BVK Elektra 2 Liffey Phase 1 ICAV v Elite Gastrobars Ltd & Anor (Approved)

Factual and Procedural Background

This judgment concerns an application for summary judgment brought by the Plaintiff in respect of arrears of rent, service charge, insurance contribution, and licence fee against the Defendants. The motion was initially brought against both the first and second Defendants, with the second Defendant having guaranteed payments made by the first Defendant. However, the second Defendant was dissolved as a company after the motion was issued. Consequently, the summary judgment application proceeded against the first Defendant only, hereafter referred to as "the Defendant".

The Plaintiff is the owner of the Liffey Valley Shopping Centre, and the Defendant is the tenant of Restaurant Unit 3 within the shopping centre under a lease dated 15 November 2016. The original lease was between the two Defendants and a different landlord company. The freehold interest was later transferred to the Plaintiff, which is reflected in the relevant registered folio exhibited in affidavits. The Plaintiff claims arrears of rent and other charges that fell due after its registration as owner.

As of 27 June 2024, the total amount claimed was €276,041.44, comprising €272,195.42 under the lease and €3,846.02 under the licence. The Defendant raised multiple issues contesting entitlement to summary judgment, but these were refined at hearing. The parties agreed on the established legal principles governing summary judgment applications, including the requirement that the Plaintiff establish entitlement to judgment and that the Defendant must show a fair or reasonable probability of a real defence to justify adjournment to plenary hearing.

The proceedings commenced by summary summons on 28 June 2023. The lease, a relatively standard form, included covenants by the Defendant to pay rent and associated charges quarterly in advance without deduction or set-off except as permitted by law. The Plaintiff became registered as full owner of the freehold interest in August 2020, with conclusive evidence provided by the folio and affidavits.

The Defendant explained that arrears arose from August 2020 due to business disruption caused by Covid-19 public health measures. The lease contained a rent review mechanism, which was invoked by the Defendant in February 2024, resulting in a downward adjustment of the rent and the amount claimed.

Two affidavits sworn by the Defendant raised several preliminary issues, including the Plaintiff’s status as an Irish Collective Asset-management Vehicle (ICAV) and the appropriateness of summary judgment during a rent review. These issues were resolved or fell away by the time of the hearing.

Legal Issues Presented

1. Whether the Plaintiff is entitled to summary judgment for the arrears claimed under the lease and licence.
2. Whether the Defendant has demonstrated a bona fide defence sufficient to adjourn the matter to plenary hearing, specifically regarding:
• The accuracy and clarity of the Plaintiff’s accounts and figures claimed.
• The Plaintiff’s status and entitlement as landlord to recover the sums claimed.
• The interpretation of insurance and business interruption clauses in the lease, particularly concerning Covid-19 restrictions and rent suspension.

Arguments of the Parties

Defendant's Arguments

• There is a lack of clear explanation in the Plaintiff’s accounts and figures, with specific reference to unexplained entries and alleged mathematical errors in the statements of arrears.
• The Plaintiff’s status as landlord is questioned, particularly the entitlement to arrears arising before the Plaintiff’s registration as owner.
• The Plaintiff failed to obtain insurance covering business interruption caused by public health measures, which should relieve the Defendant from rent obligations during Covid-19 restrictions.
• The rent suspension clause (clause 7.4) in the lease should apply to prevent rent payments while access to the premises was restricted by public health measures.

Plaintiff's Arguments

• The Plaintiff provided detailed affidavits explaining the accounts and figures, including adjustments following the rent review and clarifications of entries challenged by the Defendant.
• The Plaintiff’s status as landlord is conclusively evidenced by the registered folio and the rent review memorandum entered into by the parties, which the Defendant accepted.
• The insurance obligations under the lease relate to physical damage risks ("Insured Risks") and do not extend to business interruption caused by public health restrictions such as Covid-19.
• The rent suspension clause applies only where physical damage or prevention of access results from an Insured Risk, not regulatory or public health restrictions.
• The Plaintiff relied on case law supporting the interpretation that rent cesser clauses do not cover regulatory restrictions, including Oyster Shuckers Ltd v. Agriculture Manufacture Support (EU) Ltd and Bank of New York Mellon (International) Ltd v. Cine-UK Ltd.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the refined issues raised by the Defendant and found that the Plaintiff had sufficiently established entitlement to summary judgment. The Plaintiff’s evidence, including affidavits and exhibited documents, adequately explained the accounts and figures claimed, addressing the Defendant’s concerns about unclear entries and alleged errors. The Defendant failed to demonstrate any specific, credible discrepancies or to provide an alternative correct calculation of sums owed.

Regarding the Plaintiff’s status as landlord, the court accepted the conclusive evidence of title provided by the registered folio and the rent review memorandum, which the Defendant effectively accepted. The court found no legal impediment to the Plaintiff’s claim for arrears accruing after registration of ownership.

On the interpretation of the insurance and rent suspension clauses, the court concluded that the landlord’s obligation to insure related only to defined "Insured Risks" involving physical damage or events reasonably insurable, not to business interruption caused by public health restrictions such as Covid-19. The rent suspension clause (clause 7.4) was interpreted as applying only where physical damage or prevention of access resulted from an Insured Risk. The Defendant’s interpretation that regulatory restrictions alone could trigger rent suspension was rejected as incorrect.

The court noted supportive case law from both Irish and English courts that align with its interpretation, distinguishing cases with differing facts or legal contexts. The Defendant’s reliance on the Lestown case was found inapposite due to its different circumstances, including the presence of insurance coverage for notifiable diseases and the nature of the application.

Accordingly, the court found that the Defendant had not demonstrated a bona fide defence sufficient to adjourn the matter to plenary hearing and that the Plaintiff was entitled to summary judgment.

Holding and Implications

The court granted summary judgment to the Plaintiff in the amount of €276,041.44.

This decision directly resolves the Plaintiff’s claim for arrears against the Defendant, confirming the Plaintiff’s entitlement to recover rent and associated charges under the lease and licence following its registration as owner. The court’s interpretation of the insurance and rent suspension clauses clarifies that business interruption caused by public health restrictions does not excuse rent payment absent physical damage or insured risks. No new precedent was established beyond the application of existing principles to the facts.

The matter was listed for final orders and to hear submissions on costs and interest.