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Commercial Property

Limits on court’s role in ordering compliance with lease covenant.

February 2016

 

Justice Hedigan of the High Court in judgement dated 22 January 2016 in a case brought by Thomas Thompson Holdings Limited (and others) against Musgrave Group plc (and others), declined to grant an interlocutory injunction requiring the tenant (which leased and ran the Anchor Supermarket at Carlow Shopping Centre) to continue opening for business until trial in compliance with the “keep open” covenant in the supermarket lease.

In deciding that this case was not suitable for such an order to be made before trial the judge commented that 

  • An award for damages against Musgraves if it lost the case could be an adequate remedy.
  • The Centre owner was not in a financial position to provide a meaningful undertaking as to damages.
  • The least harm principle (an issue for the court to consider when granting temporary injunctions like had been sought here) meant that refusing the order for now would push both parties to find an alternative tenant anyway.

In considering the substantive issue here, although commenting that the Centre owner raised an arguable case on the issue (whether the law required a tenant to carry out its obligation to “keep open” the supermarket), the Court felt that the main legal authority on the specific matter (the Argyll Stores case heard by the UK House of Lords in the mid-1990s) supports the view that generally, an injunction will not be granted requiring a tenant to carry on a business, and certainly not where the business is losing money. Here, Musgraves stated that they had been operating the business from the supermarket at an escalating and continuing annual loss for each of the previous four years.

Conclusion: The case shows how unlikely it is that an Irish Court will grant a positive order requiring a tenant to positively do something (as opposed to refrain from doing something in breach of the lease), especially where the tenant is carrying on its business at a loss.

Contact

For further information on updating your organisation’s policies and procedures, contact Pat Ahern, Partner, Ronan Daly Jermyn on patrick.ahern@rdj.ie

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