Brad Trerise has written a client alert on the recent appeal case made by several large cinema chains over the the payment of outstanding rent for periods of the Coronavirus pandemic, during which they were forced to close.

Key Take-aways:

  • Cine UK, Cineworld and various other cinema firms appealed on the basis of a novel argument – that the premises were rendered “unfit for use”, under the terms of the leases, due to the government lockdown legislation. In previous cases, this clause has explicitly referred to the physical state of the premises only.
  • The Court of Appeal rejected this nuanced interpretation, ruling that when drafting the lease documents, a condition to the like of a pandemic, cannot be expected to have been considered as a potential source of rendering the premises unusable.
  • The Court of Appeal also concluded that whilst the cinema firms had suffered financial damage over the pandemic, this was not in anyway related to the damage of the actual premises.
  • The cinema tenants had hoped for the final judgement to be more favourable. However, the Commercial Rent (Coronavirus) Act 2022, could present Cine UK and Cineworld a final opportunity to appeal the granted summary judgement for the repayment of their arrears, as it allows for parties to apply for arbitration on coronavirus arrears disputes.

Read the full article here