Property litigation weekly update – 8 July 2022
This week‘s update highlights a tenant’s appeal in a substantial covid rent arrears claim and a further appeal concerning quiet enjoyment. All this together with insight from our colleagues around the firm, and positive news.
London Trocadero (2015) LLP v Picturehouse Cinemas Limited & ors
Covid rent arrears claims remain hard fought by landlords and tenants of commercial properties. The landlord in the case of London Trocadero (2015) LLP v Picturehouse Cinemas Limited & ors began its claim against the tenant in October 2020. It successfully applied for summary judgment, with the High Court providing their decision in late 2021. The claim concerned rent and service charge arrears of around £2.9 million owed by the tenant. The court refused to imply a term into two leases of the property which would have had the effect of ensuring that the payment of rent and service charges was suspended during periods in which it was illegal or unviable for the cinema to be open and trading. Additionally, the court concluded that there was no failure of basis or consideration, stating that the use of the premises as a cinema was not “fundamental to the basis” of the leases, rather, any understanding of how the premises are intended to be used is merely ''an expectation which motivated a party to enter into a contract''.
The tenant has since appealed and the Court's decision is eagerly awaited. The appeal was heard in the Court of Appeal on 21-23 June.
The Tenant is disputing its liability for the arrears on the basis of the following arguments:
(i) A term should be implied into the leases to suspend the tenant's obligation to pay rents during the periods the premises could not be lawfully used; and
(ii) There had been a failure of consideration as the leases were entered into on the basis the premises could be used as a cinema. Such use was prevented for certain periods as a matter of law, due to Covid restrictions, so there should be no obligation to pay the rent during these times.
There is a linked appeal - The Bank of New York Mellon (International) Limited v Cine-UK Limited. Watch this space.
Brem v Murray & Marchant (2022) EWHC 1479 (QB)
Mr Marchant rented a flat to Mr Brem and gave permission for Mr Brem to sub-let one of the rooms within the flat to Ms Murray.
The flat was in a dangerous state of disrepair and in January 2017 Ms Murray instructed solicitors to send a letter of claim to both Mr Marchant and Mr Brem. In response, Mr Marchant changed the locks to the flat. Her possessions were either moved, damaged or disposed of.
Two injunctions orders were made ordering Mr Marchant to allow Ms Murray re-entry. After an initial failure to comply, a fortnight later, Ms Marchant was allowed back into her room.
Ms Murray then brought a claim for damages against both Mr Marchant and Mr Brem under unlawful eviction pursuant to Section 3 of the Protection from Eviction Act 1977 and delay in complying with the Court’s orders to allow re-entry. This claim was successful at first instance against Mr Marchant for unlawful eviction and against Mr Brem for breaching his covenant for quiet enjoyment. The Court awarded special damages of £19,510, and common law punitive and exemplary damages of £5,000 with Mr Brem and Mr Marchant being jointly and severally liable for payment, in the case of Mr Brem because he “ignored his legal obligations by siding with the first defendant, and allowing him into the premises, despite being entitled to exclude him”.
Mr Brem brought an appeal on the basis that he had not carried out the eviction and that breach of quiet enjoyment was a contractual matter and not one of tort. The tenant is entitled to enjoy his lease without lawful interruption, eviction by the landlord (without due process) or interruption but the covenant of quiet enjoyment does not protect against tortious entries, such as trespass for which there are remedies in tort, and evictions by third parties.
The High Court stated that Ms Murray had not pleaded breach of quiet enjoyment and that any argument she had in this regard was that Mr Brem stood by whilst others evicted Ms Murray, rather than being actively involved. The Court held that the implied covenant does not import any positive obligation on a landlord to stop others intruding and as such the Appeal was allowed, the Order for damages against Mr Brem was set aside, and full liability fell to Mr Marchant who did not attend the appeal hearing.
Insights from around the firm
- Thinking Real Estate – this issue includes our article on Balancing city centre living with a night-time economy
- Is levelling up levelling out? - listen to our recent podcast here
- Gas safety instructions and service of Section 21 notices
- The water quality of the River Tagus in Lisbon has improved to such a degree that dolphins are now spotted there on a regular basis.
- What should you do if you are 6 and you lose a tooth whilst onboard a flight, meaning you haven't got the vital evidence for the tooth fairy? Get the captain to write a note – the story of one little girl's hero is here.
- One lucky fan gave his Pride flag to Adele for her Hyde Park performance and ended up being invited to watch the show from the VIP section at the side of the stage