In what is sure to be a welcome outcome for commercial landlords, Westfield London’s owners, COMMERZ REAL INVESTMENTGESELLSCHAFT mbh, have won summary judgment against one of their tenants, The Fragrance Shop, for unpaid rents and service charges that have accrued throughout the pandemic.
The Fragrance Shop had not paid rent since April 2020 and had three months of unpaid service charges. They had been closed intermittently since March 2020 as a result of the nationwide lockdowns. Commerz sought summary judgment for rent amounting to £166,884 (inclusive of VAT) and interest at the contractual rate.
The Fragrance Shop put forward three grounds for defending the claim as follows:
- They claimed that the claim was issued prematurely contrary to the Code of Practice for Commercial Property Relationships during the COVID-19 pandemic.
- They claimed that the claim was a means of circumventing measures put in place to prevent forfeiture, winding up and recovery using CRAR. Issuing and pursuing the claim is said to be the claimant exploiting a “loophole” in the restrictions placed upon the recovery of rent put in place by the government.
- They alleged that the claimant was in breach of its obligation under clause 5.2 of the lease under which it covenanted to observe and perform its obligations under schedule 3 of the lease, which included an obligation to insure.
Each of the tenants above arguments were unsuccessful.
Chief master Matthew Marsh at the High Court granted summary judgment to the Claimant, without the need for a full trial. He stated that “as part of the measures taken to protect the economy, the government has placed restrictions upon some, but not all, remedies that are open to landlords. There is no legal restriction placed upon a landlord bringing a claim for rents and seeking judgment upon that claim”
Chief master Matthew Marsh made it clear that the Code of Practice did not affect the legal relationship between landlord and tenant. The code makes it clear that the legal position is that tenants are liable for covenants and payment obligations under their lease, unless this is renegotiated by agreement with landlords. The Claimant put forward documentation which showed “that there has been significant engagement by the claimant. There is simply no other conclusion that could be reached upon a review of these exchanges. The lack of engagement, if anything, is on the defendant’s side”.
He further went on to say; “I am satisfied that the claimant has discharged the burden of establishing that the rents it claims are due and the defendant has no real prospect of defending the claim to recover the outstanding rents. There are no compelling reasons why the claim should go to a full trial”.
Summary judgment was awarded in full.
For a link to the full judgment please click here.
If we can be of assistance in recovering outstanding rent arrears please do not hesitate to contact our property litigation team.