of the Intoxicating Liquor Act 2000. At the time, as noted above, the Plaintiff was part of the Harcourt Developments Group, and in preference to taking the licence in its own name, it was decided that another Harcourt Developments company, the Defendant, should take the lease. The Defendant paid the liquidator of the former tenant €30,000 for the licence and fittings on the same day that the lease was executed.

10 . In September 2020, the Premises was vacant and in need of total updating and refurbishment but was not able to trade until all COVID19 restrictions had been lifted. For much of the periods of lockdown, no construction activity was possible, but if there was no lease in place, the licence would lapse if not renewed annually by the 30 ^th of September.

11 . To avoid that possibility, on the 22 ^nd of September 2020, the Plaintiff granted the lease to the Defendant. The rent recited in the lease was the independently verified market rent for the Premises in “ shell and core” state.

12 . Clause 5.18 of the lease suspended the rent during COVID19 restrictions, so a side letter (“the First Side Letter”) was written by the Plaintiff to the Defendant, which stated that the rent would be abated for the first two years. This First Side Letter, together with the lease, were furnished to the Plaintiff's lenders, EPF, whose consent was needed. It agreed to both the lease and the contents of the First Side Letter.

13 . However, the very next day, the 23 ^rd of September 2020, the Plaintiff wrote another letter (“the Second Side Letter”). In the context of this dispute, I think it is worth setting it out in full.

“LINDAT LIMITED (hereinafter referred to as “The landlord”

18/19 Harcourt Street

Dublin 2

To: The PW Plaza Café Bar Limited (“the Tenant”)

18/18 Harcourt Street

Dublin 2

Re: Unit 1, Donaghmede Shopping Centre, Grange Road, Dublin 13 (the “Demised Unit”)

Lease of even date made between (1) Lindat Limited (hereinafter called “the Landlord”) of the First P (2) The PW Plaza Café Bar Limited of the Second Part (“the Lease”)

Dated 23 day of Sept, 20

Dear sirs

This side letter is supplemental to the Lease.

Save where the context otherwise requires, capitalized terms not defined in this letter shall have the same meaning as assigned to them in the Lease.

In consideration of you the Tenant entering the lease, we confirm that notwithstanding the terms of the Lease, the following is agreed;

• 1. The Payments and Outgoings to include rent, service charge, Insurance and all other outgoing payable by the tenant under the lease shall commence when the fit-out works are complete and the premises has commenced trading.

• 2. The Rent Payable in the Lease for the first year and 2nd year following the commencement of trade shall be abated to €40,000 plus VAT being 50% of the Initial Rent reserved in the Lease. The abated Rent payable is to be paid in accordance with the terms of the Lease to the intent that each quarterly payment under the Lease in the first and the second year of the Term is abated by 50% to €10,000 plus VAT.

The landlord may assign the benefit of this agreement or may mortgage it or charge it to banks or other financial institutions. The landlord will also be at liberty to grant steps in rights with respect to its interest in this agreement to banks or other financial institutions. The Tenant will join in and be party to any such agreement required by such banks or financial institutions full.

In all other respects the Lease is confirmed.”

14 . There are a number of things to note about this letter. The first is that the registered offices of the landlord are the same as that of the tenant, which is not such a surprise seeing as they are part of the same group. The second is that the two letters share much of the same language including the word “ consideration”, with the date written in by hand. Finally, this was an incredibly generous offer. Notwithstanding the contents of the lease, and the contents of the First Side Letter, this Second Side Letter waived the obligation to pay rent, service charges, insurance and all other outgoings. Further, even after the business started to trade there was to be a 50% cut in the initial rent reserved in the lease.

15 . In the context of the obligations on the part of the Plaintiff, as it was then owned by Harcourt Developments Group, to seek the approval of their lender, EPF, this was a most surprising letter. It would seem to have been the intent to bind parties who may purchase the shares in the Plaintiff in the future.

16 . In December of 2021, EPF discovered the Second Side Letter. On the 13 ^th of February 2023, the lenders appointed receivers over the whole of the Donaghmede Shopping Centre, including the public house. In March 2023, the Defendant sought to open the premises for trade after the refurbishment.

17 . In July of 2023, the shares of Lindat were acquired by Marisola Limited and new directors were appointed. From that point on it was no longer part of the Harcourt Developments Group of companies, nor indeed was the rest of the shopping centre.

18 . On the 8 ^th of August 2023, the Plaintiff served a Notice of Forfeiture on the Defendant pursuant to section 14 of the Conveyancing Act, 1881 and gave it 21 days to remedy its breach of covenant and pay the arrears of rent then due and owing in the sum of €199,226.30. While the Forfeiture Notice was silent as to how the arrears were calculated, it is common case that it was on the basis of the First Side Letter. On the same day it served a letter demanding the arrears of service charge in the sum of €234,935.17 and insurance for €7,786.97, which were due and owing on that date, again, giving it 21 days to pay those sums. In total the sums due and owning was said to be €441,948.44.

19 . On the 29 ^th of August 2023, the Plaintiff re-entered and took possession of the premises using a master key, pursuant to Clause 5.1 of the lease, and the next day requested the Defendant to assign, transfer and deliver the publican's licences and restaurant certificates in respect of the demised premises. It got no response.

20 . While the parties entered into significant table tennis type correspondence, no application was made by the Defendant for an injunction to prevent the Plaintiff obtaining possession.

21 . On the 21 ^st of September 2023, the Plaintiff notified Dublin Metropolitan District Court of its intention to apply to transfer the license into its name, returnable on the 28 ^th of September 2023, but unbeknownst to it, the next day on the 22 ^nd of September, the Defendant had applied through the Revenue Commissioners for the renewal of the license in its name. Then, on the 2 ^nd of October 2023, the license was duly issued to the Defendant through the offices of the Revenue Commissioners. But on the 23 ^rd of November 2023, the District Court certified that the Plaintiff was entitled to receive the license in respect of the premises.

22 . On the 10 ^th of January 2024, the Plaintiff sent a final warning letter demanding return of license and two days later, these proceedings were issued seeking interim and...