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In Perfect Stripe Limited t/a Grafter v Fennell & Ors [2025] IEHC 585, the Commercial Court (Mr Justice Twomey) has refused an interlocutory injunction sought by a tenant to regain possession of three Dublin office buildings from receivers who had taken possession following non-payment of over €3 million in rent.
Key takeaways
The decision is yet another indicator by the Irish High Court of the importance of ensuring certainty in lease documentation, in particular that lease documents say what the parties intend them to say.
A failure by a tenant to make payments of the reserved rent as it falls due will be a material challenge for a tenant in seeking to restrain the conduct of a validly appointed receiver over the property.
The Court will place significant weight on the “black letter” of the contractual documentation at the injunction stage, as the Court cannot resolve evidential issues in dispute at that point in the proceedings.
Background
A number of SPVs within the McKillen Group (the Landlords) owned three office properties in central Dublin (the Properties), the acquisition of which had been financed with funds borrowed from RELM Group (the Funder). The Plaintiff (the Tenant) is another company within the McKillen Group which entered into leases with the Landlords in respect of the Properties (the Leases) and operated serviced offices from each of the Properties.
The Defendants (the Receivers) were appointed over the Properties after the Tenant failed to pay rent under the Leases, which failure gave rise to an event of default under the relevant loan agreements between the Landlords and the Funder. The Receivers took possession of the Properties in June 2025.
The Decision
The Tenant issued proceedings against the Receivers seeking primarily orders that the Receivers vacate the Properties, together with a motion seeking injunctive relief against the Receivers requiring possession of the Properties to be delivered up to the Tenant pending the substantive hearing of the proceedings. The controller of the McKillen Group, Mr Paddy McKillen Junior, delivered affidavit evidence on behalf of the Tenant in the injunction application.
Ultimately, the Court refused the injunction application, as it was not satisfied that the Tenant had met the test set out in Merck, Sharpe and Dohme [2019] IESC 65, namely it had not raised a fair issue to be tried or established that the balance of justice required the Receivers to vacate and deliver possession of the Properties to the Tenant pending trial.
Fair issue to be tried
The Court found that the Tenant had not established a fair issue to be tried under the following headings:
Dispute over the amount of rent
The key argument made by the Tenant in seeking injunctive relief was that it did not in fact owe the rent stated in the leases, but rather that there was an understanding between the Landlords and the Funder that the rent being paid to the Landlords was to be the equivalent of the interest owed by the Landlords to the Funder under their financing arrangements – as it was put on behalf of the Tenant to the Court, “rent is interest and interest is rent”.
The Court found that the Tenant had failed to establish a fair issue to be tried on this argument.
The Tenant’s interpretation was completely contrary to the terms of the Leases and was not reflected in the Deeds of Variation, which were executed by Mr McKillen on behalf of both the Tenant and each of the Landlords to increase the rent payable under the Leases. There was no mention in the Leases or Deeds of Variation of any connection between rent payable to the Landlords and the interest payable by the Landlords to the Funder.
There was no documentary evidence adduced by the Tenant to support that argument and when the first demand was made by the Receivers for the outstanding rent, the Tenant did not identify this asserted arrangement as being in place.
Other issues argued by the Tenant which the Court did not consider a fair issue to be tried
Unconscionable pressure on the Tenant – The Tenant argued that it would be unconscionable for the Receivers to recover the rent under the Leases as the increased rent had been secured following unlawful pressure on the Tenant. The Court found that pressure is a “fact of commercial life”. Given that the facility agreements provided that, in the event of rising interest rates, either the Landlords were required to repay capital to the Funder or the Tenant was obliged to increase the rent payable to the Landlords, Mr McKillen simply chose to increase the rent.
Receivers’ failure to give reasonable notice – The Tenant further argued that the Receivers’ failed to give reasonable notice terminating negotiations regarding with the rent payable. The Court held that, in the circumstances of the case, 13 days was more than enough time and therefore this was not a fair issue to be tried.
Non-peaceable re-entry – It was argued that the Receivers re-entered the Properties by alleged non-peaceable means, namely by requesting the Tenant’s contracted security company to remotely disable magnetic locks and removing two padlocks/slipping a lock. The Court held that the terms of the Leases permitted the Receivers to take reasonable steps to effect re-entry, and this must enable padlocks to be cut or the slipping of a lock. Further, the Court noted that deactivating a magnetic lock was “the epitome of a peaceable re-entry”.
Misappropriation of the Tenant’s business – The Court found that the Tenant’s claim that the Receivers had misappropriated the Tenant’s business (by continuing to allow the licensees to occupy the serviced offices and by securing an alternative company to manage the provision of services to the offices) did not amount to a fair issue to be tried.
Balance of justice
The Court noted the following in the course of its consideration of the balance of justice:
The Court noted that this was a case “about money” and no evidence was provided by the Tenant that damages would not be an adequate remedy.
The Tenant had not undertaken to pay the stated rent in the Leases into the future, and this failure weighed heavily in favour of refusing the injunction application.
The Tenant’s offer to pay €1.6 million to the Receivers was sourced from third parties, so was something which would otherwise not be available to the Receivers. The Court, in assessing this offer, noted the evidence put forward that the Tenant was not in a strong financial position.
The Court also noted that had there not been arrears of €3.8 million overdue from the Tenant to the Landlords, the offer to pay €1.6 million may have been a considerable factor in the balance of justice. However, the failure to pay the full arrears weighed heavily in favour of refusing the injunction application.
Given the mandatory nature of the injunctive relief sought - requiring the Receiver to give up possession of the Properties - the Tenant was obliged to establish a strong case but failed to do so.
For more information in relation to this topic, please contact Tom Casey, Partner, Amie Creaton, Solicitor, Aoife Smyth, Practice Development Consultant or your usual A&L Goodbody Disputes or Real Estate contact.
