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Judgment in Covid-19 Commercial Rent Cases

Judgments, Real Estate

18 May 2021

Judgment has been handed down in the Covid-19 commercial-rent cases of Bank of New York Mellon v Cine-UK LtdAEW REIT Plc v Mecca Bingo Ltd and AEW REIT Plc v SportDirect.com Ltd [2021] EWHC 1013 (QB) in a combined judgment that can be found here.

In each of the three cases (and in a fourth that was compromised), the landlord of commercial premises claimed rent from the tenant for periods when the premises were closed as part of the lockdown measures to control the spread of the SARS-CoV-2 virus. In each case, the landlord had arranged insurance that would cover any loss of rent as a result of the spread of infectious disease. The tenants argued that their obligation to pay rent was suspended while the premises could not be put to their intended use.

The landlords applied for summary judgment on the claims, which Master Dagnall in the Queen’s Bench Division has granted. His judgment gives very detailed consideration to the arguments raised by the tenants. Together with another judgment handed down in the Chancery Division just days earlier, this decision represents a significant setback for tenants struggling to pay their rent or to negotiate extended terms following the lockdowns of the last year, although the landlord’s arguments turned on the construction of the rent cesser provisions in the various leases. Having accepted for the purpose of the applications that the pandemic was an Insured Risk (as defined) nevertheless the landlord successfully argued that the tenants were not entitled to the benefit of the insurance they (the tenants) had paid for.

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Philomena Harrison represented Cine-UK Ltd and Tim Calland represented Mecca Bingo Ltd.

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