The two most eagerly awaited rent arrears cases of recent years are set to hit the Court of Appeal next week.
The court is scheduled to hear the appeals of London Trocadero (2015) LLP v Picturehouse Cinemas Ltd and others [2021] EWHC 2591 (Ch); [2021] EGLR 43 and Bank of New York Mellon (International) Ltd v Cine-UK Ltd and other appeals [2021] EWHC 1013 (QB); [2021] EGLR 26, two important cases about the effect of the coronavirus pandemic on commercial rents. The hearing is set for 21 June.
The Picturehouse case is brought by the landlords of the iconic Trocadero Centre in London’s Piccadilly Circus. It is the location of Picturehouse’s flagship cinema, Picturehouse Central.
According to court documents, Picturehouse stopped paying rent in June 2020, arguing that it was “uncommercial” to make the payments during periods when ithe premises cannot be used to screen films. At a hearing last year, the cinema chain’s lawyers argued that the ability to use the venue as a cinema was “fundamental to the basis of the lease”.
However, in his judgment, handed down in September, High Court judge Mr Justice Vos disagreed, leaving the chain liable for almost £3m in rent arrears.
He said that case law supports a “long-standing principle that an inability of a tenant to use premises for the purposes intended at the time the lease was granted will not provide a defence to a claim for the payment of rent”.
Even so, he added that “there can be no general rule”, and “each case will depend on its own facts”.
The BNY Mellon case is another landlord-friendly judgment in which landlord BNY Mellon sought summary judgment against three tenants, all of whom are household names, over their refusal to pay rent during coronavirus lockdowns.
The tenants were Cine-UK, Mecca Bingo and Sports Direct. All of them had their ability to trade impeded by the government-imposed Covid-19 lockdowns and had failed to pay their rent, arguing that the leases had been “temporarily frustrated”.
The High Court rejected their arguments and told them to pay up.
The tenants in both cases sought permission to appeal, and their arguments will be heard together next week.
“The case is being closely watched by landlords and tenants alike as the impact of the pandemic lives on in the commercial property sector,” said Emma Preece, a property lawyer at Charles Russell Speechlys LLP.
While the cases, when heard at the High Court, were about the individual circumstances of the claimants, the Court of Appeal’s decision to hear the cases together “gives the courts the opportunity to align their approach to pandemic arrears with the government’s protective measures which have been introduced since the original court decisions,” she said.
Even so, in both cases the landlord won summary judgment, which means that the judges ruled the tenants had no real prospect for success.
As a result, a victory for the tenants would be “quite a significant U-turn” by the courts, she said.
