First Property Group wins nearly half a million in unpaid rent from H. Samuel operator
London property fund manager First Property Group has won nearly half a million in rent arrears from the operator of H. Samuel and Ernest Jones, after the jewellers withheld payment during pandemic restrictions.
First Property recovered £450,000 from retail operator Signet Trading, in the first known arbitration under the Commercial Rent (Coronavirus) Act 2022.
Gary Cowen QC, who handed down the ruling at City property-specialists Falcon Chambers Arbitration, said that although its retail stores had been protected under the act, its offices were not.
The judge said that because there remained two workers in the office, while the rest of staff worked from home, the office space “was not adversely affected by coronavirus” and that there is “no protected rent debt in this case.”
Investment manager at First Property, Martin Pryce, added: “Too many businesses tried to use the cover of Covid-19 to avoid paying rent that was rightfully due. Landlords should not have to pay for this.”
The case of H. Samuel and Ernest Jones, which have around 300 retail stores across the UK, offers an early indication as to how the coming months may unfold for pandemic rent arrears cases, lawyers told City PM
The case signals “that even if a tenant’s main business has been subject to a closure requirement and is not operating, if other parts of the business have not been subject to the same closure requirement, those parts may well still be liable for the rent,” head of property litigation at law firm Harold Benjamin, Steven Ross, said yesterday.
Richard Hart, head of property management at management and consultancy firm Workman noted the case “provides clarity and confidence for landlords that, in scenarios where mutually acceptable solutions cannot be agreed in advance, the arbitration process is operating in line with the provision set out by the Act.”
It comes as cinema chain Cineworld and Picturehouse Cinemas appeal to the courts in a £1.4m stand-off with London’s Trocadero Centre over unpaid rent during the pandemic.
Onlookers have expected the case to set a precedent for a raft of businesses which were forced to shutter amid lockdown restrictions, leaving them unable to pay rents without jeopardising the company.
Rob Nicholson, partner in the property litigation team at Ashfords, argued that “a more tenant-friendly outcome” is still expected, despite the most recent ruling, as the jewellers’ offices were still in use, unlike its stores.
City PM has contacted Signet for comment.