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The recent decision in the London Trocadero LLP -v- Picture House Cinemas Limited and others [2021] EWCH 5291 (Ch) case has provided further comfort to commercial landlords in that rent accrued during COVID is recoverable via the court route, irrespective of the moratorium on other action and the pending binding arbitration scheme planned by the Government. This case brings the third decision from the High Court on these matters.

The interesting point in this case is that the court was not prepared to adjourn the summary judgment application until after the legislation relating to the arbitration is in place. This means that it is unlikely that commercial tenants will be able to delay matters until the scheme is in place in the hope that some arrears will be written off.

In the claim for £2.9m in rent arrears, the defendants argued that there were implied rent suspension terms when the premises could not be used for its intended purpose (in this case a cinema) or where attendance levels had dropped to an unanticipated level. In the absence of express terms in the lease, the court did not agree with this point.

An argument of partial failure of consideration had already been rejected in an earlier judgment in BNY Mellon -v- Cine-UK Ltd and others [2021] EWCH 1013 QB (although this is subject to appeal), however, in the Trocadero case, the defendants tried to argue a total failure of consideration. The court rejected this point on the basis that the tenant had retained possession of the premises, thereby receiving some benefit and that the permitted use restrictions were not fundamental to the basis of the lease.

Finally, the defendants issued a counterclaim of £621k for insurance payments, which they claimed should be off-set against any arrears. The court was persuaded that a right of set-off could potentially exist due to the precise wording of the lease, however, this is to be decided at a later date at trial.

It seems that the scales are presently weighing in favour of commercial landlords despite the restrictions, however, it remains to be seen whether this will change as further cases pass through the court system on these issues.



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