Johnny Ronan set to appeal High Court ruling on reduced Bewley’s rent

's High Court ruling that the rent on Bewley's cafe on Dublin's Grafton Street must be allowed to fall in line with the depressed open market rate.

Michael Harrington, the CBRE retail specialist who advises Mr Ronan, said yesterday that while his instructions had yet to be confirmed, it was "highly likely" that the judgment would be appealed.

Mr Ronan's Ickendel Ltd is expected to challenge Mr Justice Peter Charleton's interpretation of the five-yearly upwards-only lease on the famous cafe dating from 1987. The test case hinged on the interpretation of a key but ambiguous clause in the lease agreement.

Ickendel accepted that should there be deflation, the rent could remain at the same level as that fixed in 2007 – €1,463,964. However, Mr Justice Charleton said the rent review clause could only reasonably be constructed so as to allow for a fall in rent but never below the rent initially agreed in 1987.

Falling rents
Grafton Street rents have generally fallen by anything up to 52 per cent since the property boom because of the recession and the spending slowdown.

The High Court was told that Bewley’s was losing about €700,000 a year because of the high rent it had to pay. *

Ickendel will not be in a position to appeal the High Court ruling without the approval of Nama, which has taken over responsibility for a €21 million Bank of Ireland loan to the company.

The State asset manager last year issued guidelines to debtors advising them to consider ameliorating rents on properties which are above market value or where the viability of the business is threatened.

However, Nama stressed that its guidance was “not designed to accrue benefits to a tenant who is in a position to bear the burden of rent due because they are part of a group with profitable trading outlets in and outside Ireland”.

Landmark building
During one of a number of legal disputes between Mr Ronan and Bewley's which ended up in court at the peak of the property market, Mr Ronan offered the cafe operators €6 million to vacate the landmark building. The offer was rejected.

Mr Ronan's offer had been prompted by an approach from fashion giant Zara, which was prepared to pay a rent of €2 million a year. Zara later settled for a site on South King Street.

** This article has been modified from the orignial. Initially it stated that the operating company of the Bewley's cafe was part of the US-owned Aramark Corp.

Campbell Bewley Group, which is the operating company, would like to point out that Bewley's is not owned by Aramark Corporation and that it has no connection with that company. The article also stated that Aramark's “Irish division” acquired the Grafton Street operation “as part of Campbell Catering in 2004”. While Aramark did acquire Campbell Catering around that time, it did not acquire Bewley's Cafe, or Bewley's at any time.