Clerys redeveloper sues clothing retailer alleging wrongful termination of lease

A company behind the redevelopment of the former Clerys department store building in Dublin’s O’Connell Street has brought a legal action over the alleged wrongful termination of a lease by a clothing retailer.

The reopening of the iconic building with retail stores and rooftop hospitality facilities is scheduled for before Christmas.

On Monday, Mr Justice Denis McDonald admitted Oces Property Holdings Ltd’s case against Heatons Ltd (trading as Flannels) to the Commercial Court on consent between the parties.

Redeveloping building

He adjourned the matter to December after being told mediation was to take place to resolve the dispute. He gave permission to the parties to apply to have the case brought back before December if the mediation is successful.

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Oces director Derek McGrath said in an affidavit that the company began redeveloping the Clerys building in 2018. This, he said, will contribute considerably to the regeneration of O’Connell Street.

In November 2021, it entered into an agreement with Heatons and Sportsdirect.com Retail, which was the guarantor, to take the lease on the ground floor and basement area of the building covering some 30,000sq ft.

The annual rent in the lease was specified at in excess of €1 million and Oces claims it has incurred significant costs in undertaking works requested by Heatons.

Last January, Mr McGrath said, a joint inspection of the premises by architects for each party took place in anticipation of the issuing of the landlord’s certificate of practical completion.

Oces’s architect subsequently engaged with an architect for Heatons in relation to a snag list, he said. A proposed second inspection did not go ahead.

In June, Oces notified Heatons’s solicitors the certificate of completion had issued and the response was that the certificate “has not been and could not be” validly issued because Heatons had not received the required 15 days notice of the pre-certificate joint inspection.

Terminating lease

The Heatons’ side disputed this, saying the inspection took place in January, items on the snag list had been addressed and there was no requirement under the lease to issue a second notice. However, it added, the invitation to inspect the premises remained open.

On July 14th, Mr McGrath said, Heatons’s solicitors wrote purporting to terminate the lease agreement claiming there had been a breach by the landlord.

Oces was seeking declaratory orders from the court in relation to the validity of the certificate of practical completion and the invalidity of the purported termination notice. It is also seeking specific performance of the defendant’s obligations under the lease agreement as well as damages.