In a recent landlord and tenant case, Kenneth Treacy v Lee James Menswear Limited and James O'Regan [2022] IEHC 600, the plaintiff landlord sought summary judgment for rent arrears and unpaid insurance premia under a 2007 lease. The defence put forward by the tenant was frustration of contract brought about by the COVID-19 regulations which, it argued, prevented it from using the premises as a retail outlet, thereby relieving it of its obligation to pay rent and other amounts under the lease.
The tenant sought to rely on two provisions of the lease which obliged the tenant:
"not to engage in any activity in or on the demised premises which may result in: The landlord incurring liability or expense under any statutory provision"; and
"not to use the demised premises --- for any illegal --- purpose ---".
The judge reviewed the authorities on frustration of contract, rejected the concept of partial frustration of a commercial lease and held that the tenant's contention that it was discharged from its obligation to pay rent for so long as the COVID-19 regulations were in force had no basis in law. Whilst COVID-19 regulations were in force the tenant continued to remain and enjoy rights afforded by law to a tenant albeit the subject to temporary restrictions.
Judgment was granted to the plaintiff against the tenant and the guarantor of the tenant's lease obligations (the second-named defendant) in respect of the rent arrears and unpaid insurance premia.
This case is a useful summary of the defence of frustration in the context of commercial leases and the impact of COVID-19. It follows the approach adopted in the other Irish cases referenced below:
Foot Locker Retail Ireland Limited v Percy Nominees Limited [2021] IEHC 749
Oysters Shuckers Ltd T/A Klaw v Architecture Manufacture Support (EU) Ltd and Anor [2020] IEHC 527.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
