Scaffolding firm liable for €2m after wrongfully terminating leasing agreement

High Court reporters

A scaffolding and engineering firm is liable for €2 million in damages, plus VAT, after it put in place a strategy to wrongfully terminate its lease and relocate, the High Court ruled.

Instant Upright Ltd, which provides instant aluminium access towers and walkway solutions, did so to take advantage of the collapse of the roof of its rented premises in Park West, Clondalkin, Dublin following a snowstorm, Mr Justice Denis McDonald has said.

There was evidence that Instant Upright had decided on a strategy to relocate to Citywest in Dublin and never to return to Park West due to the roof collapse which was caused by a build up of snow following the 'Beast from the East' snowstorms of February 2018, he said.

The event was used to wrongly terminate the long term lease at Park West with the landlord, Airscape Ltd, which repaired and restored the premises and made it fit to return to by April 2019, the judge said.

The strategy to permanently relocate was revealed in emails between senior Instant Upright personnel, as well as between assessors for the firm's insurers, Chubb, with whom the company ultimately settled for €15.2 million under a property damage and business insurance policy, Mr Justice McDonald added.

He said one example of how the strategy evolved was an email of June 2019 which discussed how the firm would be prepared to pay a surrender penalty of €3.1 million, but not the €4.2 million demanded by the landlord.

Termination cost

A figure of €3 million was specifically provisioned in Instant Upright's 2019 accounts to meet the cost of terminating the lease with the firm's auditors also saying it must be specified as such a provision or else it would be taxable.

The judge said the €3 million provision appeared to have been part of the original strategy and Airscape said that where it was so earmarked and was paid by Chubb to Instant Upright that it must now be held on trust for Airscape to the extent that it had suffered damaged.

The judge said it seemed to him that the €3 million must be treated in the same way as Instant Upright's liability to Airscape arising out of the wrongful termination of the lease.

He said a good case had been made that the €3 million is held on trust and is required to cover the damages of just over €2 million he awarded for wrongful termination.

He also said that although Instant Upright "vociferously defended" the proceedings up until recently. When the case came up for hearing this week, there was no appearance on its behalf.

Its solicitors had previously "come off record" after they were unable to obtain instructions from the firm.

As a result, the case was before the judge as an assessment of damages only in default of an appearance following the hearing of evidence and submissions from Airscape.

On the basis of the uncontested evidence he heard, the judge said it was quite clear there was no basis for Instant Upright to serve the notice of termination it sent in March 2020. He granted a declaration that the notice was invalid.

The claim for damages from Airscape arose out of arrears of rent, service charges and insurance up to the purported termination of the lease.

There was further loss of rent subsequently because, while Airscape took steps to mitigate its loss and found a new tenant, the new rent was not as substantial as Instant Upright was paying, bringing the total loss to just over €2 million.

Mr Justice McDonald gave judgment for that sum but said the final figure would have to be calculated later to include VAT.