Foot Locker says its Grafton Street rent shouldn’t be owed for period of virus lockdown

RETAILER Foot Locker has claimed it should not have to pay rent on its Grafton Street shop in Dublin for the period it was closed by the lockdown.

The chain is in dispute with the landlord of the shop over its €750,000 a year rent, the Commercial Court heard.

The footwear and clothing shop has claimed the lease it holds on the store has “been entirely frustrated” by the Covid-19 restrictions.

Foot Locker Retail Ireland Ltd, which operates a number of stores in Ireland, issued High Court proceedings last month seeking a declaration it has “no liability for rental payments under the lease as and from March 24, 2020”.

The landlord, Percy Nominees Ltd says the claim is “nothing more than a transparent and ill-judged attempt to unilaterally renegotiate the terms of the lease for the commercial benefit of Foot Locker”.

Percy Nominees was granted permission yesterday by Mr Justice David Barniville to have the case dealt with in the fast track Commercial Court. The application was made on consent from Foot Locker.

In an affidavit applying for entry of the case to the commercial list, Percy Nominees director Paul O’Shea said Foot Locker failed to pay the due quarterly rent instalments of €187,500 on both April 1 and July 1 last.

Mr O’Shea said a demand for payment was made and in a letter on June 8 last to the real estate agents acting for Percy Nominees, Foot Locker contended that as it been unable to open due to the pandemic there was “no basis under which there is a liability for rent” since closing.

While there was a “limited retail opportunity for opening” from June 8, it was clear such an opening was nothing like what was envisaged by the lease, it said.

Foot Locker agreed on July 28 to pay, and did pay, half the rent due as of July 1 and said it was “willing to discuss the circumstances concerning the lease”.

Percy Nominees responded that the clauses in the lease did not support its claim the lease was frustrated. Percy also put it on notice that if the outstanding €281,250 was not paid by August 11, it would take enforcement action.

Mr O’Shea said the Foot Locker lease is due to expire in March 2025 which means the total rent which will fall due over that time is around €3.75m.

Foot Locker, he said, is seeking to avoid payment of that sum. Percy Nominees contends Foot Locker is obligated to pay rent in accordance with the terms of the lease.

Mr O’Shea also said Percy Nominees is dependent on the rent roll from this and other premises its leases to support its business operations and discharge its liabilities

A scenario such as this, whereby the return on an asset is impeded, can have wider implications beyond this case, he said. “The commercial aspects and consequences of this dispute go beyond the issue of rent,” he said.

Mr Justice Barniville, admitting the case to the Commercial Court, noted this appeared to be the first case where a lease has been affected by the national emergency.

He said it was a very appropriate case for considering mediation as it was a difficult situation in which both parties find themselves and in particular Foot Locker because there was a requirement by the government to close.

The case comes back in January.