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This week the team analyses the lifting of the temporary restrictions on the recovery of commercial rent arrears and what this means for commercial landlords and tenants. We also report on Clarion Housing Association Ltd v Carter [2021] EWHC 2890 (QB), a recent possession claim that was appealed in the High Court. All this alongside the recent insights across the firm together with a dose of positive news.

Commercial rent arrears: what now?

Regular readers will note that we have been keeping abreast of the ever-evolving position in relation to the recovery of commercial rent arrears throughout the pandemic.

On 24 March 2022, the Commercial Rent (Coronavirus) Act 2022 (the Act) received Royal Assent and came into force, replacing the restrictions on rent recovery which were imposed at the start of the pandemic which have now lapsed.

In summary:

  • The Act introduces the concept of a protected rent debt where the arrears relate to the period in which a tenant's business was forced to close because of a coronavirus restriction;
  • The Act imposes a new moratorium on enforcement action in respect of the protected rent debt; and
  • Resolution of a protected rent debt (including whether it should be written off, reduced or subject to a payment plan) can now be referred to a new arbitration scheme set out in the Act.

Our detailed guide to the new Act can be found here.

All of the usual remedies for commercial landlords to recover non-protected arrears are, however, now available once more. These include forfeiture (subject to the usual rules regarding waiver of the right to forfeit) and full use of the Commercial Rent Arrears Recovery (CRAR) mechanism.

Furthermore, the temporary restrictions on winding up petitions imposed by the Corporate Insolvency and Governance Act 2020 (as amended) expired yesterday. This means that landlords are again able to serve a statutory demand as a pre-cursor to winding-up a tenant company, in respect of non-protected rent debts over £750, without additional hurdles.

Tenants may consider discharging any non-protected arrears in order to avoid landlords forfeiting or taking other action and parties will need to carefully weigh up whether to refer protected arrears to arbitration for determination or whether it is now in their interests to avoid the costs of that and instead seek a negotiated settlement.

Clarion Housing Association Ltd v Carter [2021] EWHC 2890 (QB)

In 2004, Ms Carter moved into the property to look after her ailing mother, who died intestate in 2017. Ms Carter asked if she could purchase the property but Clarion refused and served a notice to quit in order to terminate her mother's tenancy. It was Clarion's position that Ms Carter had no right to succession as she did not fulfil the criteria for succession under the terms of the tenancy.

The possession claim was dismissed by Deputy Circuit Judge Holt in the County Court giving judgment that, among other things, Louise Carter became an assured tenant in equity under the laws of intestacy on her mother's death. DCJ Holt found that the legal title had passed to the Public Trustee who held the tenancy on trust for any beneficiary (under the rules of intestacy). Ms Carter was such a beneficiary and was in occupation of the property; she therefore became an assured tenant in equity upon her mother's death.

Clarion appealed against the decision arguing that DCJ Holt was wrong to find that Louise Carter became an assured tenant as a beneficiary under a trust arising from the law of intestacy. Louise Carter argued that DCJ Holt's decision should be upheld and asserted that she had the right to establish title to the tenancy pending her appointment as personal representative of her mother. Failing that, Ms Carter argued that her interest was sufficient to bring her within the wide definition of 'tenant" under s45(1) of the Housing Act 1988 Act and could therefore enforce the succession provisions in the tenancy.

Mr Justice Kerr reviewed the County Court's decision and concluded that DCJ Holt's judgment that Louise Carter was an assured tenant in equity was incorrect and agreed that Ms Carter was not entitled to statutory succession of the tenancy.

However, Mr Justice Kerr did find that the equitable exception to the doctrine of privity of contract was made out and therefore Ms Carter could rely on the succession terms contained in the tenancy, irrespective of the fact she was not party to it. As such, Ms Carter was entitled to rely on the contractual succession provisions contained in her mother's tenancy agreement and her right to succeed the tenancy was upheld.

This particular tenancy predated the amendments made by the Localism Act 2011 and is therefore unlikely to be a common issue encountered. However, this case should serve as a reminder for social landlords to carefully consider their own internal policies when responding to a tenancy succession claim and consider each application with an open mind.

Insights from across the firm

Trowers has provided an update on the Economic Crime (Transparency and Enforcement) Act 2022, which was recently passed by the UK Government in response to the Ukraine War.

A webinar on how to manage mental health issues in the workplace has been recorded and can be viewed here.

Our Sara Bailey and Sharron Webster discuss what it means to be a responsible business and the practical steps Trowers is actively taking. The webinar has been recorded and can be viewed here.

One of the key aims of the Building Safety Bill is to put residents at the heart of the new regulatory system. This article looks ahead to the new resident-focused obligations that landlords of higher risk buildings (and their residents) will need to get ready for.

Positive news stories

1. The first game for FC Barcelona women's team at Camp Nou sees a world-record crowd:

This week saw FC Barcelona's women's team play their first ever game at the Camp Nou against Real Madrid in the Champions League. The game which ended in a 5-2 win for Barcelona, saw a world-record crowd of over 91,000 fans and reflects the growing popularity of women's football (or 'football' as we prefer to call it) internationally. Before the game a giant montage was created by spectators spelling out the words 'more than empowerment', with Barcelona captain Alexia Putellas describing the night as 'magical'.

2. 2021 sees record global use of wind and solar energy:

Analysis has shown that a record 10% of global electricity was generated by wind and solar power for the first time in 2021, with other 'clean sources' of energy generating an additional 18% of the total supply. The authors of the report, climate change thinktank Ember, say that fifty countries now generate more than 10% of their total electricity usage through wind and solar, and global supply from these sources has doubled since the 2015 Paris Climate Agreement.