A Grafton Street footwear and clothing store is in dispute with its landlord over liability to pay instalments on the €750,000 per year rent because it had to close due to the pandemic, the Commercial Court has heard.

Foot Locker claims the lease it holds on the store has “been entirely frustrated” by the Covid-19 restrictions. The landlord, Percy Nominees Ltd, says this is “nothing more than a transparent and ill-judged attempt to unilaterally renegotiate the terms of the lease for the commercial benefit of Foot Locker.”

Declaration

Foot Locker Retail Ireland Ltd, which operates a number of stores in Ireland, issued High Court proceedings last month seeking a declaration it has “no liability for rental payments under the lease as and from March 24th 2020”.

Percy Nominees was granted permission by Mr Justice David Barnivlle on Monday to have the case dealt with in the fast track Commercial Court. The application was made on consent from Foot Locker.

In an affidavit seeking entry of the case to the commercial list, Percy Nominees director Paul O’Shea said Foot Locker failed to pay the due quarterly rent instalments of €187,500 on both April 1st and July 1st last.

Mr O’Shea said a demand for payment was made. In a letter on June 8th to the real estate agents acting for Percy Nominees, Foot Locker contended, as it was unable to open due to the pandemic, there was “no basis under which there is a liability for rent” since closing.

While there was a “limited retail opportunity for opening” from June 8th, it was clear such an opening was nothing like what was envisaged by the lease, it said.

Foot Locker agreed on July 28th to pay, and did pay, half the rent due as of July 1st and said it was “willing to discuss the circumstances concerning the lease”.

Percy Nominees responded the clauses in the lease did not support its claim the lease was frustrated.

Action

Percy also put it on notice, if the outstanding €281,250 was not paid by August 11th, it would take enforcement action. Mr O’Shea said the Foot Locker lease is due to expire in March, 2025 which means the total rent which will fall due over that time is around €3.75 million.

Foot Locker, he said, is seeking to avoid payment of that sum. Percy Nominees contends Foot Locker is obligated to pay rent in accordance with the terms of the lease.

Mr O’Shea said Percy Nominees is dependent on the rent roll from this and other premises its leases to support its business operations and discharge its liabilities A scenario such as this, whereby the return on an asset is impeded, can have wider implications beyond this case, he said

. “The commercial aspects and consequences of this dispute go beyond the issue of rent,” he said. Mr Justice Barniville, admitting the case to the Commercial Court, noted this appeared to be the first case where a lease has been affected by the national emergency

. It was a “very appropriate” case for considering mediation as it was a difficult situation for both parties, particularly Foot Locker, because there was a requirement by the government to close, he said. The case was made returnable to January.