In the cases of Bank of New York Mellon (International) Limited v Cine-UK Limited and London Trocadero (2015) LLP v Picture Cinemas Limited, the Court of Appeal rejected appeals made by the tenants of cinema premises. In the appeals, the tenants tried to argue that they were not under an obligation to pay rent when the pandemic restrictions meant they had to close their cinemas.
The tenants tried to argue the following points:
- The tenant had no benefit from the contract between the landlord and tenant, and if they paid rent to their landlord, the landlord would unjustly benefit from receiving it;
- A term should be implied that rent would be suspended where the lawful use of the property became impossible. The tenant argued that damage to a property could be financial as well as physical damage; and
- In relation to one of the leases, the tenant was not obligated to pay rent as a result of the rent cesser provision.
The tenants’ appeals were dismissed. The Court of Appeal disagreed that the landlord had unjustly benefitted by demanding rent during a period when the tenant could not run its business. The landlord had a legal right to receive the rent. It held that the rent suspension provision was related to physical damage and not financial damage. In relation to implying terms into leases, it held that terms would only be implied to give business efficacy to the contract or that it was absolutely necessary for a term to be implied. In this case, to imply the terms requested would contradict the terms of the lease and reallocate the risk that the landlord and tenant bargained at the time the lease was entered into.