The question of whether commercial property rent has continued to be payable during the pandemic has been decisively answered in the eagerly anticipated decisions in the summary judgment applications in BANK OF NEW YORK MELLON (INTERNATIONAL) LIMITED v CINE-UK LIMITED, AEW UK REIT PLC v MECCA BINGO LIMITED, and AEW UK REIT PLC v SPORTSDIRECT.com RETAIL LIMITED.
The decision is good news for landlords.
“In times of uncertainty the law must provide a solid practical and predictable foundation for the resolution of disputes and the confidence necessary for an eventual recovery… Contractual rights are to be evaluated by applying settled principles to the contract in question. Legal certainty remains paramount and gives the surest basis for resolution.”
That has been the basis of my analysis and this judgment. Anything else is a matter, in my view, for Parliament and not for the Courts.
Ending with those words, Master Dagnall’s judgment has provided a substantial degree of clarity to landlords and tenants. The case concerned a number of common arguments that have arisen between landlords and tenants since the start of the pandemic concerning rent arrears. Following on from last week’s judgment of Chief Master Marsh in COMMERZ REAL INVESTMENTGESELLSCHAFT mbh v TFS STORES LIMITED, this is more bad news for tenants.
Many landlords and tenants of commercial property have faced an uncomfortable stand-off since the early days of the pandemic and the introduction of the temporary commercial property moratorium, substantially curtailing options open to landlords to enforce what they saw as their contractual rights.
Some tenants have challenged claims for rent with a variety of legal arguments. Most landlords have considered their own legal positions strong, arguably with good reason.
Master Dagnall’s decision to give summary judgment in these three rent arrears claims strengthens the position of landlords and will likely heighten tensions surrounding the Government’s on-going consultation (as at 23 April 2021) on what to do after the temporary covid commercial property moratorium measures are withdrawn; with the Government wishing to see ‘a carefully managed exit to preserve tenant businesses and the millions of jobs they support.’
AK Law is a firm of property law professionals which deals with all aspects of property law; our team is able to assist on all transactional and contentious property matters. The firm typically acts for property asset management companies and HNW investors. We can be contacted on 020 8280 0810 or info@ak-law.co.uk to discuss your property law needs.
If you wish to discuss your commercial property arrears case, please contact Jonathan Riding, partner for property disputes, on 020 8280 0816 or jonathan@ak-law.co.uk
