The Retailer Summer Edition 2021

SUMMER 202 1

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RecentWestfield Case The courts have been prepared to follow this principle as reinforced by a case brought by Westfield against a tenant earlier in the year. Many Retailers will be concerned after the High Court ordered a tenant to pay Westfield £160,000 in unpaid rent and service charges that accrued during the pandemic. The retailer had not paid any rent since April 2020. Westfield sought payment for rent amounting to £166,884 and interest at the contractual rate. The High Court granted Summary Judgment in its claim against the retail tenant without the need for a full trial; signalling in no uncertain terms the Court’s approach and that it is prepared to enforce the terms of leases. The Code of Practice in place for landlords and tenants to settle the position regarding rental payments was deemed to be merely guidance. Helen Dickinson, CEO at the BRC, said: “This case highlights the weak- ness of the Code of Practice in that it doesn’t change the legal liabilities of the tenant with regards to rent. Thousands of retailers were legally forced to close by Government restrictions during the pandemic, and thus had little or no income with which to pay rents. While the rent enforcement moratorium has beenwelcome, it has left the County Court Judgment loophole open that landlords can exploit. The Government must tackle the issue of rent arrears in a way that is equitable to all parties, and doesn’t ignore the loss of trade to shops who have been closed for most of the last 12 months. Unless a more imaginative approach is found, many otherwise viable businesses will be forced into adminis- tration, closing shops, costing jobs, and jeopardising future tax revenue for the Chancellor.”

What next after the Moratorium? The government has made clear, and indeed the recent case referred to above that, tenants cannot view this “break” as an indefinite silver bullet. The extension to the moratorium on commercial evictions is to allow time for negotiations to take place but the government has also con- firmed that where parties cannot agree a mutually beneficial outcome in respect of COVID-19 arrears, new legislation will step in and compel the parties to a binding arbitration process. There is little further infor- mation about this and whether arbitrators can provide for payment plans/variations to leases. Landlords and tenants will be watching carefully what proposals are set out, in the meantime, there will inevitably be further cases where landlords issue court proceedings for rental arrears.

Michael Lewis Michael.Lewis@sherrards.com +44 (0)1727 738980