High Court confirms that landlords can still bring court proceedings to recover unpaid rent

In the recent case of London Trocadero (2015) LLP v (1) Picturehouse Cinemas Ltd (2) Gallery Cinemas Limited and (3) Cineworld Cinemas Limited the High Court considered an application for summary judgment by the landlord in respect of outstanding rent arrears.

The Claimant, London Trocadero (2015) LLP, was the landlord of two leases of cinema premises at the Trocadero Centre in London of which the First Defendant, Picturehouse Cinemas Limited, was the tenant. The Second Defendant, Gallery Cinemas Limited, was the original tenant under one of the leases and the Third Defendant, Cineworld Cinemas Limited, was the guarantor of sums due under both leases.

No rent had been paid under the leases since June 2020 and the arrears together with service charges at the time of the Court hearing was in the region of £2.9 million. The Landlord issued court proceedings and applied to the court for ‘summary judgment’; this means that it asked the Court to enter judgment now rather than the case proceeding to trial on the grounds that the Defendants had no real prospect of successfully defending the claim and there was no other compelling reason why the case should be disposed of at a trial.

The Defendants said that they were not liable for rent and service charges which had arisen when the premises could not be used as a cinema. The cinema was closed for a significant period throughout the Covid-19 pandemic, opening for only 71 days between 23 March 2020 and 16 May 2021.  There were two main arguments in the defence: firstly they said that a term should be implied into the leases to the effect that payment of rent and service charges should be suspended during any period for which the use of the premises as a cinema was illegal and/or during which attendance would not be at a level commensurate with that which the parties would have anticipated at the time when the leases were entered into.

The second line of defence was that there had been a partial failure of consideration, on the basis that the payments due under the leases were for the use of the premises as a cinema, with the result that no payments were due under the leases in respect of periods for which the premises could not be used as a cinema.

The Court rejected the arguments raised. The Court also dismissed an earlier application by the tenant to adjourn the summary judgment application on the basis of the Government announcement that it intends to legislate for a binding arbitration scheme relating to rent arrears.

The decision will be welcomed by landlords. For further information on the Government’s proposals click here.

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Photo thanks to the Evening Standard, read the full article here.

Photo thanks to EGi