Leicester Square (2015) Limited & Ors v Empire Cinema 2 Limited

A statutory moratorium linked to arbitration continues according to the express mechanical terms of the legislation. It is not curtailed because an appeal appears weak, is not intended, or would be inconsistent with governmental guidance.

Statutory construction should focus on the purpose of the particular provision. Certainty in proprietary rights weighs strongly against importing subjective tests into a clear statutory timetable. An illegality defence cannot be used selectively to accept the benefit of an arbitration moratorium while rejecting its appeal period. Summary judgment is appropriate where the issue is a short point of construction and there is only one realistic outcome.

The landlords appealed from HHJ Johns KC’s decision dated 7 July 2023 in the Central London County Court. The judge had declared unlawful a physical re-entry into cinema premises because the statutory moratorium on enforcing forfeiture for protected rent debts remained in force.

The tenant’s rent arrears arose during the Covid-19 closure period. The tenant referred the dispute to arbitration under the Commercial Rent (Coronavirus) Act 2022. The arbitrator dismissed the reference on 23 April 2023. The landlords re-entered on 4 May 2023, during the period for appealing the award.

The appeal concerned statutory construction, illegality, waiver, estoppel, abandonment, the appropriateness of summary judgment, a proposed later forfeiture, and costs.

1. Appeal dismissed. Permission to appeal was granted only on the statutory-construction ground. Permission was refused on the remaining grounds.
2. The moratorium under section 23 of the Commercial Rent (Coronavirus) Act 2022 continued until the arbitration concluded. Where an award had been made, the arbitration concluded when the time for appealing expired without an appeal, or when any appeal was finally determined, abandoned or withdrawn. The statutory language did not require an appeal to be genuine, viable or intended.
3. The purpose of the relevant provisions was sufficiently captured by the creation of a binding arbitration mechanism for resolving protected rent disputes, together with a moratorium linked to that mechanism. The landlords’ more detailed purposive construction was rejected. It would introduce uncertainty based on the prospects of an appeal and the tenant’s subjective intention, contrary to the clear and workable statutory timetable.
4. The analogy with section 64 of the Landlord and Tenant Act 1954 supported a mechanical approach to the expiry of rights pending appeal. The court declined to treat the period for appealing as having ended earlier merely because no appeal was intended.
5. The illegality defence failed. Applying the approach in Patel v Mirza and Grondona v Stoffel & Co, there was no relevant statutory or guidance-based prohibition whose purposes would be enhanced by denying the tenant’s claim. The landlords’ position was also incoherent: it relied on the arbitration to extend the moratorium while selectively rejecting the appeal period. The statutory mechanisms themselves sufficiently determined the parties’ rights.
6. Waiver, estoppel and abandonment were not established. The tenant’s statement that it intended to comply with any award was a response to an allegation that it would ignore the award, not a promise not to appeal. The United States motion was not communicated to the landlords and could not found waiver or estoppel. Any waiver would in any event prevent an appeal rather than accelerate the statutory expiry of the moratorium.
7. There was no compelling reason for a trial. Later forfeiture proceedings and evidence concerning them were irrelevant to the issues in the present action and could not justify postponing the possession order. The proposed trial was in substance a disguised application for a stay.
8. The costs ground failed because the appellants had not properly provided the transcript or reasons necessary to challenge the order.

• Chancery Appeals (ChD): The appeal from HHJ Johns KC’s order and judgment dated 7 July 2023 was dismissed. Permission was granted on Ground 1(a) but refused on Grounds 1(b), 1(c), 2, 3 and 4.
• Central London County Court: HHJ Johns KC granted summary judgment declaring the landlords’ forfeiture unlawful because the statutory moratorium remained in force.