Electronic Peaceable Re‑Entry and the “Free Ride” Bar to Mandatory Injunctions: New Guidance from Perfect Stripe Ltd t/a Grafter v Fennell & Ors [2025] IEHC 585

Court: High Court (Commercial Court), Ireland

Judge: Twomey J

Date: 31 October 2025

Citation: [2025] IEHC 585

Introduction

This Commercial Court judgment arises from an application by Perfect Stripe Limited trading as Grafter (“Grafter”), a serviced-office operator, for a mandatory interlocutory injunction seeking the return of possession of three prime Dublin office buildings (at St. Stephen’s Green, Ely Place and Leeson Street) from joint receivers appointed over the landlord entities (Wonder Bay Ltd, Crossville Properties Ltd and Discovery Dawn Ltd). The receivers were appointed by lenders within the RELM Group after significant rent arrears accrued under Grafter’s intra‑group leases.

The core backdrop is an intra‑group structure: Grafter, controlled by Mr. Paddy McKillen Jr, leased the properties from three special purpose landlord companies that were also within the McKillen Group. The landlord SPVs financed the acquisitions through RELM Group facilities secured over rent accounts; rent serviceability was aligned with interest cover requirements. Following interest rate rises, Grafter executed Deeds of Variation (again signed by Mr. McKillen for both sides) increasing rent to support the landlords’ loan covenants. Substantial arrears then arose, the receivers were appointed, and they re‑entered the properties peaceably on 23 June 2025.

Grafter advanced a suite of arguments to justify restoration of possession pending trial, including:

• that rent arrears should be re‑computed because “rent equals interest” (i.e., rent varied with the landlords’ interest obligations to the lender and could be satisfied by interest payments made by other group companies);
• that rent increases were procured by “unconscionable” lender pressure in the wake of rising rates;
• that the receivers misappropriated Grafter’s serviced‑office business by continuing to permit licensees to occupy and by appointing a third‑party operator;
• and that re‑entry was not “peaceable” given remote de‑magnetisation of doors, cutting of padlocks, and slipping of a latch.

The High Court refused the injunction. In doing so, it clarifies two important points with practical reach: first, what constitutes “peaceable re‑entry” in the modern, electronically-controlled built environment; and second, when a tenant in arrears can (and cannot) obtain a mandatory interlocutory injunction that would effectively grant a “free ride” in occupation pending trial.

Summary of the Judgment

• Test applied: The court applied the Supreme Court framework in Merck Sharpe & Dohme v Clonmel Healthcare [2019] IESC 65: (i) the form of final relief might be granted at trial; (ii) there is a fair issue to be tried; and (iii) the balance of justice favours an injunction, with robust scepticism regarding claims that damages are inadequate in commercial disputes.
• No fair issue to be tried: The “rent equals interest” thesis was rejected as flatly inconsistent with the leases and Deeds of Variation (each containing entire agreement language and setting a fixed rent). The “unconscionable pressure” claim failed; the lender’s demands were the normal stresses of commercial life and of enforcing agreed loan covenants. Claims of misappropriation failed because Grafter’s ability to operate depended on its leasehold estate, which it lost through forfeiture for non‑payment. The receivers’ re‑entry was found to be peaceable and permissible.
• Balance of justice: Even if there were a fair issue, the balance of justice strongly favoured refusal. Grafter offered only €1.6m against €3.82m arrears and refused to undertake to pay the full contractual rent going forward. The court emphasised that granting possession on that basis would give the tenant a “free ride” at the lender’s expense.
• Mandatory nature of relief: The relief sought was mandatory (to reverse a completed forfeiture and re‑entry). That elevated the threshold to showing a strong and clear case likely to succeed at trial (Ryanair DAC v Skyscanner [2022] IECA 64). Grafter did not come close.
• Result: Interlocutory injunction refused. Case adjourned for mention to finalise orders and costs.

Detailed Analysis

1. Precedents Cited and Their Influence

The court’s approach is tightly anchored in established authority, which it applies with notable practical clarity to modern commercial realities.

• Merck Sharpe & Dohme v Clonmel Healthcare [2019] IESC 65 (O’Donnell J): Set the modern Irish test for interlocutory injunctions. Twomey J followed Merck’s emphasis that the core task is to do justice pending trial, with the adequacy of damages often paramount, and with courts in commercial disputes being “robustly sceptical” of assertions that damages are inadequate. This scepticism underpins the court’s readiness to refuse relief where the tenant was in arrears and could not commit to the full contractual rent going forward.
• ACC Bank plc v Kelly [2011] IEHC 7 (Clarke J): “It is not open to a borrower to disregard the terms and then complain about them later when they do not suit.” The court uses this to reject Grafter’s attempt to re‑characterise rent as a function of interest obligations (or as satisfied by other group remittances), contrary to the clear lease and Deed of Variation terms and the explicit “entire agreement” provisions.
• ACC Bank v Dillon & Others [2012] IEHC 474 (Charleton J): The law tolerates the stresses of commercial negotiation; pressure to agree terms in a difficult credit environment does not necessarily amount to duress or render agreements unconscionable. Twomey J uses this to dismiss Grafter’s claim that interest‑rate‑driven lender pressure invalidated Grafter’s rent increases.
• Oyster Shuckers Ltd t/a Klaw v Architecture Manufacture Support (EU) Ltd [2020] IEHC 527 (Sanfey J): A tenant’s failure to pay past rent and inability to pay future rent weighs heavily against interlocutory relief; reversing a lawful peaceable re‑entry amounts to an effective mandatory injunction. Twomey J invokes Oyster Shuckers to emphasise why Grafter’s limited offer and refusal to commit to full rent could not carry the balance of justice.
• Sweeney (F.G.) Ltd v Powerscourt Shopping Centre [1984] WJSC‑HC 2859 (Carroll J): The “free ride” principle—courts should not countenance a lessee enjoying possession without paying rent and services. Twomey J adopts this language to underline the injustice in granting possession to a tenant in significant arrears who will not undertake to pay full rent.
• Ryanair DAC v Skyscanner Ltd [2022] IECA 64 (Murray J, approving [2020] IEHC 399): A mandatory interlocutory injunction requires a strong and clear case likely to succeed at trial. Grafter’s case fell far short.
• Word Perfect Translation Services Ltd v Minister for Public Expenditure and Reform [2023] IECA 189: Cited for costs management—urging a broad‑brush, resource‑efficient approach. While tangential to the merits, it flags the court’s expectation of pragmatic case management in the aftermath.

2. The Court’s Legal Reasoning

(a) The “Rent = Interest” Theory: Contract Text Trumps Post‑hoc Understandings

The lodestar of the court’s analysis is the written bargain. Each lease specified a fixed rent. Each Deed of Variation increased rent to specific figures (e.g., €1.75m p.a. for St. Stephen’s Green), expressly ratifying the lease and including entire agreement language that precluded reliance on extra‑contractual representations (see para. 35–39). The leases explicitly state that the tenant did not rely on statements other than those contained in the lease or specified pre‑lease documents. No document states that rent is a moving function of the landlords’ interest burden or that group interest payments would discharge Grafter’s rental obligations.

Against that backdrop, Grafter’s reliance on an email exchange from RELM’s loan services director (detailing rents needed to maintain covenant compliance and threatening consequences if deeds were not signed) could not morph the rent clause into a variable formula or underpin an estoppel. The court describes the exchange as precisely what one expects from a lender keen to ensure borrowers meet their covenants (para. 32–34), not as evidence of a tripartite variation of landlord‑tenant obligations that the lender was not even party to. Clarke J’s warning in ACC v Kelly is pointedly applied: if a party wants a key term (here, “rent = interest”), that term must be written in before signing.

The court also notes the forensic inconsistency that when rent was demanded (10 June 2025), Grafter’s immediate response (19 June) did not rely on the “rent = interest” theory but instead argued pressure and set‑off (para. 41–43). This omission undermined the credibility of the claimed understanding. Conclusion: there is no fair issue to be tried on re‑computation of rent; the arrears figure of €3.82m (per the contractual rent) governs for the interlocutory stage.

(b) “Unconscionable” Pressure from Rising Rates: Commercial Pressure Is Not Duress

Grafter said the rent increases were procured under unconscionable pressure: the lender insisted rents rise so that the landlord SPVs could maintain interest cover; otherwise receivership would follow. The court holds that such pressure reflects ordinary commercial reality, particularly in a rising‑rate environment (para. 50–52). ACC v Dillon is instructive: the law recognises the “stresses of commercial negotiation” and does not invalidate agreements simply because one party felt it had “no choice” to avoid adverse outcomes that were themselves contractually anticipated.

Two further facts eviscerate the claim. First, the same person (Mr. McKillen) controlled both sides to the rental variation; the arrangement was intra‑group and knowingly adopted to satisfy lender covenants. Second, the consequence invoked (appointment of receivers) was not an unlawful threat but a contractual remedy. The court therefore finds no fair issue on unconscionability.

(c) No Duty to Give Additional “Notice” of the End of Without‑Prejudice Negotiations

Grafter complained that after good‑faith negotiations in April–May 2025 and a limited rent abatement for April/May, the receivers moved too quickly to demand arrears (10 June) and to re‑enter (23 June). The court notes the negotiations were without prejudice to full rights under the leases (para. 54), and Grafter never specified what more time was needed for or what would have changed. Thirteen days sufficed; no fair issue arises (para. 55).

(d) Peaceable Re‑Entry in the Electronic Age: Remote Unlocking, Cutting Padlocks, and Slipping a Latch

The receivers effected re‑entry by:

• remotely disabling magnetic locks;
• cutting two padlocks on gates at St. Stephen’s Green;
• slipping a front‑door latch at Ely Place with a piece of plastic.

The leases mattered. St. Stephen’s Green (and Leeson Street in materially similar terms) authorised re‑entry for non‑payment and allowed the landlord to take “reasonable steps” to effect re‑entry (para. 57–59), even contemplating that some damage might occur with a duty to make good (para. 59).

The court’s findings are clear and practically significant:

• Remote de‑magnetising of electronic locks is peaceable re‑entry. It is akin to asking a key‑holder to open the door and is the “epitome” of peaceable entry (para. 62). Instructing the building’s security contractor to disable magnetic locks is not violent or unlawful.
• Cutting padlocks can be a “reasonable step” permitted by the lease. Otherwise, a defaulting tenant could thwart re‑entry merely by attaching a padlock, forcing needless litigation for what amounts to removing an obstacle to effectuate a granted remedy (para. 58–59).
• Slipping a latch with a piece of plastic is likewise not violent; if this were non‑peaceable, landlords would be driven to court orders in almost every forfeiture for non‑payment—a result the court rejects as commercially unrealistic (para. 66–67).

This is the judgment’s most forward‑looking clarification: technology‑enabled access (and simple mechanical techniques) can constitute lawful peaceable re‑entry, particularly where leases authorise “reasonable steps.”

(e) Alleged Misappropriation of Grafter’s Business

Grafter argued that by continuing to accommodate licensees and appointing a replacement operator (Iconic), the receivers misappropriated its business, and that employees moved under TUPE. The court disagreed. Grafter’s “business” depended on its leasehold estate; once forfeited, it had “nothing to sub‑lease” to licensees. The receivers’ duty is to obtain the best price reasonably obtainable (para. 70); maintaining licence income streams and continuity of occupation enhances value. The alternative—shuttering premises, expelling licensees, and thereby undermining value and creating redundancies—would risk breach of duty and loss. The TUPE movements simply reflected employees preserving jobs where Grafter could no longer offer employment (para. 68–74). No fair issue arises.

(f) Balance of Justice: No Interlocutory “Free Ride”

Even if a fair issue existed, the balance of justice decisively favoured the receivers:

• Arrears and undertakings: Against €3.82m arrears, Grafter offered €1.6m sourced from third parties and refused to undertake to pay the full contractual rent prospectively (para. 76–83). That is precisely the “free ride” Sweeney v Powerscourt warns against: the court will not restore occupation to a tenant unwilling to meet its bargain.
• Relative financial positions and adequacy of damages: Grafter’s inability to fund its own proposal signalled weakness; if an injunction issued but the tenant lost at trial, recovery from Grafter was doubtful. By contrast, there was no evidence that the RELM Group could not meet damages if it ultimately lost (para. 86–90). Under Merck, courts are sceptical of claims that damages are inadequate in such commercial settings—no such evidence was offered by Grafter.
• Status quo and mandatory nature: Reversing re‑entry would upend the status quo and require a mandatory order, available only upon a strong case likely to succeed (Ryanair v Skyscanner). Grafter’s case fell short of even a fair issue on its central planks (para. 92–95).

3. Likely Impact and Practice Guidance

(i) Peaceable Re‑Entry in a Digitised Built Environment

The judgment modernises the concept of “peaceable re‑entry”:

• Remote disabling of electronic locks is peaceable;
• Removing tenant‑added barriers (e.g., padlocks) can be a “reasonable step” under an explicit lease clause;
• Low‑force mechanical techniques (slipping a latch) are not violent re‑entry.

For landlords and receivers: draft and rely on “reasonable steps” clauses for re‑entry; coordinate with building security contractors; preserve evidence of non‑payment and the access sequence; promptly repair any incidental damage (as required by the lease).

For tenants: absent a court order or express lease constraints, electronic and low‑force re‑entry methods are unlikely to found a successful challenge where arrears persist.

(ii) Interlocutory Relief in Rent Forfeiture Cases: The “Free Ride” Principle Strengthened

Perfect Stripe consolidates Oyster Shuckers and Sweeney into a clear practical rule: a tenant seeking to reverse re‑entry must, at a minimum, offer to discharge arrears calculated per the lease and undertake to pay full contractual rent hereafter. Without that, the balance of justice will rarely favour relief, especially in commercial contexts where damages are typically adequate.

(iii) Entire Agreement and Intra‑Group Contracts: No Side‑Door Rent Recalibration

The case is a warning against relying on “understandings” to recalibrate rent outside the lease framework, particularly in intra‑group scenarios:

• Entire agreement clauses will be enforced;
• Post‑signing emails about covenant compliance do not vary rent obligations;
• Payments by other group companies to the lender will not be “deemed” to be rent paid by the tenant absent clear contractual language.

(iv) Receivers’ Duties and Continuity of Trade

Facilitating continued occupation by licensees and appointing an alternative operator to preserve income is consistent with a receiver’s duty to achieve best price. Claims of “misappropriation” will not gain traction where the tenant’s business model cannot subsist without its leasehold estate and forfeiture has lawfully occurred.

(v) Litigation Strategy and Evidence

• Tenants seeking relief should be prepared with funds to clear arrears per contract and to give an explicit undertaking to pay full rent prospectively.
• If alleging unconscionability or variation, point to contemporaneous documents evidencing the alleged term; silence in response letters and absence of written terms will be fatal.
• On adequacy of damages, put forward concrete evidence if arguing that damages would not suffice; Merck’s scepticism looms large in commercial disputes.
• Expect the court to preserve the status quo where forfeiture and re‑entry have occurred; mandatory relief requires a strong and clear case likely to succeed at trial.

Complex Concepts Simplified

• Interlocutory injunction: A temporary court order to maintain or alter the position until a full trial decides the dispute. The applicant must show a fair issue to be tried and that the balance of justice favours the order.
• Mandatory vs prohibitory injunction: A mandatory injunction requires someone to do something (e.g., hand back possession), while a prohibitory injunction restrains action. Mandatory relief needs a stronger showing—usually a clear case likely to succeed.
• Balance of justice (balance of convenience): The court’s assessment of what is fairest pending trial, considering adequacy of damages, relative hardship, and status quo.
• Adequacy of damages: If money can compensate the applicant later, courts are reluctant to grant interim injunctions, especially in commercial disputes.
• Peaceable re‑entry: Regaining possession without force or violence, typically expressly allowed by leases for non‑payment. In this case, remote unlocking, cutting padlocks, and slipping a latch were all held to be peaceable or reasonable steps under the lease.
• Entire agreement clause: A term confirming that only the written contract terms (and specified documents) form the agreement; it prevents reliance on extraneous “understandings.”
• Interest cover ratio (ICR): A loan covenant measuring how comfortably rent receipts cover interest payments (here, set at 1.1x), often driving rent requirements in property finance.
• Receivership: A remedy for secured lenders where a receiver is appointed to take control of assets (like income‑producing properties) to realise value and repay the lender.
• TUPE: Regulations protecting employees when a business or part of it transfers to a new operator; employees can move with their jobs on existing terms.

Conclusion

Perfect Stripe Ltd t/a Grafter v Fennell & Ors delivers two clear and impactful messages for commercial property and enforcement practice in Ireland.

First, on peaceable re‑entry, the High Court adapts the concept to contemporary building technology. Remote de‑magnetisation of electronic locks, cutting tenant‑imposed padlocks, and slipping a latch are peaceable or reasonable means of re‑entry where the lease permits it, particularly to avoid the absurdity of requiring court orders for the removal of simple barriers in the face of non‑payment.

Second, the judgment crystallises a “no free ride” rule for mandatory interlocutory relief in rent forfeiture cases. A tenant in significant arrears who neither pays the arrears calculated under the lease nor undertakes to pay full contractual rent going forward will rarely persuade a court that justice requires restoration of possession pending trial. This is reinforced by Merck’s scepticism about the inadequacy of damages in commercial cases and by the elevated threshold for mandatory injunctions in Ryanair v Skyscanner.

The decision also underscores the primacy of written contract terms—especially entire agreement clauses—over post‑hoc assertions of “understandings,” and it recognises receivers’ legitimate role in preserving and enhancing value through continuity of occupation and income.

The key takeaways:

• Draft, honour, and, if needed, vary rent and re‑entry provisions in writing; courts will enforce what you sign.
• Expect courts to treat technology‑enabled access methods as peaceable re‑entry when leases authorise “reasonable steps.”
• Do not expect interlocutory possession if you are in arrears and will not commit to the full contractual rent; courts will not facilitate a “free ride.”
• Receivers may lawfully sustain licence income and appoint operators to maximise value; that is not misappropriation where the tenant’s lease has been forfeited.

In sum, Twomey J’s judgment offers pragmatic, commercially coherent guidance at the intersection of property finance, receivership practice, and interim remedies—guidance that will travel beyond the serviced‑office sector to landlord‑tenant disputes wherever leases, security covenants, and modern access control systems converge.