Don’t Look! Has the Supreme Court Created a New Tort of Overlooking?

In a surprise move, the Supreme Court has overturned* an earlier ruling of the Court of Appeal and ruled that use of the Tate Modern viewing platform by members of the public is a nuisance to neighbouring flat owners.

The Court’s ruling is the culmination of a long running dispute between the owners of flats adjacent to the Tate Modern extension, on the south bank of the River Thames in central London, and the trustees of the gallery.

The modern flats include “winter gardens”, a type of indoor balcony with floor to ceiling windows looking out over London.

The flats were constructed between 2006 and 2012, around the same time the Blavatnik Building was built, which is the name given to the Tate’s extension, and which has a viewing gallery on its top floor running along all four sides giving a 360-degree panoramic view of London.

The viewing gallery attracts hundreds of thousands of visitors a year. From the south side, visitors can see directly into the “winter gardens”, through to the central living accommodation of the flats. Visitors frequently look into the flats, sometimes with binoculars, and occasionally take photos which are posted to social media.

The flat owners have claimed throughout this litigation that by allowing visitors to look into their flats, the Tate committed the tort of nuisance, and have sought an injunction against the Tate to close part of the viewing gallery.

Private nuisance is a common law tort, which is defined as an unlawful interference with a landowner’s use or enjoyment of their land.

Over the hundreds of years that the tort of nuisance has existed and been developed by the courts, there has never been a reported case in England and Wales in which a court has found that overlooking by a neighbour constituted nuisance. On the contrary, the courts have found that, subject to planning permission being granted, a landowner may create windows which overlook a neighbour’s property.

The general principle in common law is that anyone may build whatever they like on their land. It’s planning law that controls what can be built as a matter of public policy. There is also the law relating to rights of light and air, which may in certain situations inhibit a landowner’s ability to build, but rights of light were not an issue in this case.

The Court of Appeal did not want to expand the tort of nuisance to include overlooking as it felt that doing so could open the floodgates to complaints in cases where planning permission is granted to include a balcony or other structure overlooking property.

The Supreme Court’s ruling (made with a narrow three-to-two majority) that overturns the Court of Appeal’s reasoning has been controversial, to say the least.

It’s going to be significant for developers of any buildings in confined urban settings, although only time will tell how significant.

The judgment appears to have turned on the Supreme Court’s interpretation of the particular facts in this case.

Lord Leggatt, who gave the leading judgment, ruled that whilst mere overlooking does not give rise to a liability for nuisance, which in one sense answers the question posed by this blog title in the negative, in this case the use of the viewing platform amounted to an extreme form of “intense visual intrusion” and “intolerable interference with their freedom to use and enjoy the property” in a way which did give rise to liability in nuisance and could not be justified by the “rule of give and take”.

“Ordinary use” is to be judged by having regard to the character of the location, and it was held that use of the viewing platform was not a common and ordinary use of the Tate’s property. Lord Leggatt even went so far as to compare the use of the viewing platform to a zoo.

Many on social media have taken the opposite view, branding the outcome a Nimby’s charter, and have pointed out that if you choose to live in a flat with floor to ceiling walls of glass, then what do you expect?

The Supreme Court did not buy this argument however and instead focussed on their reasoning that the Tate was not using its building in an “ordinary” way, so it was not correct to say the design of the flats had in itself increased the likelihood of such a nuisance.

The Supreme Court also did not think it reasonable to expect the flat owners to take steps to avoid being seen, such as by putting up blinds or net curtains, as was suggested in the High Court, as this would place responsibility on the victims of the tort.

The High Court will now determine what remedy is appropriate – injunction or damages – and to that extent public interest considerations may be relevant.

Although the set of circumstances here are unusual, the outcome of this case will undoubtedly increase the likelihood of questions of privacy being raised by objectors to developments.

This is especially true in the less unusual cases of CCTV or being photographed or filmed from a neighbouring property, where further issues of privacy could be explored.

Courts will have to draw the line between reasonable give and take between neighbours and exceptional cases that give rise to a nuisance claim. There are bound to be instances in future where it’s not clear at the outset on which side of that line a proposed development sits.

*Fearn and others (Appellants) v Board of Trustees of the Tate Gallery (Respondent) [2023] UKSC 4

Postscript 9/2/23: The more I think about this case the more it seems to me to be an issue that really ought to have been dealt with at the planning stage, in this case the planning of the Tate extension. As I indicate above, the extent to which the peculiar circumstances of this case will have a general impact on the law of nuisance remains to be seen, but it's nevertheless an example of  the private law doctrine of nuisance being used to rectify a public law mistake in planning.

Service Charge – “Pay now, argue later”

The Supreme Court has handed down an important judgment in a service charge dispute [Sara Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC2] concerning the construction of a provision which is widely used in commercial leases, which stated that the landlord's service charge certificate would be “conclusive in the absence of manifest error, mathematical error, or fraud”.

The landlord sought summary judgment for unpaid charges of £400,000.

To illustrate how difficult this issue was to determine, the High Court found in favour of the tenant; the Court of Appeal found in favour of the landlord. The case was then appealed to the Supreme Court.

The landlord argued that the certificate was conclusive and applied not only to the total costs incurred, but also to the identification of the services in the charge, save for the very limited circumstances described (manifest or mathematical error, or fraud). In other words – pay now, argue never.

The tenant argued that the true meaning of the clause was that the landlord's certificate was only conclusive as to the amounts incurred, but not as to its liability for the charge. Therefore, it should be entitled to challenge the landlord's inclusion of certain costs at the outset. In other words - argue now, pay later.

The Supreme Court found a middle path to take – pay now, argue later.

The court decided that the correct interpretation was that the landlord’s certificate was conclusive as to the sum payable by the tenant following certification, but not as to the tenant's underlying liability for the service charge. This assured the landlord of payment without delay but allowed the tenant the opportunity to dispute liability later if it felt it had been improperly charged.

There was a detailed dispute mechanism in the lease relating to the proportion of the service charge payable and the rights for the tenant to inspect receipts and invoices. If, as the landlord argued, the service charge certificate was wholly conclusive, then these provisions would have been made superfluous.

There was a standard “no set-off” clause in the lease, but the Supreme Court held that this did not prevent the tenant making a counterclaim.

So, the landlord got its summary judgment for immediate payment, but the tenant was allowed to counterclaim subsequently as to the amount charged.

On the one hand, this looks like a neat solution that gives the landlord the certainty of immediate payment but allows the tenant to argue for a rebate if circumstances justify.

On the other hand, it could mean cash-strapped tenants have to pay exorbitant charges they can’t afford on demand and then incur the further expense of litigating them after payment, that is if they can even afford to do so.

Meanwhile landlords, many of whom are also under considerable financial pressure, might be able to insist on payment following the issue of their service charge certificate, but potentially face the prospect of a rebate being awarded tenants later on.

Tighter lease drafting up front might be one way to avoid such uncertainty, but there will inevitably need to be a degree of compromise whenever the issue is addressed.

When paying the service charge, in cases such as this it would be advisable for tenants to make their payments on a without prejudice basis and to reserve the right to challenge the demand subsequently.

 

Roundup December 2022

Here’s a roundup of things that have caught my eye this month.

Conservation Covenants

Conservation covenants, introduced by the Environment Act 2021 and which have been available for use since 30 September 2022, can now be registered as local land charges under rules which came into effect on 29 November 2022.

Conservation covenants are private voluntary legal agreements which bind current and future landowners to positive and restrictive conservation related actions. I first wrote about them in 2013 when the Law Commission launched a consultation. Things have moved on quite a lot since then! There’s more about the new rules here from Herbert Smith Freehills LLP.

Telecoms lease renewals

The County Court has provided clarification on the valuation structure to be adopted when determining the annual rents of renewal leases relating to electronic communications sites under section 34 of the Landlord and Tenant Act 1954 and has set out useful guidance on several other key points that are commonly in dispute. There’s more on this here from DWF.

Tenant Fees Act

There have been very few cases under the Tenant Fees Act 2019 (TFA). However, a recent case before the First Tier Tribunal concerned the lawfulness of agency fees charged by Foxtons at the start of a tenancy agreement for a term of only 8 weeks.

Foxtons used a type of short let agreement, perhaps wrongly assuming that an Assured Shorthold Tenancy cannot be for under 6 months. They thought this meant the TFA did not apply and tried to charge for agency fees to cover various costs incurred in letting the property. The tribunal highlighted that the length of the tenancy does not, in itself, determine the type of agreement, which is most likely to be an AST. There’s more on this here from Boyes Turner.

Disrepair in residential premises – fitness for human habitation

This isn’t just a problem for social landlords. Most private sector tenancies will be subject to the same rules as those in the public sector when it comes to repairs and maintenance issues. Tozers LLP look into this in the context of the recent tragic death of Awaab Ishak.

Landlords should be aware of the Housing Health and Safety Rating System (HHSRS). A detailed regime introduced by the Housing Act 2004 were various potential risks and hazards are assessed and given a ‘hazard score’ by the local authority.

Damp and mould growth are specifically listed as presenting a potential hazard for occupants.

Landlords can also be challenged by tenants directly claiming breaches of the implied tenancy terms contained in the Landlord and Tenant Act 1985, as amended by the Homes (Fitness for Human Habitation) Act 2018. Arguments about the causes of damp and mould, and whether its presence amounts to a breach of s11, feature in many Court cases. ‘Freedom from damp’ is now expressly listed as a factor which could make a home unfit for human habitation.

The obligations of those involved in the construction of dwellings to ensure they are fit for habitation were originally included in the Defective Premises Act 1972. The scope of the obligation has been changed following the introduction of the Building Safety Act 2022.

The duties under the 1972 Act now extend to anyone who is carrying out work to an existing dwelling, so will include refurbishment. This significantly increases the scope of the Act. “Fit for habitation” wasn’t defined in the 1972 Act, but the term has been interpreted by the courts over the years.

A wide group of people can make claims under the 1972 Act: the person for whom the property was provided; subsequent tenants and owners; and anyone who has a legal or equitable interest in the property.

The other big change brought in by the 2022 Act is to increase the limitation period for such claims. This was 6 years under the 1972 Act. It’s now 15 years for claims made in respect of works carried out after the new Act came into force; and 30 years (!) for claims relating to works carried out before the new Act came into force (28 June 2022) (although the 30 years period doesn’t apply to the expanded potential claims relating to refurbishment). More detail is in this explainer from Brodies.

Fire Safety

The government has finally announced its proposals on how developers will contribute to the remediation of unsafe buildings over 11 metres in height under the Building Safety Levy, first announced in February 2021. Here’s an article from Burgess Salmon that has more on the consultation, and so too does Travers Smith.

Registration of Overseas Owners

Time is running out for overseas owners of real estate to register their beneficial owners at Companies House under the Economic Crime (Transparency and Enforcement) Act 2022 and obtain an overseas entity identification (OEID) number and the status of “Registered Overseas Entity”. Failure to do so risks facing serious difficulties in real estate transactions and ultimately criminal sanctions.

The registration deadline is 31 January 2023.

This also applies to any overseas entity that has disposed of all its UK real estate between 28 February 2022 and 31 January 2023.

It applies to freehold or leasehold property where the lease is for 7 years or more.

“Drop-in” Planning Permissions

The Supreme Court has delivered a landmark judgment in a planning case (Hillside Parks) that will have important implications, particularly for large development sites.

A developer or landowner will often obtain an original planning permission on a large site and then pursue changes for part of the site, by lodging a subsequent planning application to “drop-in” alternative development submitted as a fresh, separate application.

The Supreme Court has ruled that generally the implementation of one of these subsequent “drop-in” permissions renders further development under the original permission unlawful, save for certain limited exceptions.

In so ruling, the Supreme Court has reaffirmed the so-called Pilkington principle. There has to be a material departure from the permitted scheme for further development to be rendered unlawful, which is question of fact and degree. Development already carried out in accordance with the original permission is not rendered unlawful merely because further development under the permission is no longer possible.

Freeths discuss the possible implications of this.

The Product Security and Telecommunications Infrastructure Act 2022

This new Act is now partially in force. It’s intended to support the rollout of future-proof, gigabit-capable broadband and 5G networks in a way that balances the interests of landowners, operators and the public, aligns the procedure and framework for renewal agreements with new agreements, to encourage collaborative negotiations and introduce measures that will optimise the use of existing infrastructure. CMS explains this in more detail.

 

 

 

Time Running Out for Commercial Landlords with Low EPC Ratings

Landlords with buildings rated F and G on their EPCs only have until 31 March 2023 to improve the EPC rating or register an exemption. Failure to do either of these things could land them a fine of up to £150,000 and the risk of being “named and shamed”.

An EPC is an energy performance certificate, issued by an assessor, which details the energy efficiency of the property and is valid for 10 years from registration on the EPC Register.

From 1 April 2023, it will be unlawful for a landlord to continue to let a sub-standard property, unless an exemption applies and has been validly registered on the PRS Exemptions Register.

“Sub-standard” property means one having an EPC rating of below E.

If you have a sub-standard building, you will need to carry out energy improvement works to improve the rating to at least E or register an exemption.

The improvement works

The energy improvement works must be listed as a “relevant energy efficiency improvement” in the relevant regulations and must also be identified as a recommended improvement for the building in a green deal report, a recommendation report, or a report prepared by a surveyor.

Exemptions

If the following exemptions apply, then you can continue to let a sub-standard property. If an exemption applies (save for the first one listed below) then it must be registered on the Private Rented Sector (PRS) Register.

 ·       Lease term - Commercial properties let for more than 99 years or for less than six months do not need to comply.

 ·       Consent exemption - Can you enter the property to do the works if it is let? This will depend on the terms of the lease, which are not overridden by statute. If there’s no right of entry and the tenant doesn’t consent, you may be able to register a “consent exemption”. This exemption would expire when the tenant leaves the property.

 ·       All improvements made exemption – where you have made all the possible relevant energy efficiency improvements and the property is still below the minimum rating, or there are no improvements that can be made

 ·       Devaluation exemption - You might qualify for a “devaluation exemption” if a report says the installation of specific energy efficiency measures would reduce the market value of the property, or the building of which it forms part, by more than 5%.

 ·       Economically efficient exemption – where the costs of carrying out the relevant improvements will not be recovered within seven years.

 ·       Temporary exemption - if you buy a property subject to tenancies that is rated below E (which is of course a risk), then from 1 April 2023 you will be able to register a temporary exemption which lasts 6 months, designed to give you time either to improve the property (although you would need to check the leases to ensure you have a right of entry or get tenants’ consents) or to register a longer-term exemption.

Exemptions are personal, and do not attach to the property. So, if you buy a property where the seller has an exemption, you will need to register your own exemption after the transfer of ownership, and of course that means you would need to be certain you could do so.

Other than temporary exemptions (and the rule about length of lease term), exemptions generally last for 5 years.

Also bear in mind that the minimum standard of E is likely to rise in the coming years. The government’s 2021 consultation proposed raising the minimum standard for non-domestic properties to C in 2027, followed by B in 2030.

The government has yet to publish a response to that consultation, but it makes sense that if improvement works are undertaken that the opportunity is used to significantly improve a building’s energy efficiency, rather than aim for the bare minimum.

Register of Overseas Entities

On 1 August 2022 the new Economic Crime (Transparency and Enforcement) Act 2022 came into force and with it a new Register of Overseas Entities was created.

New land registration requirements will also soon come into force on 5 September 2022.

The new law was introduced to address concerns regarding a lack of transparency around who ultimately owns land in the UK and will affect both existing owners of real estate in the UK and prospective buyers who are overseas entities.

Here are the key dates.

·       1 January 1999 – any overseas entity that became the registered proprietor of a qualifying estate in UK real property on or after this date will be captured by the provisions of the new law.

·       28 February 2022 – any overseas entity that has disposed of a qualifying estate in UK real property on or after this date, but prior to the expiry of the transitional period described below, will be required to disclose certain beneficial ownership information to the registrar.

·       1 August 2022 – a six-month transitional period began.

·       5 September 2022 – the new land registration requirements will come into force.

·       31 January 2023 – the transitional period will end – any overseas entity still owning a qualifying estate in UK real property on this date must have applied to be registered on the Register of Overseas Entities.

See this briefing from Freshfields Bruckhaus Deringer for a very good summary of the new law and how it will be applied.

Commercial Rent (Coronavirus) Act 2022 Now in Force

The Commercial Rent (Coronavirus) Act 2022 is now in force, and the general moratorium against forfeiture, re-entry and Commercial Rent Arrears Recovery (CRAR) is over.

Landlords may now be able to recover unprotected rent; enact forfeiture and CRAR; and petition to wind up a company in respect of unprotected rent that is in arrears.

Unprotected rent is basically rent that isn’t owed because of the Covid-related restrictions and closures that took place between March 2020 and July 2021.

Protected rent arrears are ring-fenced, so that if an agreement for repayment hasn’t been reached, there is now a 6-month period (ie until 24 September 2022) for landlords and tenants to refer the arrears to arbitration.

Only after 24 September 2022, if there is no arbitration or at the end of the process, might the landlord then be able to take further steps to recover the protected rent debt.

Either a landlord or tenant can apply unilaterally for arbitration. The arbitrators will look at the parties’ businesses and attempt to strike a balance between preserving the viability of the tenant’s business and preserving the landlord’s solvency. How this will work in practice remains to be seen.

Arbitrators may write off debts in full or in part, defer the debt for up to 24 months, or grant no concession at all.

The most important effect of the arbitration scheme might simply be to encourage landlords and tenants to strike a deal outside of the process, given the uncertainty of its outcome for either party.

The Act gives guidance on the arbitration bodies that can be approached and the timetable for arbitration.

Commercial Rent Arrears: With the Clock Ticking on the Moratorium, What Next?

With the government ending the last of the Covid-19 restrictions and the moratorium on enforcement expiring on 25 March 2022, where does that leave landlords and tenants of commercial property when it comes to settling the arrears of rent that have built up during the pandemic?

In November the government announced its detailed proposals on how commercial rent arrears accrued during the pandemic should be dealt with when it introduced in Parliament the Commercial Rent (Coronavirus) Bill, along with a new Code of practice for commercial property relationships following the Covid-19 pandemic.

The Bill, currently in the reporting stage in the House of Lords, is expected to become law soon and take effect from 25 March 2022.

The new law will only apply to commercial rent arrears that accrued while businesses were forced to close during the pandemic.

It ring-fences rent, service charge, insurance, interest on overdue amounts and rent deposit top-ups.

The ring-fenced sums are protected rents for a protected period beginning on 21 March 2020 and ending on the day when the premises were not subject to closure or restrictions regulating their use, for example limits on numbers or mandatory table service. For hospitality businesses in England, that date will be 18 July 2021; in Wales 7 August 2021. For non-essential retailers in England the relevant period ended sooner on 12 April 2021.

There will be a new statutory arbitration process for commercial landlords and tenants who have not already reached an agreement on how to deal with the arrears. Any agreements made voluntarily before the new law comes into force will not be affected.

The new arbitration scheme will last for 6 months from 25 March 2022, and during that period enforcement of protected rent arrears accrued during the protected period by court proceedings, CRAR, forfeiture or winding up will be prohibited.

The government has published draft statutory guidance on how arbitrators should exercise their functions under the new law.

To be eligible for arbitration, the tenant’s business must be viable, or would be viable if given relief. The draft guidance explains the concept of "viability of a tenant’s business" and details how arbitrators should make the viability assessment.

The “viability” test is likely to be very difficult for arbitrators to assess in practice, assuming there are even enough suitably qualified arbitrators to go round. This will undoubtedly be a controversial element in the process.

The new law will only apply to businesses legally required to close or cease trading during the ring-fenced period. It will not cover those businesses whose trade was affected in other ways.

Those businesses will have to rely on the Code, which provides guidance on how parties should approach negotiation regarding rent arrears that accrued during the pandemic.

The Code states that tenants must pay in full if they are able to, while maintaining the viability of their business. Where this isn’t possible, tenants are to negotiate with their landlords considering the behaviours, principles, affordability, and viability statements outlined within the Code.

This could be problematic for businesses that could have opened but chose not to as it was not considered to be in the best interests of their business.

What about tenants that elected not to participate in the “eat out to help out” super-spreading scheme? Will they be punished for failing to mitigate their losses?

There also does not appear to be any protection for loss of trade suffered during the Plan B restrictions over Christmas 2021, or closures due to staff sickness during the Omicron outbreak.

It’s possible these issues will never be addressed, in which case tenants will have to try and agree some sort of arrangement with their landlords to settle the arrears or spread out their payment.

For all other non-protected overdue rent, when the current moratorium ends on 25 March 2022 landlords will once again be able to enforce recovery by the usual methods such as forfeiture, CRAR, winding-up or drawing down on rent deposits.

 

COVID-19: New Proposals for Treatment of Pandemic-Related Commercial Rent Arrears Released

The government has finally announced its detailed proposals on how commercial rent arrears accrued during the pandemic should be dealt with.

The Commercial Rent (Coronavirus) Bill was introduced in Parliament on 9 November 2021, along with a new Code of practice for commercial property relationships following the COVID-19 pandemic.

The Bill will only apply to commercial rent arrears that accrued while businesses were forced to close during the pandemic.

It ring fences rent, service charge, insurance, interest on overdue amounts and rent deposit top-ups.

The ring-fenced sums are protected rents for a protected period beginning on 21 March 2020 and ending on the day when the premises were not subject to closure or restrictions regulating their use, for example limits on numbers or mandatory table service. For hospitality businesses in England, that date will be 18 July 2021.

The Bill provides for a new statutory arbitration process for commercial landlords and tenants who have not already reached an agreement on how to deal with the arrears. Any agreements made voluntarily before the Bill comes into force will not be affected.

It is proposed that the new arbitration scheme will last for 6 months from March 2022, and during that period enforcement of protected rent arrears accrued during the protected period by court proceedings, CRAR, forfeiture or winding up will be prohibited.

The Code replaces the earlier version first published in June 2020, and subsequently updated in April 2021, and provides guidance on how parties should approach negotiation regarding rent arrears that accrued during the pandemic.

It also includes guidance on the arbitration process, the evidence that will be considered and the principles the arbitrator will apply.

The government aims to pass the Bill by 25 March 2022, subject to parliamentary approval. The existing moratorium on forfeiture, CRAR and winding-up petitions will remain in place in the meantime.

Beware the Perils of Property Fraud

 

In a recent story reported across the mainstream media, a man described his shock at returning to his house and finding it stripped of all furnishings after it was sold without his knowledge.

His identity had been stolen and used to sell the house and bank the proceeds, and the new owner had been registered as proprietor at the Land Registry.

Although the facts in this case were stark, property fraud is on the increase.

The Land Registry paid out a total of £3.5m in compensation for fraud last year. It commented:

"We work with professional conveyancers, such as solicitors, and rely on them and the checks that they make to spot fraudulent attempts to impersonate property owners…Despite our efforts, every year we do register a very small number of fraudulent transactions”.

Some properties are more vulnerable to property fraud than others, especially those that are mortgage-free and unoccupied.

Is there anything you can do to protect yourself?

You can reduce the risk of becoming a victim to property fraud by doing the following:

1.     Make sure your address for service registered at the Land Registry is up to date. This is particularly important if you don’t live at the property and it will enable the Land Registry to contact you if it has concerns about a potentially fraudulent transaction.

2.     Sign up to the free fraud alert service operated by the Land Registry by email. Once they have your details, the Land Registry will email you if an official search or application is made against the property. You then have an opportunity to contact the Land Registry and provided you act quickly you may be able to stop a fraudulent transaction from taking place, or at least from being registered.

If a fraudulent transaction has taken place, then the question is which solicitor is responsible, the one acting for the purported seller, the one acting for the innocent buyer, or both?

This was the subject of litigation in 2018 resulting in the Dreamvar and P&P judgment handed down by the Court of Appeal.

In a complex judgment, the conclusion was that solicitors on both sides in a fraudulent transaction could be held liable for the loss. If the fraudulent seller’s solicitors fail to carry out sufficient checks on their clients, they must share in the responsibility for the loss – it cannot fall solely on the buyer’s solicitors.

However, many argued at the time (me included) that the liability should fall entirely on the solicitors acting for the fraudulent seller, rather than be shared between those acting for the fraudulent seller and those acting for the innocent buyer, and a powerful dissenting judgment given by Lady Justice Gloster in the Court of Appeal expressed that view.

The solicitor acting for the seller is after all in the best position to carry out the identity checks as part of the "know your client" and anti-money laundering processes undertaken when taking on a new client.

Buyers’ solicitors can try to protect themselves by asking for a warranty from the seller’s solicitors that they have carried out all appropriate identification checks.

 

COVID-19: High Court Grants Landlord Summary Judgment for Rent Arrears

 

The High Court* has granted a landlord summary judgment to recover rent and service charge arrears on premises that were closed during the pandemic.

The premises are a cinema in London’s Trocadero Centre.

The cinema had to close in March 2020 due to the pandemic and no rent has been paid since June 2020. The landlord brought proceedings for summary judgment for rent and service charge arrears of £2.9m.

The court rejected the tenant’s defences that there should be implied terms that they were not liable to pay for periods when the premises could not be used, and that there was a failure of basis.

The court found that the risk lay with the tenant, who could have taken out business interruption insurance (it was agreed that the pandemic was not an insured risk).

Judge Robin Vos stated there was “a long-standing principle that an inability of a tenant to use premises for the purpose intended at the time the lease was granted will not provide a defence to a claim for the payment of rent.”

The court had dismissed an application by the tenant to adjourn the summary judgment pending the introduction of the bindingarbitration scheme for pandemic rent arrears, which was a proposal announced by the government in June, but which has still not been enacted.

Until that arbitration scheme is up and running (which requires legislation), then regardless of the ongoing moratorium on forfeiture action, this case demonstrates that landlords are still able to sue tenants for non-payment even if the tenant was unable to trade during the pandemic.

*London Trocadero(2015) LLP v Picturehouse Cinemas Ltd and others [2021] EWHC 2591 (Ch) (28September 2021) (Robin Vos sitting as Deputy Judge of the High Court)

UPDATE: Permission to appeal to the Court of Appeal has been granted in London Trocadero, together with a stay of execution of the judgment pending the appeal. It is also understood that the High Court has granted Cine-UK Ltd permission to appeal in Bank of New York Mellon, and granted its application that the appeal should be transferred from the High Court to the Court of Appeal.