On 21 June 2022, the 3-day appeal hearing of the High Court decision in London Trocadero (2015) LLP v. Picturehouse Cinemas Limited & ors will begin. The case is hugely significant for commercial landlords and tenants in England & Wales, because it seeks to determine whether or not a commercial tenant negatively impacted by the pandemic (in this case resulting in £2.9Million of rent arrears) will be responsible for payment of rent during that period.
The tenant has raised two arguments in defence of the arrears action, which the Court of Appeal will determine, namely:
1. 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.
2. There had been a failure of consideration as the leases were entered into on the basis the premises could be used as a cinema. The premises could not be used for the intended purpose for certain periods due to the Covid restrictions and so there should be no obligation to pay the rent during these times.
For more details about the case and the High Court decision, please see our previous blog here.
The long-awaited decision will have wide implications for the industry (as well as English contract law generally) and help to resolve substantive outstanding pandemic-related rent arrears. We will update further as and when judgment is given.
If you have any concerns or questions about commercial rent arrears or how this decision may impact you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.