Court’s Interpretation of Variation of a Lease

The Supreme Court has delivered a decision in the case of Stapleyside Company v Carraig Donn Retail Ltd. which turned on the interpretation of an agreement signed between the parties. The case highlights the unforeseen consequences of exchanges of emails and correspondence.

Per Clarke J. delivering the judgment of the court: “…the problem with arrangements not being adequately converted into a legally recognisable form is that significant problems can be encountered if things go wrong.”

In this case the tenant was offered a reduced rent in return for what appeared to be a promise to surrender the lease at the landlord’s option. The landlord subsequently served what purported to be a notice of termination. It became important to establish whether this notice actually terminated the lease. The High Court found that the lease had been terminated (ironically this was good news for the tenant as it entitled it to a new lease at reduced rent) but the Supreme Court took a different view and found the tenant still bound by the original lease (which carried ‘Celtic tiger’ rent.)