Should commercial landlords share the financial burden of the pandemic with their tenants?
The Court of Appeal has provided its decision in favour of the Landlord in the London Trocadero rent arrears test case.
The decision has been eagerly awaited as it will have wider effects on landlords and tenant with rent arrears caused by the pandemic.
The Court of Appeal decided in favour of landlords, rejecting the tenants’ arguments and submissions. The tenant had argued that a term should be implied into leases to suspend the tenant obligation to pay rent where the premises could not be lawfully used. In addition, to this they argued that there has been a failure of consideration as the leases were entered into on the basis that the premises could be used as cinema and at the time the premises could not be used as a cinema.
The decision will provide some comfort to landlords and will also give clarity to both landlords and tenants on their positions.
Holly Minney, Head of the Dispute Resolution team, said:
“This decision is another step towards the legal position being returned to the pre-pandemic era. It will be welcomed by landlords. But also goes to show that the effects of the pandemic are still present.”