High Court: Supermacs ordered to pay outstanding rent arrears and interest

Delivering judgment for the High Court, Mr Justice Sean Gillane determined: “There is nothing to recommend the proposition, as a matter of principle or logic, that absent an explicit reassignment by a discharged receiver, the right to recover remains with him, despite being released from his appointment.”

Background

The defendant, a company running a well-known fast-food chain across Ireland, acquired a leasehold interest in a premises at 24 High Street, Co Kilkenny on 8 February 1998.

In March 2008, the plaintiff acquired the premises and pursuant to an arbitration determination of December 2008, rent was fixed at a rate of €186,754.00 per annum to be paid by way of 12 monthly instalments of €15,562.84.

The plaintiff mortgaged a number of properties, including 24 High Street, to AIB in 2011. The plaintiff subsequently ran into financial difficulty and defaulted on his loan agreements with AIB.

On 22 October 2018, AIB assigned the plaintiff’s debt to Everyday Finance DAC and a receiver was appointed over the plaintiff’s charged assets on 17 February 2020.

Immediately thereafter, Madden Property Consultants on behalf of the receiver wrote to the defendant indicating that all rent payments should be made directly to them.

Between April 2020 and June 2020, the defendant failed to pay rent. Between July 2020 and November 2020, the defendant paid half of what was due. In December 2020, the defendant again paid no rent. Between January 2021 and March 2021, the defendant again paid half of what was due.

In June 2020, the defendant wrote to Madden requesting a 50 per cent reduction in rent on the basis that the premises had been closed for some time and trade had fallen, against the background of the Covid-19 pandemic. This request was not acceded to.

A settlement was reached between the plaintiff and Everyday in March 2021 which involved the sale of the premises, and the net proceeds of the sale were accepted by Everyday in full and final satisfaction of the plaintiff’s outstanding liabilities. As part of the sale agreement, the plaintiff allowed the purchaser to discount the purchase price by the full amount of rent due for March 2021.

A deed of discharge was executed in respect of the receiver, of which the defendant was notified. As part of the settlement, Everyday disclaimed any legal or equitable right in respect of the rent arrears.

In November 2020, the defendant had discovered that the plaintiff was at an advanced stage in negotiations for the sale of the premises and wrote to the receiver seeking its inclusion in the bidding process. 

The defendant threatened legal proceedings and to report the receiver unless the defendant could participate, and issued proceedings seeking to restrain the sale of the premises in January 2021.

On 22 March 2021, the plaintiff’s solicitors demanded payment of the outstanding rent and threatened the issue of summary judgment proceedings. In its reply, the defendant queried the plaintiff’s entitlement to claim the rent monies.

In April 2021, the plaintiff issued summary proceedings, which were sent to plenary hearing in light of the defendant’s contention that its case might be improved by discovery of documentation relating to the appointment and discharge of the receiver.

The parties’ positions

The plaintiff alleged that the appointment of the receiver did not displace the defendant’s obligation to discharge the rent in full, and that his right to recover the outstanding monies was revived upon the discharge of the receiver. The plaintiff explained that it was his understanding of the settlement agreement that he was entitled to “go after” whatever monies were outstanding. 

The defendant inter alia challenged the locus standi of the plaintiff to seek the rent due and owing during the period of the receivership, arguing that if the right to collect the accrued rent had been assigned to the receiver, then the deed of discharge merely discharged the receiver but did nothing else. The defendant also alleged that the rights contended for by the plaintiff in the lease were extinguished once the premises was sold.

At hearing, it was conceded by the defendant that there was unpaid rent in the sum of €124,502.72, and it was agreed that the applicable interest rate was 13.25 per cent (€87,999.00), in the event that the plaintiff was entitled to recover.

The High Court

Mr Justice Gillane heard that the defendant was a “repeat offender” of non-payment of rent, and said that it had engaged in a “strategic weaponising of payment/non-payment of rent” and wrongfully tried to disrupt the plaintiff’s sale of the premises. It was alleged that the evidence of its managing director, to the effect that he did not know who to pay the arrears of rent to, was simply not credible.

The judge determined that the appointment of the receiver removed from the plaintiff the ability to deal with the premises and to collect the rent that was due and owing, and allowed the receiver to require that the rent be paid to him.

The court noted that the uncontested evidence was that the defendant was informed of the appointment of the receiver and the rent was to be paid directly to Madden acting on the receiver’s behalf, and that contrary to the defendant’s assertions, there had never been any agreement to accept a reduced rent or to waive any payment of rent during the relevant period.

Mr Justice Gillane opined that “the defendant made a conscious decision to pay no rent or half the rent on dates when payment was due. Such rent, as was paid, was directly paid to the receiver’s agent which leaves me in no doubt as to the defendant’s understanding of the position in relation to the receivership and the continuing rent obligations pursuant to the lease.”

Finding that there was no evidence to suggest that the receiver or his agent had communicated with the defendant in relation to the rent arrears since his discharge in March 2021, such as would give rise to a rational fear on the part of the defendant that it might have an ongoing liability to the receiver, the judge highlighted that the sale of the premises was undoubtedly “the source of some animus towards the plaintiff” on the defendant’s part.

Referring to the authorities advanced by the parties, the court explained that the defendant’s obligation to pay rent derived from the lease and that nothing in the appointment of the receiver varied that obligation, which subsisted throughout the receivership and was the basis of the receiver’s right to recover once appointed.

Mr Justice Gillane determined that it would be unjust to say that where a receiver has in his discretion chosen not to pursue an asset, after that receiver is discharged, the underlying rights of the mortgagor are permanently extinguished or are extinguished absent an express assignment from the discharged receiver.

The judge did not agree with the defendant that An Post v Harrington [2019] IEHC 438 was authority for inter alia the proposition that absent an assignment, the mortgagor’s rights would not be revived.

As to the plaintiff’s claim for aggravated damages, the court expressed that while the conduct of the defendant was less than satisfactory, it did not warrant such an order.

Conclusion

Accordingly, the High Court granted judgment in favour of the plaintiff in the amount of €124,502.72 plus interest at 13.25 per cent.

Richard Duggan v Supermacs Ireland Limited [2026] IEHC 218