Factual and Procedural Background
This opinion concerns an application for a stay brought by the Defendants / Appellants (referred to as "the Landlords") in the context of an appeal against a decision of the Dublin Circuit Court. The Circuit Court had determined the first of two modules in a landlord and tenant dispute in favour of the Plaintiff / Respondent (referred to as "the Tenant"). The dispute relates to commercial premises in The City, operated as a restaurant by the Tenant.
The Tenant initially occupied the premises under leases dated 25 January 2011 and 25 October 2015, with the latter expiring on 24 July 2020. The Tenant became entitled to a new lease under statutory provisions effective from 24 January 2016. The Tenant commenced proceedings on 1 October 2020 seeking a new lease. The Landlords initially conceded the Tenant's entitlement but later contested the validity of the lease due to alleged forfeiture.
Key events include the Tenant ceasing rent payments and closing the restaurant on 11 February 2023, the Landlords serving a forfeiture notice on 1 August 2023, and re-entering the premises on 17 August 2023, which the Landlords claim forfeited the lease. The Tenant re-possessed the premises on 25 August 2023, disputing the validity of the forfeiture.
The Circuit Court directed a two-stage trial: the first stage to determine the validity of the forfeiture, and the second to address issues relating to the new lease. The first stage trial occurred over five days between April and July 2024, with judgment delivered on 29 October 2024, finding the lease had not been validly forfeited. The Landlords appealed, and the present application concerns a stay of the second stage pending appeal.
Legal Issues Presented
- Whether there are arguable grounds for the Landlords' appeal against the Circuit Court's finding that the lease was not validly forfeited.
- Whether the balance of justice supports granting a stay of the second module of the Circuit Court proceedings pending the determination of the appeal.
Arguments of the Parties
Appellants' (Landlords') Arguments
- The Circuit Court erred in its findings regarding the VAT payment issues.
- The service of the forfeiture notice was valid under the terms of the lease despite the Circuit Court's contrary conclusion.
- The re-entry onto the premises was peaceable and thus validly forfeited the lease.
- Proceeding with the second module before the appeal is determined would lead to a waste of court resources and expense if the appeal succeeds.
Respondent's (Tenant's) Arguments
- The Tenant argues the Landlords employed a strategy to delay and lengthen the proceedings unjustifiably.
- The Landlords' re-entry was forcible, involving locksmiths using an angle grinder to break locks, and thus invalid as peaceable re-entry.
- The Tenant has incurred substantial expenditure on repairs and improvements, amounting to over €387,000.
- The Tenant wishes to reopen the restaurant and is prejudiced by further delays caused by a stay.
- The Tenant has paid rent during the Covid period and resumed payments to the Landlords' solicitors' client account, contesting any arrears.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Brompton v. McDonald (No.3) [2022] IECA 5 |
Establishing arguable grounds for appeal as a prerequisite to granting a stay. |
The court applied this principle to require the Landlords to demonstrate arguable grounds for the appeal before granting a stay. |
| Jennings v. An Bord Pleanála [2022] IEHC 61 |
Balancing the risk of injustice when deciding on a stay pending appeal. |
The court used this precedent to emphasize the need for a nuanced approach to minimize overall injustice. |
| Okunade [2012] 3 IR 152 |
Underlying principle that a stay pending appeal involves inherent risks of injustice that must be balanced. |
Guided the court's consideration of the balance of justice and risk of injustice in this stay application. |
| Krikke [2020] IESC 42 |
Recognition that any decision on a stay pending appeal carries a clear risk of injustice. |
Supported the court’s view that no simple rule exists and that a nuanced decision is necessary. |
Court's Reasoning and Analysis
The court applied a two-part test for granting a stay pending appeal: first, the appellant must establish arguable grounds for the appeal; second, the balance of justice must favour granting the stay.
On arguability, the court accepted that there were arguable grounds, particularly concerning the validity of the forfeiture notice and the nature of the re-entry. However, the court found the Landlords' argument on peaceable re-entry to be very weak, describing their approach as artificial and atomistic. The forcible nature of the re-entry, including the use of an angle grinder to break locks, undermined the claim of peaceable re-entry.
Regarding the balance of justice, the court noted the Tenant's substantial interest in the current favorable judgment and the delay and sluggishness attributed to the Landlords in processing the proceedings. The court weighed the potential prejudice to both parties: a stay would delay the Tenant's ability to reopen the restaurant and resolve lease terms, while not granting a stay might lead to some wasted costs if the Landlords' appeal succeeded. However, the court found that the risk of injustice was minimized by the Tenant's likely ability to recover costs and that the Landlords had not discharged the burden of proof to justify a stay.
The court also observed that the appeal will be heard de novo, but this did not alter the fundamental test for a stay. It recommended that the appeal be progressed expeditiously but declined to grant priority status.
Holding and Implications
The court REFUSED THE APPLICATION FOR A STAY of the second module of the Circuit Court proceedings pending determination of the appeal.
This decision means the second stage hearing will proceed as scheduled, allowing the terms of the new lease and related issues to be determined without further delay. The court emphasized that the Landlords have not shown that delaying the proceedings is justified given the weak merits of their appeal and the prejudice to the Tenant. No new legal precedent was established; the ruling applies established principles to the facts of this case.
The court provisionally awarded costs of the stay application to the Tenant but stayed the costs order pending the appeal outcome, with a further costs hearing scheduled.