Klaw restaurant fails to stop landlord taking possession in rent row

A restaurant in Temple Bar, Dublin has failed to get a continuing injunction preventing the landlord taking over the premises in a dispute over rent.

Klaw in Crown Alley, operated by a company called Oysters Shuckers Ltd, in June got an interim injunction, on a one-side-only-represented basis, preventing eviction by Architecture Manufacture Support (EU) Ltd and its director Wooi Heong Tan.

Mr Justice Mark Sanfey later heard the case as to whether the injunction should continue, or be made interlocutory, pending a full trial.

On Friday, the judge said while Klaw had established there was a fair question to be tried as to whether there was a valid and binding lease, the balance of justice required the application be refused.

The court heard there was a dispute over whether a new lease came into effect last November with a higher rent than before.

The failure of Klaw to discharge full rent and its admitted inability to pay rent in the future – it does not expect to reopen until the new year due to the pandemic – were matters which weighed heavily in assessing the balance of convenience or justice, Mr Justice Sanfey said.

He said there was no stateable basis on which the rent is not payable under the disputed lease in relation to the period of closure caused by the pandemic.

There was therefore no basis to Klaw’s proposal that future rent should be paid into an escrow account rather than directly to the defendant company, he said.

While Klaw had proposed to make certain payments towards arrears and rent in the future, the first named defendant would still be at a substantial loss for an uncertain period in the future, he said.

‘Trading prospects’

The defendant company was in effect being asked to “subsidise or underwrite the future trading prospects and prosperity of the plaintiff, which in the current circumstances can only be regarded as precarious”. In the meantime the defendant is deprived of use of its premises, he said.

One must have considerable sympathy for Klaw and indeed all other businesses which have found their prospects blighted by the pandemic, he said.

One of the Klaw company's directors, Niall Sabongi, had in a sworn statement deprecated the fact the defendant company was not prepared to accommodate the restaurant in its difficulties. Mr Sabongi said this was in marked contrast to what he said were other lessors in Temple Bar and the local area where rents have been stalled, postponed or significantly reduced.

The judge said if Mr Sabongi was correct, “it is certainly heartening to learn that landlords in Temple Bar and other local areas are being understanding towards tenants given the current circumstances”.

Where a current tenancy becomes difficult through no fault of the tenant, one would expect landlords who value their relationship with their tenants to assist them in working through their difficulties, he said.

The problem in this case was that there was a fundamental dispute between the parties as to whether a tenancy exists at all, he said.

It is clear also that the relationship between Mr Tan and the directors of the Klaw company, Mr Sabongi and Wing Lee, over the course of time deteriorated to a point where the "mutual distrust between the parties is very evident", he said.

No order will be made in the terms sought by Klaw and the parties must proceed however they see fit, he said.