‘Ulterior motive in withholding lease assignment’

A company belonging to businessman Louis Fitzgerald, which is landlord of the Café en Seine premises in Dublin, acted for an ulterior motive when withholding consent for a receiver’s proposed assignment of the lease to clear the way for a €5m sale, the Commercial Court ruled.

Mr Justice Robert Haughton rejected Mr Fitzgerald’s evidence concerning why his company, Chupn Ltd, withheld consent in September 2014 for assignment of the lease held by the bar’s operating company, Perfect Pies Ltd, so as to clear the way for a planned sale of the Dawson St premises by October 2014 to a subsidiary of Ardan Advisory Ltd.

The judge upheld claims by Pearse Farrell, receiver to Perfect Pies, that the refusal was unreasonable and aimed at getting possession of the premises.

Starpin Ltd, a company in the Fitzgerald Group, made an initial offer of €4.26m for the premises and subsequently submitted a tender of €5.2m, later verbally increased to €5.35m, the judge noted.

The receiver’s selling agent had said the Starpin tender was not accompanied by proof of funds. A €5m Ardan offer was accepted.

The judge said he gave “great weight” to Mr Fitzgerald’s statement “myself and my son Eddie purchased Café en Seine with the intention that someday we might own it”.

In conversations with the receiver’s selling agent, Mr Fitzgerald was not engaging in “soft” or “pub” talk, as he contended, but giving “a clear indication” he would not accept the outcome of the tender process, would use the position of landlord to prevent the assignment proceeding and take all possible steps “to get the property back”, the judge held.

Mr Fitzgerald, he also ruled, gave misleading evidence to the High Court when it was hearing a petition brought in January 2015 by one of his companies, Avalondale Ltd, to wind up Perfect Pies over an old €105,857 debt which was transferred to Avalondale.

The petition proceedings were an abuse of the court’s process, the judge said. Had the petition succeeded, the leases would have been forfeit and the Fitzgerald Group would have got possession of Café en Seine at “little or no cost”, perhaps €10,000 and some legal fees.

While finding there was insufficient evidence to persuade the court that, as of September 6 to 10, 2014, Mr Fitzgerald had decided to put Perfect Pies in liquidation, he was satisfied, from then on at least, Mr Fitzgerald was actively engaged with his management and advisors in obstructing completion of any assignment of the leasehold interests and seeking to advance the objective of obtaining possession.

On those and other grounds, the judge granted a declaration that Chupn, in delaying or failing to consent to the September 2014 request to assign the lease, was acting unreasonably within the meaning of the leases and/or Section 66 of the Landlord and Tenant Amendment Act 1980.

Refusing an additional order dispensing with Chupn’s consent to the assignment, he held this was not an appropriate case for such an order.