Property litigation weekly update - 17 September 2020


In this week's bulletin we report on the extension of the moratorium on forfeiture for commercial properties, a recent dispute between a telecommunications provider and a property owner and the new accelerated possession form for residential property. All this, alongside insights from our colleagues around the firm and some positive news.

Extension of Moratorium on Forfeiture for Non-Payment of Rent at Commercial Properties

The Government has announced that the moratorium on forfeiture for non-payment of rent will now be extended until the end of 2020. It had been due to end on 30 September 2020. The restrictions on the use of the Commercial Rent Arrears Recovery procedure are similarly to be extended. At the time of going to press there has been no extension to the legislation preventing statutory demands and winding-up petitions being used to recover rent arrears that have accrued as a result of Covid-19. This protection is currently due to end on 30 September 2020.

The Government has set out that the extension on the moratorium on forfeiture "will help those businesses most in need of additional support to remain in their premises without the threat of eviction for the rest of this year, giving them the chance to focus on rebuilding their business over the autumn and Christmas period." However, the Government has once again re-stated that those who can pay their rent should do so and both landlords and tenants should follow the 'Code of Practice for commercial property relationships during the COVID-19 pandemic'.

Trade and retail bodies such as UKHospitality have welcomed the move stating that it "should give businesses some much-needed breathing room to come to agreements." However, whilst the measures may protect tenants from losing their premises, unpaid rent will still be due and owing, and tenants will therefore need to consider how these arrears can be managed.

The extension is not such good news for landlords. The British Property Federation, the British Retail Consortium and others have been lobbying the Government for the moratorium to end and for a Property Bounceback Grant to be put in place instead. The proposed scheme would see the Government pay 50% of rent and service charge due with the other 50% dealt with between the parties. However, it appears that with this extension that measure will not be introduced for at least the foreseeable future.

While the moratorium has been extended, the Government's announcement was silent on statutory demands and winding-up petitions. Currently a creditor cannot present a winding-up petition against a company until after 30 September 2020 unless it reasonably believes that the company’s inability to pay its debts is not the result of coronavirus. In the past the Government has treated these issues separately and so there may yet be a similar announcement on statutory demands and winding-up petitions. If not, however, landlords may soon be able to serve statutory demands and/or issue winding-up petitions in the face of undisputed arrears. In the event that this measure is also extended, the fall back position remains that debt proceedings can be brought against a tenant that owes rent.

Case Update – Cornerstone Telecommunications Infrastructure Ltd –v- University of the Arts London [2020] UKUT 0248 (LC)

On 1 September 2020, Judgment was handed down by the Upper Tribunal (UT) in the case of Cornerstone Telecommunications Infrastructure Ltd –v- University of the Arts London. The case concerned an application made to the UT by the claimant, Cornerstone Telecommunications Infrastructure Ltd (CTIL) for the imposition of a Code Agreement between it and the respondent, University of the Arts London.

CTIL had made an application under para 20 of the Code seeking rights to install and operate telecommunication apparatus on the respondent's building.

The respondent opposed the application on the basis that if the Code Agreement was granted it would suffer loss that could not be compensated by way of money and/or that the prejudice it would suffer would outweigh the public benefit to have access to electronic communications. The building in question was due to be demolished and the respondent had entered into a number of agreements with a developer in which it covenanted not to restrict or prohibit the ability of the developer to carry out the development.

Although it was noted by the UT that the prejudice to be suffered by the respondent would need to be very high to outweigh the public benefit of allowing the claimant to install telecommunication equipment onto its building, the UT decided that as it was not possible to be confident that the claimant would leave the site without litigation (and therefore leave the respondent in breach of its obligations with the developer), the prejudice that would be suffered by it would not be outweighed by the public benefit derived from the imposition of the code agreement.

Accordingly the para 20 application was dismissed.

This case should provide some support for building owners who face requests from operators to enter into code agreements that may interfere or prevent them from complying with their obligations under other contracts.

New accelerated possession procedure – N5B Form

Last week, we reported that a new prescribed Form 6A was introduced as the form which must be used when seeking possession under section 21 of the Housing Act 1988.

From 11 September 2020 a new accelerated possession claim form was added to the Government website.

This new form does not make any substantial changes to the N5B form which was revised in April 2020, however it must be used when seeking possession for properties in England with effect from 11 September 2020.

Insights from around the firm

Positive news

  • In what is only the third such discovery of its kind, scientists have found a manta ray nursery off the coast of South Florida consisting of a large concentration of juvenile manta rays. Manta ray nurseries are ultra-rare, the only other two known are located in the Gulf of Mexico and Indonesia.
  •  The Oscars has introduced new guidelines in a bid to improve diversity and inclusion for its "best picture" award (its most prestigious award). To be eligible, entries must satisfy two of four criteria. Also, to qualify for 'Standard A', one of three criteria must be met which includes having at least one lead / significant support actor from an "underrepresented racial or ethnic group". The new guidelines will come into effect for the 2025 Oscars.
  • Phosphine gas has been detected by scientists 50km up from Planet Venus's surface in quantities which raises the extraordinary possibility of living organisms floating in the clouds of Planet Venus.

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