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Landlord Succeeds in Non-Payment of Rent Claim

12th May 2021

Landlord Succeeds in Non-Payment of Rent Claim

Nyree Applegarth, a partner in the Higgs Dispute Resolution and Litigation team, welcomes a High Court ruling which has seen a commercial landlord recoup money owed from a tenant – a rarity during Covid times.

In ordinary times, a landlord obtaining a Summary Judgment against a tenant for non-payment of rent and service charges would not be worthy of any headline - but it is at the current time, and as we come out of the pandemic.

The High Court has just upheld an Order in favour of the landlord relating to money owed to the landlord after the tenant had been obliged to close its shop at the Westfield Shopping Centre due to Government restrictions during the pandemic. 

The tenant had not paid any rent since April 2020 and the service charges for April, May and June 2020 were also unpaid.  The tenant sought to defend the Judgment on the grounds that:

  • it had been issued prematurely and contrary to the Code of Practice for commercial property relationships during the pandemic,
  • that the landlord was, in some way, exploiting a loophole in the restrictions that the Government had put in place to protect tenants and
  • that there was an implied term that the landlord was obliged to make a claim on its insurance for loss of rent and service charge due to forced closures.

However, the Court has decided that the Code did not vary or suspend the contractual terms of the lease and although the Government had protected tenants and introduced restrictions on some remedies, there was no restriction on a landlord bringing a claim in the Court for an Order that the tenant has to pay rent.

In relation to the insurance argument, in this instance, the obligation to pay rent under the insurance policy, only operated where there was physical damage to the landlord’s premises, which did not apply in this instance.

This is a welcome decision for landlords who have been prejudiced since March 2020 and have had their hands tied and have been unable to exercise many of the usual remedies that would usually be available to them.  It also serves as a reminder that tenants need to arrange their own business interruption insurance.

I have extensive experience in landlord and tenant disputes. Contact me on 01384 327151 or nyree.applegarth@higgsandsons.co.uk to discuss.

 

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