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Mishcon de Reya acts for successful landlord in Court of Appeal COVID-19 rent case

Posted on 27 July 2022

The Bank of New York Mellon (International) Limited v Cine-UK Limited 

Chhavie KapoorMichael Clarke and Gavin O'Donovan acted for the successful landlord in the Court of Appeal case of The Bank of New York Mellon (International) Limited v Cine-UK Limited, which related to non-payment of rent concerning cinema premises in Bristol during the Government-enforced lockdown in 2020 following the outbreak of COVID-19.

The landlord issued proceedings for the rent that fell due in March, June and September 2020 that the tenant had failed to pay. The landlord issued an application for summary judgment and was successful in that application before Master Dagnall ([2021] EWHC 1013 (QB)). Cine-UK Limited, one of the four defendants in the original claim, was granted leave to appeal the Master's summary judgment decision.

The appeal was heard by the Court of Appeal on 21 and 22 June 2022 before Sir Julian Flaux (Chancellor of the High Court), Snowden LJ and Sir Nicholas Patten, alongside the appeal in London Trocadero (2015) LLP v Picturehouse Cinemas Limited and Gallery Cinemas Limited.

Cine-UK Limited appealed the Master's decision on the following grounds:

  • The Master erred in his interpretation of the rent cesser provisions in the lease, which the tenant argues should not be limited to physical damage;
  • The Master was wrong to reject the argument that a term should be implied into the lease to suspend rent payments when the premises could not be occupied; and
  • The Master was wrong to conclude there had been no partial failure of consideration on the basis the premises could not be occupied for a period of time.

The Court of Appeal judges unanimously rejected the arguments put forward by the tenant. They held that:

  • The rent cesser applies in cases of physical damage, which does not include financial damage to the tenant's business;
  • On the topic of the implied term, they did not consider that the implication of the term sought by the tenant was necessary to give the lease business efficacy, nor was it sufficiently obvious that the term should be included; and
  • On the question of failure of consideration, or "failure of basis", they agreed that permitting the tenant to be released from obligations to pay rent during periods of enforced closure would result in an unlawful re-allocation of risk that subverts the terms of the lease.

Read the full judgment here.

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