One of the most important cases to be heard so far this year concerns the validity of keep open clauses. Can a landlord force a tenant to continuing trading?
Supervalu has a keep open clause in their anchor store lease at Carlow Shopping Centre. Notwithstanding this clause the tenant, Musgrave, decided to close their store as they had been suffering significant operating losses. At no point was there any suggestion that the tenant would stop paying rent. It simply wanted to cease trading. In January, the owners of Carlow Shopping Centre were unsuccessful when they tried to bring an injunction stopping the tenant from closing its store.
The court refused the injunction as it had grave concerns about forcing a business to continue trading at a loss. Whilst the injunction was refused, the tenant was clearly in breach of it's tenant covenant to keep the unit open and trading. The court decided that damages would be an adequate remedy to compensate the landlord for breach of covenant.
What of the other retailers in the Centre? Without a doubt their trade will be affected by the closure of the anchor store. Interesting this month a lawsuit taken by the Carlow retailers against Musgrave for damages has been withdrawn. No doubt some deal has been struck between the parties but the details of which will remain confidential.
High Court refuses to grant mandatory interlocutory injunctive relief sought by the owners and operators of a shopping centre in County Carlow, which would have required the anchor tenant of the centre to remain open despite continued significant operating losses, pending the full hearing of an action claiming damages for breach of a restrictive covenant of a lease, on the grounds that: a) the plaintiffs have failed to establish a strong case likely to succeed at a full hearing; and b) the court has grave concerns over the wisdom of forcing a commercial venture to continue to operate despite monetary losses.