In the first reported decision on tenant Covid arrears the Court held that the tenant had no real prospect of defending the claim to recover the outstanding rents and awarded summary judgment. The case of Commerz Real Investmentgesellschaft mbh v TFS Stores Limited concerned the landlord’s claim to recover arrears of rent that had not been paid during the pandemic. The tenant advanced three defences. First that the claim was premature given the Code of Practice for Commercial Property Relationships During the COVID-19 Pandemic; Secondly that pursuing a debt claim was exploiting a ‘loophole’ in the Government’s restrictions placed upon the recovery of rent and thirdly it should have been covered by the insurance the landlord was obliged to have in place.
In summarily dismissing all of the arguments advanced and avoiding the need for a full trial, the Court held;
The Code of Practice did not alter the legal landlord and tenant relationship and it was not a charter for tenants to decline to pay rent.
There was no loophole to be exploited. The Government’s restrictions did not restrict the landlord’s ability to pursue a debt claim and there was no basis for concluding that a landlord’s right of access to the Court was restricted.
The rent cesser did not apply as there was no physical damage to the property and that the clause did not fall to be construed more widely.
This decision will be welcome relief to landlords who only have the option of pursing debt claims as a result of the Government’s restrictions.