Court of Appeal unanimously confirms that commercial rent accrued during the pandemic remains payable
In a decision which affirms longstanding principles, the Court of Appeal has unanimously found in the favour of commercial landlords following linked appeals in these cases:
- Bank of New York Mellon (International) Ltd v Cine-UK Ltd [2022] EWCA Civ 1021; and
- London Trocadero (2015) LLP v. Picturehouse Cinemas Limited & ors
The common issue in dispute in both cases was whether the commercial tenants were required to pay rent to their landlords during periods of the pandemic when they were unable to open or run a business due to the lockdown restrictions. The tenants argued that as they were unable to open, under various provisions under their leases, they were not required to pay rent. At the High Court last year, in both cases the Court found against the tenants and held that the rent accrued during periods of lockdown remained payable.
The tenants obtained permission to appeal the first instance decisions to the Court of Appeal. One of the main arguments raised by the tenants was that during the lockdowns, as it was unlawful to open their businesses, there was an implied term in their leases that their obligation to pay rent ought to be waived during the period opening was restricted. The Court of Appeal handed down their decision over the summer, and they rejected the arguments raised by the tenants and upheld the decisions of the High Court.
The Court of Appeal's position was that the tenants' arguments did not reflect what was agreed between the parties at the time of entering into their respective leases. This reinforces commercial landlords' right to recover arrears which have accrued since the pandemic, which will be subject to the arbitration scheme under the Commercial Rent (Coronavirus) Act 2022.
If you are interested to read more, have a look at our longer article discussing the cases.
The first decisions under the coronavirus rent arbitration scheme are discussed here.