COVID-19: Tenant successfully renews lease to include a COVID-19 rent suspension clause

In WH Smith Retail Holdings Limited v Commerz Real Investmentgesellshaft mbH (unreported) (County Court) the tenant (T) operated a newsagent and Post Office from a unit in the Westfield shopping centre. T was holding over under the Landlord and Tenant Act 1954 (LTA 1954) and had served a section 26 notice requesting a new lease. The landlord (L) was not opposed to the renewal, and the parties had agreed the majority of the terms of the new lease.

Both L and T agreed that the new lease should include a rent suspension clause to alleviate the burden of the rent on the tenant in the event of pandemic. The court had to decide what should trigger such a clause. L argued that the trigger should be if T was itself required to close due to restrictions imposed by the government. T argued that it should be the closure of non-essential retail premises because, as an essential retailer, T was unlikely ever to be forced to close under such restrictions. 

The Judge agreed with T, acknowledging the fact that whilst T was one of very few retailers within the shopping centre that were able to continue trading during the COVID-19 restrictions, this was only a notional advantage to T. Without the footfall that came from the other non-essential retailers being open, T still experienced a significant drop in sales. The correct trigger was the closure of non-essential retail premises.

This is an interesting case, albeit, as a County Court decision, not binding on future cases. The result may have been different if the premises had been in a high street setting, where there would be greater opportunity for passing trade. 

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