In a throwback to Covid legislation, in Leicester Square (2015) Limited and others v Empire Cinema 2 Limited [2024] EWHC 2294 (Ch) the Court has clarified when the moratorium restricting landlords from being able to forfeit for rent arrears came to an end, if a referral to arbitration had been made.
Empire was the tenant of a cinema in Leicester Square, London. During the pandemic, Empire did not pay rent for over a year while the premises were closed, relying on legislation passed during the pandemic which prohibited landlords from forfeiting leases for non-payment of rent. The Covid legislation also established an arbitration scheme which enabled landlords or tenants to apply for an arbitrator to determine whether the tenant should be given relief from qualifying pandemic related rent arrears. If a referral to arbitration was made, a statutory moratorium was automatically put in place which prohibited forfeiture.
Empire made a referral to the arbitration scheme. On 23 April 2023, the arbitrator refused Empire's case and determined that they should pay rent arrears owing to the landlord in full in the sum of £16,413.98. Empire paid the arrears during the afternoon on 4 May 2023, but on the morning before the arrears were paid the landlord forfeited the lease by peaceable re-entry.
Empire applied to Court for a declaration of unlawful forfeiture on the basis that the moratorium had not ended, because the legislation provided that the moratorium would end on "on the day on which the arbitration concludes". The legislation defined "concludes" as being when "the time period for appealing expires without an appeal being brought", which was after the forfeiture took place.
The landlord argued that Empire did not have a genuine intention to appeal and had no viable grounds to appeal, therefore the moratorium ended on the date of the arbitrator's determination, prior to the forfeiture.
Dismissing the landlord's appeal, the High Court determined that the extension of the moratorium was an automatic mechanical provision, rather than one that subjectively depended on each party's intention and the merits of an appeal, and therefore the forfeiture was unlawful because the moratorium remained in place when peaceable re-entry occurred.
Aside from being a reminder of the extent to which landlords rights were severely curtailed during the Covid pandemic, the High Court's decision highlights that when calculating statutory deadlines linked to appeal periods the Court is likely to adopt a mechanical approach to interpretation for reasons of certainty.
