Long Read  

Trocadero case result a relief to commercial landlords

It is therefore clear that the courts are not willing to interfere with the contractual relationship between a landlord and tenant when considering pandemic arrears, regardless of the impact on their business, as the courts remain reluctant to intervene in contracts where disputes have arisen.

The Court of Appeal’s decision follows a trend of recent judgments where the courts have ruled against tenants seeking to defend claims for rent arrears. Many tenants eagerly awaited the decision in the hope that the Court of Appeal would take a different approach and relieve them from their obligations. 

Covid assistance

The government introduced various measures to assist tenants during the pandemic, including a moratorium on commercial evictions, the introduction of a commercial rent code designed to provide guidance on how landlords and tenants should approach rent arrears negotiations and more recently, a legally binding arbitration process.

However, there remain billions of pounds worth of commercial rent arrears with little or in many cases no recourse in the courts for tenants seeking to escape payment of rent arrears. 

Landlords now have a clear route to claiming arrears. Tenants seeking to avoid increased costs should think carefully about whether they may be better served by embarking on the statutory arbitration process.

The decision will come as yet another blow for tenants that have incurred significant losses during the pandemic, many of whom are struggling to survive. 

The message by the government is clear: those who can afford to pay should pay, and landlords should continue to work with those tenants that cannot afford to pay to help them get back on their feet. 

Only time can tell how the commercial rental market will recover after the pandemic. For many landlords, particularly in certain retail markets, the most viable option may still be to allow their tenants to continue to occupy premises with a view to avoiding business rates liabilities.

It also remains to be seen whether the tenants in these cases are prepared to take a third bite at the cherry by appealing to the Supreme Court.

Gurpreet Sanghera is a partner and specialist property litigator at Simkins