Foot Locker on the offensive

It has been reported that Foot Locker Retail Ireland Limited have lodged an appeal against the decision of the High Court which was delivered by Justice Brian O’Moore on 30 November 2021.

The High Court

This case has now been well publicised and Foot Locker put forward a novel argument that the lease of their premises in Grafton Street had been “partially frustrated” as a result of the Covid-19 restrictions. If successful, this would mean Foot Locker would have been entitled to occupy the Grafton Street premises but not pay any rent for the period of the restrictions.

In support of that argument they pointed to the following covenants in their lease:-

1. A covenant by them to comply with enactments for the time being in force or any orders or regulations thereunder.
2. A covenant to use the property as a high quality retail shop.
3. A covenant to keep the premises open at all reasonable times.

At the outset, Foot Locker sought a declaration that the lease was frustrated and that they had no liability to pay the rental payments under the lease from 24 March 2020. This argument subsequently changed in the course of the pleadings and the question for the court to decide was whether there was a partial frustration of the terms of the lease. Effectively, Foot Locker’s argument was that the combination of the “keep open” clause and the user clause mandated the tenant to operate a high end retail store from its Grafton Street premises during normal trading hours which was rendered impossible during the period of restrictions. Percy Nominees argued that the concept of partial frustration was unknown in Irish law and did not exist.

Justice O’Moore found in favour of Percy Nominees and ruled that partial frustration was not a legal concept applied in Irish Courts. Justice O’Moore stated that if a doctrine of partial frustration was to be introduced it would require legislation.

Recent Developments

Interestingly, it has been reported in the last few days that Foot Locker has now lodged a Notice of Appeal in respect of the ruling and are claiming Justice O’Moore erred in failing to give due weight to what is described as the exceptional, unprecedented and wholly unanticipated nature of the impact of the Covid-19 pandemic on the operation of the lease and that a lease can be subject to temporary frustration. It is reported that the Notice of Appeal also claims the judge erred in failing to give due weight to how prolonged government mandated closure was wholly at odds with the terms of the agreement between parties. The appeal is also seeking an order setting aside the judgment of Justice O’Moore for order of repayment of more than €1m. If this appeal goes to trial then its outcome will again be of interest to many landlords and tenants.

For further information on this topic please contact Brendan Sharkey at bsharkey@reddycharlton.ie