Zurich: Stage victory for Manor on Bahnhofstrasse
Manor has won a partial victory in the protracted legal dispute between Manor and Swiss Life over the department store on Zurich's Bahnhofsstrasse. The rental court in Zurich ruled that Swiss Life had not legally terminated the rental agreement with Manor.
As the owner of the building at Bahnhofstrasse 75 in Zurich, Swiss Life wants to convert the property and set up space for boutiques and offices in the future instead of the department store that currently exists. Swiss Life therefore terminated the lease agreement with Manor as of January 1, 2014. However, the agreement includes an option to extend the lease until 2019, and for this period Swiss Life is charging a much higher rent than before. Swiss Life argued that these were contractually agreed "standard market conditions". The department store chain objected to this and took the matter to court.
Manor has now won a stage victory before the Zurich rental court: The court ruled that Swiss Life had not legally terminated the lease of its tenant. The contract had been drawn up in such a way that only one department store use had ever been intended in the property. The landlord, a legal predecessor of Swiss Life, had even demanded that an operational department store be returned to it upon termination of the lease.
Therefore, in the opinion of the rental court, Swiss Life's offer did not correspond to what the parties had agreed at the time. First, the offer related to only two of the three properties. Secondly, the landlord offered a rent that was approximately three times higher than the rent previously paid and was not oriented towards a department store use, but towards a use for "sales areas of any kind (boutiques) and offices".
Lease agreement was not validly terminated
The rental court came to the conclusion that this did not correspond to the - solely decisive - original intention of the contracting parties. The parties at the time clearly assumed that the rental property was to be used as a department store in the long term. The agreed "standard market conditions" were therefore to be understood as rents for a department store.
As a result, the lease was not validly terminated and thus still exists. An extension, i.e. renewal, of the lease for six years, as Manor had requested, was therefore neither possible nor necessary, the judges ruled.
Swiss Life has already announced its intention to challenge the decision of the rental court. In any case, much is still unresolved in the legal dispute. Parallel proceedings between the parties are pending before the Zurich Commercial Court. The court must decide in principle on the question of whether Swiss Life is required to submit an offer to Manor that complies with department store regulations. If it comes to the conclusion that the more expensive offer is legal, the termination would be valid after all. However, Manor could then apply to the rental court to have the extension proceedings resumed.
