July 2024

Decision of the Single-Member Court of First Instance of Athens on Compensation for Premature Termination amounting to €235,000.

The Monomeles Protodikeio Athinon (Single-Member Court of First Instance of Athens) issued decision no. 881/2024 concerning a lawsuit for damages due to the premature termination of a lease agreement. The lessee was ordered to pay the lessor an amount exceeding €150,000 plus interest. In this particular case, our client, the lessor company, entered into a lease agreement for a property with a lessee company managing food stores. The latter also undertook the obligation to carry out completion works on the leased property. Due to the lessee's business policy, the specific store was never utilized, nor were the completion works ever commenced. Consequently, the lessor company terminated the lease agreement and filed a lawsuit for damages due to the premature termination of the lease, which was caused by the lessee’s fault, specifically the breach of their contractual obligation.

The court, recognizing the lessee's breach of the contractual obligation to execute the works and the validity of the termination by the lessor, ruled that "due to the premature termination of the aforementioned lease agreement by the fault of the defendant, the plaintiff is entitled to compensation for the loss of profit it would have earned from the defendant’s fault ... which consists of the rent for the period after her departure, namely from March 2018 to October 2018, an amount that the plaintiff would likely have received if the lease had been active." As clarified in the major reasoning of the decision, "the lessor’s damage due to the premature termination of a fixed-term lease agreement, i.e., one that is terminated before its contractual end, consists of the loss of profit, i.e., the rent for the entire remaining period of the lease. However, this is due for the time after any retention of the leased property and onward, until it is re-leased, but not beyond the fixed term of the lease." Thus, in this case, where the property was retained by the lessee for two months after the termination of the lease (for which usage compensation was paid) and was re-leased after eight (8) months (March – October), the awarded usage compensation of €152,000 concerned only this eight-month period.

Interestingly, according to the court, the lessee was obliged to pay the awarded amount of €152,000 "with the legal interest from the 11th day of each month to which it pertains and until repayment, as the manner of payment of the compensation, consisting of lost rents, is not in a lump sum but at regular intervals, as each rent should have been paid." The court held that "the fact that the plaintiff claims the rents as lost profits does not change their cause, which is the lease agreement and the third term agreed upon, stating that they become due and payable by the 10th day of each rental month." Consequently, the total debt of the defendant, including the default interest from the day after each of the eight rents became due, as well as the awarded interest, exceeded €235,000.