The Bewley's Group has described today's landmark Supreme Court ruling upholding its upward only rent clause as "immensely disappointing" saying it had only wanted to be treated fairly by its Grafton Street landlord Ickendel Ltd.
The company, which is controlled by developer Johnny Ronan, was successful in its appeal against a High Court decision last March that supported reducing the rate to reflect market conditions.
Bewley's, which has been owned by the Campbell family since 1986, saw its rent liability increase to an "oppressive" €1.46 million in 2007.
In a statement today, the company said it was “immensely disappointed” at the development.
"The landlord has managed to achieve an oppressive rent of €1.5 million which was set in 2007 at the height of the unsustainable property bubble, and which is double the market rent set at 1 January 2012," said group chief executive John Cahill.
“All we have sought to achieve was an acknowledgement of economic reality and fair treatment with a rent that reflects market values, but this has been blocked by Nama and the landlord.”
Bewley’s had argued the rent should fall in line with market conditions but Ickendel resisted and the matter was ultimately tested in the High Court, the successful appeal of which was outlined today.
The initially successful High Court ruling would have reduced the amount to €728,000, as arrived at by an arbitrator.
There is no suggestion the decision will undermine the company’s presence in the iconic Grafton Street location but it will be a welcome one for landlords and for Nama which has interests in many commercial properties.
"The High Court decision [had] caused significant uncertainty as to the efficacy of upwards only rent review clauses generally in leases granted before March 2010," noted Andrew Muckian, partner and head of property at William Fry solicitors who advise on property development and transactions.
“The Supreme Court decision will be greeted with relief by Nama and all landlords and investors and is likely to act as a further stimulus to international and domestic investor interest in Ireland’s recovering commercial property sector.”
Meanwhile, Senator Fergal Quinn says he is confident the ruling would have little effect on legislation he is hoping to pass to curb the practice of one-way reviews.
His Upward Only (Clauses and Reviews) Bill 2013 is to be debated in the Dáil either next week or in September.
Should it pass that stage, Mr Quinn believes President Michael D Higgins will refer it to the Supreme Court in a move that will ultimately decide the future of the controversial regime.
“We have three legal views from a judge and two senior counsel saying there is no reason why the upward [only reviews] should continue,” he said.
“The judge said it is a specific issue in this case. From that point of view it gives us confidence.”
Both Johnny Ronan and Nama declined to comment on the ruling.