The High Court recently handed down another decision upholding a landlord’s claim for rent arrears accrued during the Covid-19 pandemic.
The London Trocadero (2015) v Picturehouse Cinemas, Gallery Cinemas and Cineworld Cinemas (2021) EWHC 2591 (Ch) case involved two cinema premises in the London Trocadero Centre and arrears of rent for the sum of £2.9m.
The decision is significant for several reasons. While it will feel like a further blow for tenants, the tide may be about to turn. The question of whether rent could really be payable given the impact of Covid-19 was effectively answered earlier this year when two separate High Court decisions (the Bank of New York Mellon and the Commerz Real cases) rejected a range of tenant arguments and confirmed that it was.
This case differs as it is the first reported case that dealt with the impact of the forthcoming government arbitration scheme to deal with Covid-related arrears. The court declined attempts to adjourn the landlord’s claim because the scheme will soon be in force.
While the case will widely be seen as the final nail in the coffin for tenants, the ‘compulsory’ and ‘binding’ scheme is due to come into effect by or before March 2022. At that point, parties will be forced to participate in the scheme, which it appears will have the ability to discount the rent payable in respect of Covid-related arrears.
As such, there is currently a race for landlords to obtain judgments before the scheme is introduced and deprives them of their right for a full rent. Conversely, tenants will seek to prevent cases reaching the point where a judgment is given.
While the Trocadero case currently makes depressing news for tenants with unpaid Covid-related arrears, if they can avoid the fateful day for a little longer, we are likely to see the tide turn at least a little in their favour as the arbitration scheme comes into force.
Given the current delays, the point where it is too late for landlords to actually issue a claim for Covid-related arrears is probably near or already upon us.
Chris Hill and Greg Barnbrook are property litigation partners at Keystone Law