Business Tenancies: Determination of relief awarded to tenant from protected rent debt (Stratford City Shopping Centre (No 2) Nominee A Ltd and Stratford City Shopping Centre (No 2) Nominee B Ltd v Newspoint (Stratford) Ltd – 2022

This final arbitration award applies s.15 of the Commercial Rent (Coronavirus) Act 2022, determining that relief was to be granted to a tenant from its payment of a protected rent debt.

The background

Stratford City Shopping Centre (No 2) Nominee A Ltd and Stratford City Shopping Centre (No 2) Nominee B Ltd v Newspoint (Stratford) Ltd [2022] concerned two retail units located in Stratford City Shopping Centre. The respondent was the tenant of the applicant landlord, operating a newsagent business out of the two units. The tenant experienced a significant fall in trade as a result of the pandemic and was in arrears of rent.

The tenant’s argument that it had agreed a rent concession was unsuccessful and a first arbitration award determined arrears for the first and second unit as £30,010 and £19,287.27. The final hearing in the arbitration addressed the tenant’s financial viability and proposals from the parties as to payment of the protected rent debt due to the landlord.

The landlord proposed:

• Immediate payment by the tenant of interest and costs
• Immediate payment of a share of the arbitrator’s fee, to be a sum greater than the 50% contained in the CR(C)A 2022
• Payment of arrears in full, deferred over a period of 6-12 months

The tenant’s proposal differed, being:

• No payment of interest
• Payment of 50% of the arbitration fees
• Payment of lower sums for both units, to be based on apportionments, overpayment and rent concessions which had been found against the tenant in the earlier first award

The decision

The tenant did not provide sufficient evidence to the arbitrator of the impact of the pandemic on its business or its viability beyond profit and loss accounts and unaudited financial statements. The arbitrator concluded that, by giving the tenant more time to pay its arrears, the viability of the tenant’s business would be preserved. Agreeing with the landlord on this point, the arbitrator set a period of 9 months for the tenant to pay.

The arbitrator found that common ground must have existed between the parties that the tenant business was viable, or would be viable if relief of some kind was given. Applying s.15 CR(C)A 2022, the arbitrator found that any award should preserve business viability of the tenant insofar as such an award also preserved the solvency of the landlord’s business. The arbitrator did, however, conclude that the tenant was to make full payment of protected rent without delay.

Further, the arbitrator concluded that the tenant was to be responsible for 75% of the arbitration fees as a result of its failure in the case and in evidencing its viability.

Advice and action for landlords

This decision will be of interest and reassurance to landlords who have tenants in arrears as a result of the coronavirus pandemic.

The tenant did not present sufficient evidence as to the impact on its viability as a business, and the arbitrator concluded that payments deferred over 9 months would be enough to preserve the tenant’s business without adversely impacting the landlord’s own business viability.