Landlord & Tenant Law Update – Poundland Ltd v Toplain Ltd
A concern for many landlords and tenants alike is the possibility of another pandemic. This case tested whether the courts would be willing to impose pandemic protection terms.
Following the events of the past year or so there has been much in the way of discussion and speculation about what the “new normal” might be in almost every facet of life. This is no different for those occupying and letting commercial property.
The headline discussions relating to commercial premises at present relate to things that have a more translatable impact for the wider world beyond landlords and tenants; flexible working and the commensurate reduction in the need for office space, for example. There are longer-term, less obvious developments afoot as well.
Those familiar with commercial premises will know that there are a number of statutory protections for tenants to allow them the security of knowing that unless there is a substantial breach by them of the terms of the lease then they may only be evicted in a very tightly controlled set of circumstances. These protections mean that it is often the case that it is simply the terms of a renewal lease, rather than the tenant’s continued occupation, which are in dispute. If the terms cannot be agreed upon between the landlord and tenant, they may ask that the court decide them.
As part of the commercial negotiations for many leases at the moment where tenants are moving into new properties, the subject of protection from future pandemic risk is raised by the tenant and often accommodated by the landlord. However, a recent case on a lease renewal suggests that the court might not be ready to impose on the parties’ terms which provide such protection where the tenant is staying put and just seeking a renewal lease.
Poundland Ltd v Toplain Ltd
In the case of Poundland Ltd v Toplain Ltd the tenant sought, among other things, clauses allowing partial rent and service charge suspension in the case of a future pandemic to which the landlord was refusing to agree. District Judge Jenkins declined to order that such clauses form part of the lease raising the following points:
- in determining those terms the court shall have regard to the terms of the current tenancy and all relevant circumstances and it is for the party looking to change the term to justify that change
- the nature of the parties interests in the land– the landlord long term, the tenant comparatively short term – is a relevant circumstance and it is likely disproportionate to transfer short term risk to the party with the long term interest as it would inevitably come with a separation of control of that risk
- the purpose of the legislation is not to insulate the tenant from commercial or trading risk, or to reallocate previously negotiated risks
- while the effects of the Covid-19 pandemic and future lockdowns are relevant: “it is not in my view sufficient a reason to impose a sharing of the risk in circumstances over which the defendant would have no control whilst the claimant may have some by reference to reliefs or schemes that might be available to them by the government”.
While this is only a County Court case and therefore not binding, and one can see the scope for a wider interpretation of “all relevant circumstances”, it is worth noting an example that the courts may not be willing to impose pandemic protection terms, and considering whether this may lead to an uptick in tenants seeking new premises because a court-ordered renewal will not offer them what they are after or may be otherwise available in the commercial market at large.
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