Unopposed lease renewals are rarely litigated to trial. The recent case in Westfield Shopping Centre of WH Smith Retail Holdings Limited v Commerz Real Investmentgesellshaft MBH is one of the exceptions, in which the Court determined two key issues of potentially wide impact in the context of the Covid-19 pandemic:
- The parties were agreed that there should be some form of Covid rent suspension clause, and had by the time of the trial agreed that it should see the parties sharing the risk on the rent equally (i.e. the rent would be reduced by 50%) but with service charge remaining payable in full. As the parties had agreed there should be a suspension clause (albeit they could not agree the precise trigger for it), the Court was not asked to determine this but interestingly the Judge did comment that he considered that "essential fairness demands it".
- Whilst interim rent is normally the same as the new rent, where the market has shifted substantially from the position it was in at the earliest point the Court would have had jurisdiction to determine the renewal, the Court should set the interim rent at that different figure. In this case that earlier date was in 2018, before the pandemic and at an earlier point in the perceived ongoing downward shift in retail values. Accordingly, if the new tenancy had commenced at that earlier date the rent would have been much higher than the actual rent ordered. On this basis, the interim rent was fixed at the higher sum of £758,785 p.a and the rent under the new tenancy at £404,666 p.a.
