Business Tenancies – New Practice Direction only gives more certainty about what cannot be done and offers no answers to previous questions

7th April 2020 Commercial Litigation

Following on from my previous article about changes to the recovery of commercial premises brought about by the Coronavirus Act 2020 (to be found here), on 25 March 2020 the courts issued a new practice direction (the PD) the effect of which, with effect from that date until 90 days afterwards (expiring on 25 June 2020, but it could be extended as the PD is not due to expire until 30 October 2020), stays or temporarily halts all existing and any future possession proceedings brought and any enforcement of those. Although the government expressed the intention to do this for residential premises only the PD is much wider than that and includes all possession claims under Civil Procedure Rules Part 55, which covers all possession claims for land, including against trespassers and licensees and for mortgagee possession claims.

This does not mean that landlords cannot pursue their tenants for non-payment of rent such as by a debt recovery action in court or by the Commercial Rent Arrears Recovery process – there is no rent “holiday” but only a deferral; nor does it prevent landlords, or tenants, from claiming for injunction orders preventing the other party from breaching the terms of their lease, requiring compliance with those terms or acting in any other way entitling such a claim to be made. However, rarely will an injunction be granted to remove persons from land such as trespassers, even if they can be identified rather than pursued as “persons unknown” because the remedy of a possession order is (in normal times) available; an injunction will be more readily available against those only threatening to trespass. Furthermore, unlike a possession order enforceable by writ or warrant of possession, which enables removal of all persons from the land in question, injunction orders are not so easy to police and achieve the same effect.

Thus, for commercial landlords, keeping a close eye on land which might be squatted is more advisable than ever, as is engaging with their tenants in respect of any likely failure to pay rent or comply with any other tenant obligations and warning them of the ultimate sanction available once normal times return and that interest may accrue in the meantime, under the lease; in certain cases, landlords may still wish to threaten or even issue possession claims for non-payment of rent, even though those will be stayed or for other non-rent breaches (once the requisite section 146 Law of Property Act 1925 notice has been served and the reasonable time for any compliance has expired). Tenants should engage with their landlords in much the same way as soon as they consider they will not be able to comply with their obligations. The relationship between these parties will thus be best preserved once the lockdown is finally over. ​​​​​​

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David Wadsworth is a Partner located in Londonin our Commercial Litigation department

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