The moratorium preventing landlords from taking enforcement action for arrears of rent under the Coronavirus Act 2022 comes to an end on the final disposition of an appeal.
The High Court considered this issue dismissing an appeal in Leicester Square (2015) Ltd and others v Empire Cinema 2 Ltd [2024] EWHC 2294 (Ch); [2024] PLSCS 162.
Empire was the tenant of cinema premises in Leicester Square, London, under the remainder of a 99-year lease, of which the first and second appellant were landlords. Due to the pandemic, the premises were closed between 21 March 2020 and 18 July 2021, when Empire did not pay rent.
The 2022 Act provides both for a moratorium for rent arrears and arbitration to determine relief from rental payments. The arbitration procedure extends the moratorium until arbitration is concluded, which means when the time for appealing expires without an appeal being brought or when an appeal is finally determined, abandoned or withdrawn. Either the landlord or tenant could refer a matter to arbitration within six months of the 2022 Act being passed. An appeal had to be brought within 28 days of an award.
The protected rent of £16,413.98 was the only rent outstanding. The referral to arbitration was made on 13 September 2022, so extending the moratorium to the conclusion of the arbitration process. The arbitrator dismissed the reference on 23 April 2023 when the appellants argued that the moratorium came to an end. Empire claimed it was 21 May 2023, 28 days later.
The landlords re-entered the premises on the morning of 4 May 2023 and the same day granted licences to occupy to the third and fourth appellants. The following day the third appellant was granted a formal lease. Empire paid the disputed arrears on the afternoon of 4 May 2023 and obtained an injunction to be re-admitted to the premises.
Empire then succeeded in an application for summary judgment for a declaration that the forfeiture was unlawful because the moratorium was still in place. The judge rejected arguments based on estoppel, waiver and abandonment terminating the arbitration proceedings and ending the moratorium prior to the acts of forfeiture.
The landlords appealed, arguing that the moratorium came to an end when the award was made because Empire never genuinely intended to appeal. Its position was inherently illogical since it needed the first stage of the moratorium, as extended by the arbitration, having accepted three quarters’ rent from September 2021. Without it, it would be vulnerable to a waiver of forfeiture defence. The mechanical test provided by the statute provided complete certainty and made sense.
Louise Clark is a property law consultant and mediator
