Landlord wins unpaid rent battle with London cinemas

London’s Trocadero Centre in Piccadilly Circus has won a High Court battle against cinema chains Cineworld and Picturehouse Cinemas over £2.9m of unpaid rent.

The cinemas argued that they were not liable for paying the rent due to being closed during the pandemic’s lockdown periods.

Between closing in the first coronavirus lockdown on March 23 of last year and May 16, 2021, the cinemas were only open for 71 days, receiving around £247,000. This was compared with the Piccadilly Circus cinema’s takings of £8.92m for the same period pre-pandemic.

However Robin Vos, deputy judge of the High Court, rejected the claims of the tenant.

He said: “In my view, the requirement for the tenant to pay rent even though the premises could not be used for the intended purpose as a result of unforeseen, extraneous events does not deprive the leases of business efficacy or mean that they lack commercial or practical coherence.

“Clearly, without the implied terms, the risk is shouldered by the tenant. However, there is no good commercial reason why the loss should necessarily be borne by the landlord.”

The tenant also filed a counterclaim against the landlord about £621,000 paid in insurance – and the judge said a part of this amount should be reduced from the overall sum paid by the cinemas to the landlord.

Kim Clifford, senior associate in the real estate disputes team at law firm Ashurst, said: “In the latest rent arrears decision, the courts have confirmed that landlords can continue to push on with applications for summary judgments in rent arrears claims, notwithstanding the long awaited legislation, and indeed necessary detail, from the government of the proposed arbitration scheme.

“The decision particularly considers the arguments versed in the earlier Cine-UK case in relation to implied terms and failure of consideration, the latter of which is going to be further considered in the confirmed appeal of the Cine-UK case, alongside interpretation of those rent cesser provisions.

“The eye of the rent arrears storm is far from over, as landlords and tenants wait to see how the next chapter unfolds, with them currently facing mixed messages from the government and the courts.

“The courts have on one hand given the green light for landlords to press on for full recovery in three decisions now but on the other have also given leave to appeal.

“Meanwhile, the government have given tenants hope that they may not have to pay all of their arrears, by announcing but not particularising the arbitration scheme.

“Some tenants may decide to withhold rent pending the outcome of the appeal and the arbitration scheme, but should be cautious given this new Picturehouse decision from the High Court.”

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