BUSINESSMAN Denis O’Brien has brought a court action aimed at preventing BT Communications Ireland Ltd exiting a 25-year lease on a property at Dublin’s Grand Canal Quay.
The lease contains an upward-only rent review clause and more than €35 million could fall due for rent over the 25-year term, the businessman claims.
The lease began in April 2001, and BT served 12 months’ notice in May 2011 of its intention to exercise an option to surrender it.
Mr O’Brien claims that option has not been validly exercised.
On the application of Paul Sreenan SC, for Mr O’Brien, the proceedings were transferred to the Commercial Court yesterday by Mr Justice Peter Kelly. Hugh O’Neill SC, for BT, consented to transfer and the sides also agreed a timetable for exchange of legal documents.
In an affidavit, Richard Strappe, investment director for Mr O’Brien, said his client had leased the property at No 1 Grand Canal Quay to BT on May 27th, 2002. The lease was for a 25-year term beginning April 2001 and included a clause allowing BT to exercise an option to surrender the lease, he said.
BT had to serve at least one year’s written notice of any intention to exercise the option, he said. Having served that notice, he said, BT also had to perform and observe all the lease covenants and, on the date of exercising the option, pay six months’ rent by way of liquidated damages.
BT purported to serve a notice to exercise the option on May 16th, 2011, but on the date of exercising the option failed to pay six months’ liquidated damages as required and rather paid a sum of €1,178,927 on May 25th, 2011, which was €5,000 less than the equivalent of six months’ rent. Mr O’Brien’s agent later received a cheque for that €5,000 sum on July 6th, 2011, he said.
Mr Strappe also claimed that, having served notice exercising the surrender option, BT failed to substantially perform and observe all the covenants in the lease up to the date of determination, including those related to repair and painting. Mr O’Brien did not accept the option to surrender the lease had been validly exercised, Mr Strappe said.
