Whitestone Chambers have been working throughout the last 18 months on cases such as this. If you need legal advice on any of the issues raised in this article, please do get in touch.

The case of London Trocadero (2015) LLP v Picturehouse Cinemas Ltd [2021] EWHC 2591 (Ch) marks the third success for landlords against tenants for unpaid rent during the pandemic this year.

The tenant, Picturehouse Cinemas Ltd, held two leases of cinema premises in Trocadero Centre, Piccadilly, London. Due to pandemic restrictions, the cinema had to close for certain periods which meant that Picturehouse Cinemas could not trade at all. Even during the gaps between pandemic restrictions, Central London’s trading conditions were so poor that the cinema largely remained closed and the earnings they gained were only a fraction of what they would have been in normal circumstances.

As a result of the pandemic’s impact on the cinema industry, Picturehouse Cinemas had not paid any rent since June 2020 causing London Trocadero to seek out a summary judgement for arrears of rent and service charge of £2.9 million.

The High Court rejected the defendant’s case that they were not liable to pay rent during the period when the premises could not be used as a cinema:

1. The argument that an implied term meant that rent was not payable during periods when the use of the premises became illegal and when the attendance was not at the anticipated level of Picturehouse Cinemas’ expectations. This failed because it was not obvious, and it would not give the lease ‘business efficacy’. Therefore, it did not make any commercial sense for the loss to be borne by the landlord when neither party had insured against loss by the pandemic.

2. The argument of failure of consideration as the premises could not be used for the purposes they were let for: use as a cinema. This failed because the court held that the use of the premises as a cinema was not ‘fundamental to the basis’ on which the parties had entered into the lease.

Moreover, the government’s proposal to introduce a binding arbitration scheme to help commercial landlords and tenants settle disputes regarding rent arrears that have arisen as a result of the pandemic and its restrictions was pleaded by the defendant in an attempt to adjourn the hearing. However, the court rejected the plea because the scheme was not applicable to cases on whether money was or was not owed by a tenant.

The High Court’s decision in the London Trocadero (2015) LLP v Picturehouse Cinemas Ltd [2021] EWHC 2591 (Ch) shows that tenants cannot rely on the government’s proposed arbitration scheme when seeking to avoid paying rent. Instead, this case informs tenants that they should withhold from arguing that rent is not due and attempt to come to an agreement with their landlord or go straight to arbitration. Whitestone Chambers has been working with numerous clients in negotiating and reading such agreements.

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