From COVID claims to contract clarity: Key takeaways for Irish commercial leases

Recently, the High Court (the Court) delivered two decisions of relevance to commercial landlords and tenants in Ireland. The decisions centred on:

1. The interpretation of commercial leases in the context of COVID-19 restrictions and the high bar for tenants seeking to avoid summary judgment in rent arrears cases; and
2. The importance of ensuring defined terms in lease documents are clearly drafted.

Commercial leases, summary judgment for rent arrears and COVID-19 fallout

In BVK Elektra 2 Liffey Phase 1 ICAV v Elite Gastrobars Limited & Anor [2025] IEHC 420, Mr Justice Barry O’Donnell delivered judgment on 23 July 2025 in respect of a summary judgment application for rent arrears and other charges. The plaintiff (BVK), the landlord of Liffey Valley Shopping Centre, brought summary proceedings seeking judgment in the sum of €276,041.44 against its tenant (the Tenant), who operated a restaurant unit in the shopping centre and had been in arrears for a number of years. The Tenant applied for the proceedings to be adjourned to plenary hearing.

The parties and the Court agreed on the applicable principles and criteria for determining a matter on summary judgment. To proceed to summary judgment the Court had to address the established question of whether the Tenant had a bona fide defence, or “whether it was “very clear” that the Tenant had no case”. The Court addressed a number of issues which the Tenant claimed gave it a bona fide defence, thereby disentitling BVK from obtaining summary judgment against it:

1. Clarity of accounts: The Tenant claimed that there was a lack of clear explanation in the accounts for the figures claimed by BVK, which were complicated by the fact that a rent review had taken place during the exchange of affidavits. The Court was ultimately satisfied with BVK’s figures and clarifications on affidavits, noting that the Tenant had failed to identify any specific errors in BVK’s figures or provide any alternative calculations. In particular, the Court noted that the Tenant’s failure to identify what it alleged was the correct figure was unhelpful.
2. BVK’s status as landlord: The Tenant raised an issue with BVK’s status as landlord to recoup the portion of arrears which arose before BVK’s registration as owner on the folio. BVK argued that its entitlement to recoup the sum claimed was based on its entitlement to the reversion in the lease. The Court was satisfied that the sums claimed had fallen due after BVK’s registration on the folio, which was conclusive evidence of BVK’s title. Further, the parties had entered into a rent review memorandum, with the effect that the Tenant must be taken to have accepted BVK as the proper landlord. The Court did however note that it would have preferred BVK to provide more evidence on the manner of transfer of the interest in the lease to BVK.

Insurance and business interruption clauses: The Tenant argued that in accordance with the lease:

• BVK was required to obtain insurance in respect of business interruption caused by public health measures, to cover the risk of lost rent due to Covid-19 restrictions, and failed to do so; and
• There can be a “cesser” (i.e. a postponement) of the obligation to pay rent where the “use or all means of access” to the premises is “prevented in either case by any of the Insured Risks”, as was the effect of the COVID-19 emergency measures.
  
  The Tenant claimed that, on that basis, it had raised a bona fide defence to the summary claim.
  
  The Court found that the standard insurance clause in the lease contemplated “Insured Risks” as only potential causes of physical damage to the premises and could not include losses caused by public health restrictions. Therefore, there was no obligation on BVK to insure against losses of rent that were unconnected to the insured risks, as defined in the lease. The Court rejected the Tenant’s interpretation of the cesser clause, noting that it was clearly directed to a scenario where the premises was destroyed and where such destruction was attributable to an event falling within the definition of “Insured Risks” under the lease; business interruption caused by public health measures did not come within this definition.

Ultimately, the Court was satisfied that the Tenant had not reached the threshold of establishing a reasonable probability of having a bona fide defence and granted judgment for the full amount claimed in favour of BVK.

The importance of ensuring defined terms in a lease

In Point Village Development Limited v Dunnes Store Unlimited Company [2025] IEHC 212, Mr Justice Sanfey delivered judgment on 10 April 2025 in the ongoing dispute between the plaintiff (the Landlord) and its anchor tenant (Dunnes) at the Point Village Centre (the Centre).

The Landlord sought declarations that Dunnes was in contempt of previous High Court orders (the Orders) requiring Dunnes to submit fit out plans to the Landlord and complete works on the anchor unit at the Centre pursuant to a development agreement dated 27 February 2008 (the Development Agreement).

Whilst Dunnes had delivered fit out plans, the Landlord argued that these plans did not satisfactorily comply with the Orders, which required Dunnes “to procure the execution and completion of the Fit Out Works of the Anchor Unit (as defined in the Development Agreement)” and therefore, the non-compliance was an act of contempt by Dunnes.

However, Dunnes submitted that the Orders made were so ambiguous that it could not be guilty of  contempt. The Landlord agreed that if the Court found that the Orders were truly ambiguous, Dunnes could not be guilty of contempt.

In respect of the ambiguity of the Orders, the Court noted a number of factors:

1. While “anchor units” were referenced in the Orders, this term was not defined in the Development Agreement and its meaning was not considered by the High Court in its previous decision.
2. The definition of “Fit Out Works” in the Development Agreement was not clear that the works were to extend across the entire leased area by Dunnes.

In respect of the definition of “anchor unit”, the Court noted that in the absence of a contractual provision imposing an obligation on Dunnes to fit out 100% of its leased premises for trade, there remained a lack of clarity as to the execution of fit out works for an “anchor unit”. The Court must be absolutely clear on what compliance with an order would be in order to be satisfied beyond a reasonable doubt that a breach of the order had occurred. This test was not met by the Landlord in the absence of unequivocal contractual definitions, or judicial interpretation, of the relevant terms.

On that basis, the Landlord’s application was dismissed.

Following the finding that Dunnes was not in contempt of the Orders in delivering the much smaller fit-out to the anchor unit, the Court delivered a follow-on judgment on 4 September 2025. This judgment dealt with a number of issues including Dunnes’ application to vary the Orders to extend time for compliance and a request by the Landlord for the Court to “clarify” the effect of the Orders.

As regards the application to extend, the Court found that Dunnes had breached the Orders in failing to complete the works within the deadline but, given the circumstances of the long-running commercial dispute, the Court found that the delay did not warrant a finding of contempt and extended the time for compliance. The Court expressed its dissatisfaction with Dunnes’ conduct and ordered it to pay the Landlord’s cost of the extension motion.

The Court refused to clarify the Orders as requested by the Landlord. Mr Justice Sanfey said that such an exercise was not covered under the liberty to apply jurisdiction, nor was it covered under the Court’s inherent jurisdiction. The Court emphasised that the ambiguity in the agreement as to the extent of the fit-out was a matter that should have been addressed in the original proceedings; the resolution of this issue could not be classified as a “clarification” of the Orders.

Key takeaways

Both decisions of the High Court emphasise the importance for commercial landlords and tenants to ensure that terms in lease documents are properly defined and unambiguous.

As demonstrated by Point Village, ambiguous drafting of defined terms caused difficulties for the landlord in enforcing High Court orders against its anchor tenants in respect of the fit out works required to the leased premises. In particular, when parties intend to impose specific obligations on an anchor tenant in respect of the leased premises, drafters should take care to ensure that the lease is sufficiently detailed and clear so that all parties, and if necessary a court, can understand what exactly is required of them under lease documents.

On the other hand, the BVK Elektra decision demonstrates that the High Court is willing to enforce the clear terms of commercial leases so as to enable a landlord to successfully pursue summary judgment against a tenant for arrears of rent.

For further information, please contact Tom Casey, Partner,  Hannah Shaw, Senior Associate, Rachel Kemp, Senior Knowledge Lawyer, Amie Creaton, Solicitor, or your usual ALG Disputes & Investigations team contact.

Date published: 4 September 2025