London Trocadero (2015) LLP v Picturehouse Cinemas Ltd
| Jurisdiction | England & Wales |
| Judge | Robin Vos |
| Judgment Date | 28 September 2021 |
| Neutral Citation | [2021] EWHC 2591 (Ch) |
| Docket Number | Claim No: PT-2020-000828 |
| Court | Chancery Division |
[2021] EWHC 2591 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
PROPERTY, TRUSTS AND PROBATE LIST (Ch D)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Robin Vos
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Claim No: PT-2020-000828
Nicholas Trompeter QC (instructed by Druces LLP) appeared for the Claimant
Jonathan Seitler QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared for the Defendants
Hearing dates: 23 and 26 July 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Many businesses have been hit hard by the Covid pandemic, especially those operating in the hospitality and entertainment sectors where venues have had to remain closed or have been subject to restrictions. One particular problem for such businesses has been the payment of rent in respect of the premises from which they operate. Of course, this has also caused problems for landlords who may rely on the rent they receive to meet their own obligations.
The Claimant, London Trocadero (2015) LLP (the “Landlord”), is the landlord in respect of two leases of cinema premises at the Trocadero Centre in London of which the First Defendant, Picturehouse Cinemas Limited (the “Tenant”), is the tenant. The Second Defendant, Gallery Cinemas Limited (the “Original Tenant”), is the original tenant under one of the leases. The Third Defendant, Cineworld Cinemas Limited (the “Guarantor”), is the guarantor of sums due under both leases.
No rent has been paid under the leases since June 2020. The arrears (together with service charges) up to July this year are in the region of £2.9 million. The Landlord has brought this claim to recover the amounts outstanding.
The Defendants say that they are not liable for rent and service charges which have arisen in relation to periods when the premises could not be used as a cinema. They put their case either on the basis that a term to this effect should be implied into the leases or, alternatively, on the basis that there has been a failure of consideration (or, as it is now more often referred to, a “failure of basis”). They maintain that this is the case notwithstanding their acceptance that the leases have not come to an end as a result of frustration and that the Landlord is not in breach of the terms of the leases. Mr Seitler, appearing on behalf of the Defendants, acknowledges that the court is being asked to develop existing principles but maintains that, given the unique circumstances presented by the Covid pandemic, it is appropriate to do so.
Procedural matters
The Claim was commenced on 22 October 2020. At the time, the total amount outstanding was approximately £1.5 million.
The Defence included a counterclaim for the rent paid on 31 March 2020, said to be paid under a mistake of law (based on the same arguments as the Defendants put forward to defend the Landlord's claim for arrears) and also for damages relating to alleged overcharging by the Landlord in respect of amounts relating to insurance.
In January 2021, the Landlord applied to amend its Particulars of Claim to include further amounts which had by then become due and also applied for summary judgment.
On 13 July 2021, the Landlord updated its Particulars of Claim to include further amounts of rent and service charge which had become due, bringing the total up to the amount now currently claimed of approximately £2.9 million.
The Defendants have provided an Amended Defence and Counterclaim, which includes a further counterclaim in relation to payments in respect of electricity.
The original application for summary judgment included summary judgment in respect of the Defendants' counterclaim. The Landlord has also applied to amend its application for summary judgment to include the further counterclaim in respect of electricity. However, it now no longer seeks summary judgment in respect of the counterclaim relating to insurance payments and accepts that this should go to trial.
The result of this is that the summary judgment application relates to the claim for arrears by the Landlord, the First Defendant's counterclaim in respect of amounts paid under a mistake of law (which stands or falls with the outcome of the Landlord's claim for arrears) and the counterclaim in respect of electricity charges. However, the Defendants now accept the position in relation to electricity and so this element of the counterclaim is no longer pursued.
The Tenant claims to be able to set off its counterclaim in respect of amounts paid in relation to insurance against any arrears of rent or service charge found to be due. Although the Landlord disputes the right of set off, if it is found to exist, the Landlord accepts for the purposes of the summary judgment application that this should be based on the maximum amount claimed on the basis of the Defendants' case of £621,000.
On 12 July 2021, the Defendants made an application to adjourn the hearing of the summary judgment application. For reasons which I gave separately at the hearing, I refused that application.
I should also record that the Landlord applied for permission for an extension of time for the service of three witness statements in support of the summary judgment application which were provided to the Defendants but not properly served at least three clear days before the hearing as required by CPR 24.5(2). Again, for reasons which I gave at the time, I granted the extension of time.
Background facts
There is no dispute in relation to the facts which are relevant to the Landlord's claim and to that part of the counterclaim to which the summary judgment application relates.
The Landlord has, since August 2015, been the owner of the Trocadero Centre.
The Defendants are all members of the Cineworld group of companies. The Tenant is the current tenant of cinema premises at the Trocadero Centre under the terms of two leases dated 20 June 1994 (the “1994 Lease”) and 18 September 2014 (the “2014 Lease”).
The Original Tenant was the original tenant under the 1994 Lease. The Tenant became the tenant under the 1994 Lease in September 2014, at the same time as the 2014 Lease was put in place. The Guarantor has always been the guarantor under the 1994 Lease.
The 2014 Lease was entered into as a result of an agreed reorganisation under which there was a variation of the 1994 Lease and a surrender of part of the premises which were the subject of the 1994 Lease. The Tenant is the original tenant under the 2014 Lease and the Guarantor is the original guarantor under the 2014 Lease. The Original Tenant is not a party to and has no obligations under the 2014 Lease.
The result of this is that the Original Tenant is liable under the covenants in the 1994 Lease whilst the Tenant is liable under the covenants in relation to both leases. The Guarantor is liable in respect of the defaults of the Original Tenant under the 1994 Lease and of the Tenant under the 2014 Lease.
The terms of the leases
I need only refer to a few provisions of the leases. The key relevant terms are set out below.
The 1994 Lease
The 1994 Lease is a reversionary lease for a term of 35 years commencing 30 September 2006. It therefore expires in September 2041.
The demise is contained in clause 2 of the 1994 Lease which provides as follows:-
“IN consideration of the Rent and of the covenants hereinafter contained the Landlord HEREBY DEMISES unto the Tenant ALL THAT the demised premises TOGETHER WITH the easements and rights specified in the First Schedule hereto BUT EXCEPTING AND RESERVING the easements and rights specified in the Second Schedule hereto TO HOLD the same … UNTO the Tenant for the Term YIELDING AND PAYING therefor during the Term FIRST yearly (and proportionately for a part of a year) the Rent which shall be payable by equal quarterly payments in advance on the Quarter Days the first of such payments or a proportionate part thereof to be due on the date specified in the Particulars and to be in respect of the period therein mentioned SECONDLY by way of additional rents the amounts payable pursuant to the provisions of sub-clauses 3.5 and 3.6 of the Lease AND THIRDLY by way of additional rent the amounts payable by way of Value Added Tax pursuant to the provisions of sub-clause 3.3 of this Lease.”
Under clause 3.1, the Tenant covenants:-
“to pay the Rents at the respective times and in the manner herein provided for without any deduction whatsoever”.
Clause 3.6 requires the Tenant to pay additional rent equal to the cost of insuring the premises against the “Insured Risks” and against any loss of rent or service charge resulting from this. It is accepted that the Insured Risks do not include the Covid pandemic.
Clause 3.7.1 requires the Tenant:-
“to comply with all obligations imposed by … any Act or Acts of Parliament or legislation … in respect of the demised premises or the use thereof whether by the owner or the Landlord tenant or occupier and at all times to keep the Landlord indemnified against all costs claims demands and liability in respect thereof”.
Under clause 3.12.1, the tenant covenants not to use the premises other than for the “Permitted Use” which is defined as:-
“… a cinematograph theatre or theatres with...
To continue reading
Request your trial
-
Foot Locker Retail Ireland Ltd v Percy Nominees Ltd
...Foot Locker also initially relied on another English case, London Trocadero (2015) LLP v. Picturehouse Cinemas Limited & Ors [2021] EWHC 2591 (Ch) (“ London Trocadero”), concerning unjust enrichment, though it conceded that it had not pursued such a claim, despite having indicated an inten......
-
Foot Locker Retail Ireland Ltd v Percy Nominees Ltd
...( BNY). 29 Foot Locker's counsel also relied upon the decision in London Trocadero (2015) LLP v. Picturehouse Cinemas Ltd. & Ors. [2021] EWHC 2591 (Ch), but ultimately accepted that the essence of that decision (relating to unjust enrichment on the part of a landlord) had not been pleaded ......
-
Summary Judgment For Rent Arrears ' The Only Resort For Landlords Post-pandemic?
...are one of the few options left for landlords, and the recent case of London Trocadero (2015) LLP v Picturehouse Cinemas and others [2021] EWHC 2591 (Ch) is an interesting example of the Court's approach to summary judgment of debt claims in the The tenant had two leases of cinemas in the T......
-
Summary Judgment For Rent Arrears ' The Only Resort For Landlords Post-pandemic?
...are one of the few options left for landlords, and the recent case of London Trocadero (2015) LLP v Picturehouse Cinemas and others [2021] EWHC 2591 (Ch) is an interesting example of the Court's approach to summary judgment of debt claims in the The tenant had two leases of cinemas in the T......
-
Frustration Of Contract And Covid
...claimed (or not) In London Trocadero (2015) LLP v Picturehouse Cinemas Limited, Gallery Cinemas Limited, Cineworld Cinemas Limited [2021] EWHC 2591 (Ch), 2021 WL 04441740 the judge stated "The Defendants say that they are not liable for rent and service charges which have arisen in relation......
-
Commercial Landlord And Tenant Issues In England, Wales To Watch Out For In Early 2022
...applying to certain landlord claims started on or after 10 November 2021. London Trocadero (2015) LLP v Picturehouse Cinemas Limited [2021] EWHC 2591 (Ch) The High Court granted the landlord summary judgement in its claim for rent and service charge arrears totalling '2.9 million accrued du......
-
Making Lease Payments a Lessor Problem
...lockdown. That could be argued to be a different situation."). 81. See London Trocadero (2015) LLP v Picturehouse Cinemas Ltd. [2021] EWHC 2591 (Ch) ¶ 141, http://www.bailii.org/ew/cases/EWHC/Ch/2021/2591.html ("[T]here is a longstanding principle that an inability of a tenant to use premis......