Sign of the times: Shine Hayward given $50,000 rent arrears deadline
Nightclub owner Wendell ‘Shine' Hayward has been given until Friday, October 18, to come up with close to $50,000 in unpaid rent or face another Supreme Court Order.
The ruling centres around Shine's House of Music on the ground floor of the Stables building at 91 Reid Street in Hamilton.
The proceedings were launched by commercial property owner Benjamin Rego Jr against Mr Hayward for unpaid rent at $5,300 a month.
Puisne Judge Stephen Helman in his ruling said: “This is sadly one of many cases before the courts involving arrears of rent which have arisen due to the recession.”
The hearing was held in September, the ruling was handed down on September 30.
The case stems from a judgement in Magistrates' Court on January 11 this year under the Landlord and Tenant Act 1974.
Mr Rego sought to have the originating summons dated May 20, dealt with in the lower court in the amount of $25,000 “removed to the Supreme Court” and joined with this latest court action.
Mr Rego, the landlord, is seeking termination of Mr Hayward's five-year lease due to non-payment of rent, charges and payment of “the arrears of rent not covered by the Magistrates' Court judgement with “contractual interest”.
According to Mr Rego, the defendant, at the date of the hearing, owed $46,762.73 while continuing “to accrue at the rate of $5,300 per month”.
The defendant entered into the lease on June 1, 2010 which carried provisions for rental increases on June 1, 2012 and on the same date this year. But it was noted in court that the rent was not raised within that period and the rent remained at $5,300 a month.
The contract also carried provisions for interest payment on arrears of rent at the rate of three percent per year “above the base lending rate of the Bank of Bermuda Limited.
The court heard the defendant started falling behind with his rent in August 2011.
Court proceedings were launched the following year in October 2012, when the landlord sought judgement on the arrears which stood at $20,464.25.
By the date of the hearing on January 11, 2013, the arrears had increased to $36,364.25.
Lawyer Peter Sanderson, who appeared for the plaintiff told the court that Mr Hayward had only paid $12,600 of the arrears as September 18.
He presented a schedule of arrears that showed no rental payments since March 1 this year.
He submitted that “a tenant who has been unable to make good on substantial arrears cannot expect the lease to continue”.
“A landlord cannot be expected to put up with a tenant who has built up substantial arrears for over a year,” he added.
Mr Hayward, who did not dispute the arrears, filed a defence in June. He explained that “he has done his best to meet them”.
He noted that Shines' House of Music and Entertainment is a “new and seasonal business which has been badly hit by the recession”.
He asked for “time to trade out of his business' current financial difficulties”.
Mr Sanderson indicated however that Mr Rego “does not seek interest on the Magistrates' Court judgement”.
Justice Helman granted Mr Rego's claim for judgement for rent in arrears in the sum of $46,762.73, and for further arrears on the $5,300 monthly rent that “may accrue prior to the termination of the lease”.
Said Justice Helman: “Of the said $46,762.73, $43,321.96 is principal and $3,440.77 is interest. Interest at the contractual rate will be payable on the principal.
“Mr Rego should obtain an order, which I anticipate will be by consent, crystallising the principal due at the date of termination.”
On the issue of termination, he said: “Mr Hayward is in breach of his obligation to pay rent under the lease.
“I am satisfied that Mr Rego as landlord has acted reasonably in instituting proceedings, and that he has informed Mr Hayward of the breach.
“I am also satisfied the Mr Hayward has had a reasonable opportunity to remedy the breach, but that the breach is ongoing as arrears of rent continue to accrue.
“The reference in the lease to the landlord's rights of forfeiture and re-entry is to be construed as a reference to the right of the landlord to apply to the court for an order to terminate the lease.
“I shall therefore make an order terminating the lease,” he said.
But after hearing both sides he suspended the implementation of the order until the end of October 18.
“If, on or before that date, Mr Hayward has paid in full the judgement debt of $46,762.73 “plus any further arrears of rent that may have accrued, together with the outstanding contractual interest, and paid $9,250, which is the amount payable by that date (ie $5,000 plus five instalments of $850), the order for termination shall remain suspended until further order of the court”.
He concluded: “I award Mr Rego the costs of and incidental to this application,” he said.
“Costs generally follow the event, and there is no good reason in this case to depart from that principle.”