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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Commerz Real Investmentgesellschaft mbh v TFS Stores Ltd [2021] EWHC 863 (Ch) (16 April 2021) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2021/863.html Cite as: [2021] EWHC 863 (Ch) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST
London EC4A 1NL |
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B e f o r e :
____________________
COMMERZ REAL INVESTMENTGESELLSCHAFT mbh |
Claimant |
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- and - |
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TFS STORES LIMITED |
Defendant |
____________________
Oliver Caplan (instructed by Legal Director TFS Stores) for the Defendant
Hearing date: 18 March 2021
____________________
Crown Copyright ©
Chief Master Marsh :
Context
Defence
(1) The claim is said to have been issued prematurely contrary to the Code of Practice for Commercial Property Relationships During the COVID-19 Pandemic.
(2) The claim is said to be a means of circumventing measures put in place to prevent forfeiture, winding up and recovery using CRAR. Issuing and pursuing the claim is said to be the claimant exploiting a 'loophole' in the restrictions placed upon the recovery of rent put in place by the government.
(3) The defendant alleges that claimant is in breach of its obligation under clause 5.2 of the lease under which it covenanted to observe and perform its obligations under schedule 3, which included an obligation to insure. The defendant points to that obligation and says it is reasonable to expect that the claimant would insure against loss of rent due to forced closures and/or denial of access due to notifiable disease[2] and/or government action.
CPR rule 24.2
(1) It is open to the court to deal with a point of law or construction on the hearing of an application for summary judgment. In Easyair and in Mellor v Partridge [2013] EWCA Civ 477 at [3(vii)] Lewison J said it was open to the court to determine "a short point of law or construction". This description usually prompts the applicant to submit the point is short, and is therefore capable of being dealt with on an application for summary judgment, and the respondent to submit it is anything but short. Quite where the boundary lies between a point with which it is acceptable for the court to deal on a summary basis, and one that is unsuitable, is not easy to draw. As it appears to me, the notion of shortness does not relate to the length of the document to be construed or the length of the material passage in that document; but it may relate to the length of the hearing that will be required and the complexity of the matrix of fact the court will have to consider. In my experience the court regularly deals with points of law and of construction of real difficulty on the hearing of an application for summary judgment. I would only add that there may be some overlap between the idea of a point of construction not being 'short' and the second limb of CPR rule 24.2. There may be some points that the court is capable of grappling with (or grasping the nettle as it is sometimes put) that, nevertheless due to the context in which they arise or other factors are best left to be dealt with at a trial.
(2) It is trite that the court must not on hearing an application for summary judgment conduct a mini-trial. In this case there is no risk of that happening because there are no material disputes of fact.
(3) The court should be reluctant to grant summary judgment where the law is uncertain or the application involves the court making a determination in a developing area of law. The rationale is that the development of the law should in some cases be based upon findings of actual and not hypothetical facts. The judgment of Peter Gibson LJ in Hughes v Colin Richards [2004] EWCA Civ 266 at [30] is usually cited in support of this principle. Hughes concerned whether the adviser who set up a trust for the settlors might have assumed a duty of care towards the beneficiaries of the trust. I would observe that although there was an application for summary judgment before the court in Hughes, it was secondary to an application to strike out the claim under CPR rule 3.4(2)(a), and the defence denied the core facts relied upon by the claimants.
" They also seem to me to have special significance where, as here, most or all of the relevant facts are under the control of the plaintiff, and the defendant would have to seek to elicit by discovery, interrogatories and cross-examination those which will aid her. If the defendant cannot point to a specific issue which ought to be tried but nevertheless satisfies the court that there are circumstances that ought to be investigated, then I think that those concluding words are invoked. There are cases when the plaintiff ought to be put to strict proof of his claim, and exposed to the full investigation possible at a trial; and in such cases it would, in my judgment, be wrong to enter summary judgment for the plaintiff. In the present case the plaintiff's evidence initially consisted of a single affidavit in which brevity could scarcely be carried further. He has now amplified this by further evidence, but this is certainly not exhaustive or conclusive. The words "there ought for some other reason to be a trial" seem to me to give the court adequate powers to confine Order 14 to being a good servant and prevent it from being a bad master."
"It is not difficult to think of other circumstances where it might be reasonable to give leave to defend although no defence was shown: for example, if the defendant was unable to get in touch with some material witness who might be able to provide him with material for a defence; or if the claim were of a highly complicated or technical nature which could only properly be understood if oral evidence were given; or if the plaintiff's case tended to show that he had acted harshly and unconscionably and it was thought desirable that if he was to get judgment at all it should be in the full light of publicity." [emphasis added]
Grounds of defence
Code of Practice for commercial property relationships during the COVID 19 pandemic
"This Code of Practice is published in response to the impacts of COVID-19 on landlords and tenants in the commercial property sector and covers the whole of the United Kingdom. It is intended to reinforce and promote good practice amongst landlord and tenant relationships as they deal with income shocks caused by the pandemic. This is a voluntary code and does not change the underlying legal relationship or lease contracts between landlord and tenant and any guarantor".
"The legal position is that tenants are liable for covenants and payment obligations under the lease, unless this is renegotiated by agreement with landlords. Tenants who are in a position to pay in full should do so. Tenants who are unable to pay in full should seek agreement with their landlord to pay what they can taking into account the principles of this code. This will allow landlords to support those tenants who are in greatest need and to maintain development activity which will contribute to economic recovery. It also means landlords should provide support to a tenant where reasonably possible, whilst having regard to their own financial commitments and fiduciary duties."
Circumventing other Government measures
"The Defendant also avers that the Claimant's claim seeks to circumvent the measures put in place by the government. Those measures prevent forfeiture, winding up petitions and the CRAR procedure where rent arrears are related to Covid-19. The measures are clearly intended to protect commercial tenants where they have been forced to close and/or have been subjected to significantly reduced footfall during any trading periods, as a result of social distancing measures. Using what is essentially a loophole goes behind the intention of those measures."
Insurance
(1) Under clause 3.1 the defendant covenants to pay the Principal Rent without any deductions, counterclaims or set offs.
(2) Under clause 4.8 the defendant covenants to keep Unit 1164 open and to maintain active trade during the Facility's opening hours unless prevented from doing so because of damage by an Insured Risk (4.8.1.1), or to do so would be unlawful (4.8.1.4).
(3) Under clause 4.8.3 if the Premises are closed for trading in breach of clause 4.8.1, Base Rent is payable, even though the period of closure occurs during a rent free period (4.8.3.1) and liquidated damages are payable in addition to the Base Rent (4.8.3.2).
(4) Under clause 5.2 the claimant covenants to observe and perform its obligations in the schedules. The obligations as they relate to insurance must be considered in light of the definition of Insured Risks. The definition comprises a number of elements:
(a) The risks against which the Premises and the Facility are from time to time insured.
(b) This is followed by a lengthy list of risks prefaced by the words "… such risks … include …". It is plainly not intended to be a definitive list of insurance risks.
(c) The list of risks principally comprises the type of risk that will directly impact upon the Premises and the Facility in a physical way but also includes risks that may have indirect impact such as "riot and civil commotion, strikes, labour or political disturbance". The list does not make any direct reference to Notifiable Diseases or closure as a consequence of legal obligation.
(d) The definition concludes with "… or such other risks as the Landlord may consider it prudent to insure." It is for the claimant to decide what, if any, additional risks are to be insured. There is no obligation to obtain cover beyond the risks that are set out in the definition.
(5) Under paragraph 3.3 of Schedule 3 the defendant is not permitted to insure against the Insured Risks unless the claimant is in breach of its obligation to insure and only after the claimant has been given an opportunity to rectify its breach.
(6) Paragraph 5 of schedule 3 provides for the suspension of rent. Under paragraph 5.1 it applies "… if the Premises are damaged by an Insured Risk or if the Facility is so damaged as to affect materially and adversely the Premises…". Under paragraph 5.2 the Principal Rent is suspended "until the Premises have been reinstated and made fit for occupation, use and enjoyment …".
"12. Schedule 3 clause 2.1 of the Lease confirms that the Insurance Premiums are to include all monies and costs expended, or required to be expended by the Claimant in connection with cover against Insured Risks and loss of Principal Rent. Clause 1.1 of the Lease defines Insured Risks as including "the risks and other contingencies against which the Premises and Facility are from time to time insured" and "such other risks as the Claimant may consider it prudent to insure".
13. The insurance protects both the Claimant and Defendant in particular circumstances, where there is a loss of Principal Rent. It is reasonable for the Defendant to expect that the Claimant would obtain satisfactory cover. It is the Defendant's position that satisfactory cover includes "such other risks prudent to insure" and that it is reasonable to expect that the Claimant would obtain cover for loss of rent and service charges related to forced closures and/or denial or loss of access due to notifiable disease and/or government action.
14. The Claimant held itself out as an established Landlord and the Defendant therefore trusted the Claimant would procure the appropriate insurance in good faith."
…
"16. The Claimant is put to proof that it has obtained adequate insurance and that it has sought recovery from such insurance cover. In the event that the insurance does not cover loss of rent and service charges related to the forced closures of the stores, the Defendant avers that the Claimant has failed to meet its obligations under the Lease by failing to procure an appropriate extension to the insurance.
17. It is the Defendant's position that the Claimant could and should have insured the Property for loss of rent and service charges to include cover where the Defendant is forced to close its stores or there is a loss or denial of access due to notifiable disease and/or government action. In failing to do so the Claimant has failed to adequately insure the Premises and is in breach of the Lease."
27. The claimant's position was set out in paragraph 16 of the reply:
"(a) The Claimant was not required by the terms of the Lease (or otherwise) to insure against the risk of global pandemic nor loss of rental income attributable to such a global pandemic.
(b) The Claimant did not insure against the risk of non-payment of rent as a result of the Premises being closed to the public as a result of a global pandemic. The Claimant is not entitled to claim on its insurance policy in respect of such a risk."
28. The essence of the defendant's case, as it is pleaded, is that the claimant was under an obligation pursuant to the terms of the lease to insure against loss of rent due to a notifiable disease or government action, that the claimant is obliged to claim under the policy if such cover exists and if no relevant cover is obtained, the claimant is in breach of the lease. The defendant does not make a counterclaim for damages. It merely asserts that the claimant's alleged breach in relation to insurance is a defence to the claim. Furthermore, the defence does not address either the nature of the loss of rent the claimant could, or should, insure against or how it is said that the rent cesser provisions in the lease operate.
29. The claimant's primary submission is that unless the rent cesser provisions bite, it has not suffered any loss and, therefore, has not suffered a loss of rent that it could claim under its policy. The insurance cover relates to the claimant's loss to its business, not a notional loss because the defendant does not pay rent because the Facility is closed.
30. The defence and paragraph 16(a) of the reply give rise to a short point of construction. The claimant is, by virtue of clause 5 and paragraph 4 of the lease, obliged to insure against the Insured Risks and the other items referred to in paragraph 2.1 of schedule 3. The wording of paragraph 2.1, which is headed Insurance Premiums, is not entirely satisfactory. It requires that, amongst other things, insurance premiums "… are to include all monies and costs expended, or required to be expended, by the Landlord in connection with effecting and maintaining cover against Insured Risks" … and similarly effecting and maintaining cover against loss of rent. This seems to confuse the cost of cover, the premium, with the cover that is to be obtained. Nevertheless, it is clear from the lease that the claimant is only obliged to obtain and pay for cover against the Insured Risks and loss of rent. There is nothing in the definition of Insured Risks that refers to notifiable disease or government action and the final words are clear that it is for the claimant to decide which additional risks will be covered. This cannot be construed as creating an objective measure of reasonableness. The claimant is insuring its interests, albeit the defendant is required to contribute to the cost of the premium as part of its obligation to pay rent (clause 3.4).
31. Paragraph 16(b) of the reply makes two assertions. First, that the claimant did not obtain cover against the risk of the Facility being closed due to the pandemic. That is not, in fact, correct. Cover against the risk of loss caused by notifiable disease was obtained. The second assertion is that the claimant is not entitled to claim under its policy in respect of that risk.
32. The claimant produced a letter from Marsh, the claimant's brokers, before disclosing the policy, which summarises the scope of the cover held by the claimant:
"The insurance cover arranged on your behalf as the landlord for Westfield London provides coverage as specified under the terms of the lease for damage (as defined in the lease, and generally meaning physical damage) to the Premises and subsequent loss of rent to the landlord as a result of such damage to the Premises. There is no cover or any requirement for coverage under the terms of the lease provided by the policy for any business interruption suffered by a tenant, either generally or specifically in terms of non-payment of rent owing to a Pandemic or other Government ordered closure. This is customarily the responsibility of the tenant to arrange for insurance cover to protect against damage to their own property, subsequent business interruption and legal liability to third parties."
33. Mr Caplan submitted that the letter is at odds with the policy. The material terms of the policy terms are:
"INSURED: [The definition includes the claimant]
LOCATION: Westfield London Shopping Centre, Ariel Way, London W12 7SQ
INTEREST: Material Damage & Loss of Rent (including Terrorism) as defined in the Policy
…
PERILS INSURED: All Risks other than as excluded within the policy
Loss of Rent – In the event of Damage to the Property Insured as a result of an Insured Event which causes interruption or interference to the Insured's Business, the Insurer agrees to pay the Insured the resulting Loss of Rent [emphasis added]
INSURED'S BUSINESS: All activities, functions or occupations of whatsoever nature or description carried on by the Insured …
…
It is hereby noted and agreed that the following amendment is made to the policy …
Loss of Rent – Specified Causes
…
viii Notifiable Diseases and Other Incidents:
a. discovered at an Insured Location
b. ….
c. which are reasonably likely to result from an organism discovered at an Insured Location and/or
d. occurring within the Vicinity of an Insured Location during the Period of Insurance."
(1) That the claimant is obliged to maintain insurance for loss of rent resulting from a notifiable disease and/or government action and the claimant must claim under the loss of rent insurance policy it maintains before commencing proceedings to recover rent.
(2) That the rent cesser provisions in the lease, properly construed, apply to the COVID-19 pandemic which amounts to a suspending event for the purposes of paragraph 5 of Schedule 3 of the lease.
"18. In the Privy Council case of BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20 , 26, Lord Simon (speaking for the majority, which included Viscount Dilhorne and Lord Keith) said that:
"[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.""
The defendant's case
(1) The claimant has an obligation to take out insurance for a wide range of risks.
(2) The defendant is required to contribute to the cost of the claimant's insurance.
(3) The defendant is not permitted to insure for the same risks as the claimant. If the claimant opts to insure against Notifiable Disease then it becomes an Insured Risk and the defendant may not take out cover for that risk.
(4) The defendant is obliged to trade at the premises under the keep open provisions and is liable for liquidated damages if it fails to do so.
(5) The obligation to keep open and trade from the Premises is removed either because of damage by an Insured Risk or because to keep open and trade would be contrary to the emergency coronavirus regulations.
(6) Damage by an Insured Risk should be construed more widely than merely being damage to the Premises.
(7) If the claimant chooses to insure against loss of rent caused by an Insured Risk that is related to COVID-19 or compulsory closure of the Premises, both the claimant and the defendant have an interest in the loss of rent claim.
"The extent of the parties' respective obligations to each other and liability to each other for insured risks will be a matter of construction. So, it had been held that where a landlord had been fully indemnified in the manner envisaged by the provisions of the tenancy agreement, he could not recover damages from the tenant in addition, so as to provide himself with what would in effect be a double indemnity ('the Rowlands principle')[3]. It has subsequently been held that the following principles may be derived from the authorities[4] :
(1) The court should construe the terms of the tenancy agreement in order to determine how the parties have agreed to allocate risk between themselves.
(2) A covenant by a landlord with his tenant to insure the demised premises in return for mutual obligations by the tenant is an important indicator that the parties intended that the tenant:
(a) need not take out insurance for the risk covered by the landlord, and
(b) would not be liable for any loss or damage suffered by the landlord falling within the scope of that which the landlord has agreed to cover.
(3) The strength of that indicator will depend upon the other terms of the tenancy, including whether they provide some alternative explanation for the covenant to insure.
(4) The strength of that indicator is greater where the tenant is contractually obliged to pay for, or to contribute towards, the cost incurred by the landlord of insuring the premises.
(5) Other relevant indicators include terms of the tenancy which relieve the tenant from repairing or other contractual obligation in the event of damage by an insured risk, or which require the landlord to lay out insurance monies on remedying damage caused by an insured risk, or which suspend the obligation to pay rent whilst damage from an insured risk prevents use of the demised premises. But the application of the principle in Rowlands does not depend upon the inclusion of all or any of these terms in the tenancy agreement.
(6) Where applicable, the principle in Rowlands will defeat a claim brought against the tenant in negligence even in the absence of a clause expressly exonerating the tenant from liability for negligence."
"There are many cases in which two or more persons, such as landlord and tenant … each have an interest in the same property. These interests are separate and distinct; each is capable of supporting an insurance and each of the two persons interested may insure the property for his own protection. The insurance so effected insures for the sole benefit of the person effecting it and the other persons interested in the property have no right to participate."
"If loss of rent is covered by the insurance policy, but the rent does not abate, then unless the tenant is the insured or one of the insured, the insurers will not pay because the landlord will have suffered no loss. If, however, the tenant takes out consequential loss insurance in respect of his business, then if the rent does not abate, the extent of his claim on his own policy will, to that extent, be diminished".
Rent Cesser/Suspension
Expert determination
Summary judgment
55. I am satisfied that the issues of construction the court has been asked to consider fall well within the ambit of typical issues for determination on an application for summary judgment. They are properly regarded as being 'short'.
56. Equally, I am satisfied that the claimant has discharged the burden of establishing that the rents it claims are due and the defendant has no real prospect of defending the claim to recover the outstanding rents. There are no compelling reasons why the claim should go to a full trial. The basis of the defence does not rely upon any new principles of law. The issues raised by the defendant are capable of being resolved by applying the well-established principles that govern the construction of contracts and the implication of terms. The context in which the claim is made does not entitle the defendant to contend that these principles are now part of an area of developing law. Equally the defendant is not able to point to any conduct on the part of the claimant that might be regarded as oppressive or that the claim has been issued prematurely.
57. The claimant is entitled to judgment for the rent claimed and interest at the rate specified in the lease.
Adjournment
Conclusion
1. DEFINITIONS AND INTERPRETATION
In this Lease unless the context otherwise requires:
1.1 Definitions
……
Facility Opening Hours means:
1000 to 2200 on Monday – Saturdays
1200 to 1800 on Sundays
(in each case on public holidays); and
1000 to 2100 on public holidays (excluding Sundays)
(subject in each case to such statutory restrictions on opening hours as may apply) or such other hours as
specified by the Landlord from time to time;
……
Insured Risks means (subject to such exclusions, limitations and excesses as may be imposed by the Insurers and to the extent that insurance against such risks for properties similar to the Facility may ordinarily and reasonably be arranged in the United Kingdom market with an insurer of good repute at reasonable commercial rates and on reasonable commercial terms) the risks and other contingencies against which the Premises and the Facility are from time to time insured under this Lease. Such risks or other contingencies include fire, lightning, thunderbolt, storm, tempest, flood, bursting and overflowing of water tanks, apparatus or pipes, sprinkler leakage, earthquake, impact by road and rail vehicle, aircraft (but not hostile aircraft) or other non-hostile aerial device and devices dropped from them, riot and civil commotion, strikes, labour or political disturbance, explosion (including of boilers and other heavy apparatus), malicious damage (including where caused by acts of terrorism), accidental damage to underground pipes and cables, frost, subsidence, heave, landslip and such other risks as the Landlord may consider it prudent to insure.
……
Outside Hours Charge means the fair and proper cost to the Landlord of (at the Landlord's discretion):
(a) providing any of the Services outside the Facility Opening Hours; and / or
(b) permitting the exercise of the right at paragraph 1 of Part 2 of schedule 1 outside the Facility Opening Hours (or a fair proportion of such cost if provided to be enjoyed by another tenant or tenants);
…….
Uninsured Act of Terrorism means any malicious damage caused by an act of terrorism which is not an Insured Risk due to being:
(i) excluded, or partially excluded, from being so by reason of withdrawal of cover by the insurer and which is not otherwise available to be insured in the London Insurance Market at reasonable commercial rates and on reasonable commercial conditions; or
(ii) withdrawn from insurance cover by the Landlord on the grounds that cover cannot be placed in the London Insurance Market at reasonable commercial rates and on reasonable commercial conditions; or
(iii) excluded, or partially excluded, from insurance cover in relevant circumstances by reason of the operation of policy conditions.
……
3. RENT
The Tenant covenants to pay by way of rent during the Term, without any deductions, counterclaims or set offs (except where required by Law):
3.1 the Principal Rent……
3.2 (in respect of each Service Charge Period beginning or ending during the Term) the amount calculated by multiplying the Service Charge by the Service Charge Proportion at the times and in the manner set out in schedule 2, payable from and including the Service Charge Rent Commencement Date.
……
3.4 within fourteen (14) days of demand the Insurance Proportion of the Landlord's insurance premiums specified in schedule 3 from and including the Insurance Rent Commencement Date.
3.5 VAT …
3.6 Interest …
……
4. TENANT'S COVENANTS
The Tenant covenants with the Landlord throughout the Term, as follows:
……
4.8 Trading during Facility Opening Hours
4.8.1 To keep the Premises (excluding the Storage Area) open for business during the Facility
Opening Hours and to maintain during the Facility Opening Hours active trade throughout all
those parts of the Premises where retail trade is usually carried out or which are intended for
retail trade, unless:
4.8.1.1 the Tenant is prevented from doing so because of damage by Insured Risk; or
……
4.8.1.4 to do so would be unlawful;
…….
4.8.3 If the Premises (excluding the Storage Area) are closed for trading during the Facility Opening Hours in breach of clause 4.8.1 then:
4.8.3.1 (if applicable) the Base Rent shall become payable for each day on which the Premises are so closed notwithstanding that the Rent Commencement Date has not occurred; and
4.8.3.2 (in addition to continuing to pay the Base Rent pursuant to this Lease) to pay the Landlord by way of liquidated damages forthwith on written demand for each day on which the Premises are closed a sum equal to twenty five percent (25%) of the Base Rent divided by the total number of days when the Facility has been open to trade during the relevant Year (as that term is defined in paragraph 1 of Schedule 4).
4.9 Trading Outside Facility Opening Hours
4.9.1 Not to open the Premises (excluding the Storage Area) for business outside the Facility Opening Hours without obtaining the prior consent of the Landlord……
……
4.9.3 In so opening the Premises for business outside the Facility Opening Hours, to comply with any conditions which the Landlord shall reasonably consider to be appropriate and pay within ten
(10) Working Days of demand to the Landlord the Outside Hours Charge.
……
4.15 Statutory Requirements
……
4.15.2
4.15.2.1 To comply with them, and not to breach, any Law which at any time affects the Premises, their use and / or the enjoyment of people in them;
……
5. LANDLORD'S COVENANTS
The Landlord covenants with the Tenant as follows:
……
Performance of Landlord's Obligations in Schedules
5.2 To observe and perform its obligations in the schedules.
……
11. NO WARRANTY
The Landlord does not warrant that the use of the Premises for the Permitted use is authorised under any Law or that the Premises are fit or otherwise usable for any specific purpose.
……
13. EXPERT DETERMINATION PROCEEDINGS
13.1 The provisions of this clause 13 apply to determination of issues by an independent expert if it is invoked elsewhere in this Lease or the parties otherwise agree to invoke it.
……
SCHEDULE 3
Insurance
1.Interpretation
In this schedule:
1.1
1.2
1.3
1.4
2. Insurance premiums
2.1 Insurance premiums are to include all monies and costs expended, or required to be expended, by the Landlord in connection with:
2.1.1 effecting and maintaining cover against Insured Risks;
2.1.2 effecting and maintaining cover against loss of:
2.1.2.1 the Principal Rent……
……
which cover the Landlord covenants to effect for a period of not less than five (5) years;
……
3. Tenant's obligations in relation to insurance cover
……
3.3 The Tenant may not insure the Premises against any of the Insured Risks other than where the Landlord is in breach of its obligations under paragraph 4.1 and then only provided that the Tenant has so notified the Landlord in writing and has allowed the Landlord a reasonable period of time in which to rectify the breach.
……
4. Landlord's obligation to insure and reinstate damage by Insured Risks
4.1 The Landlord shall keep the Facility (including the Premises) insured with an insurer of good
repute against the Insured Risks and other items referred to at paragraph 2.1 for the full cost of reinstatement, subject to any excess or deductible and any exclusions, warranties or other terms imposed by the Insurers on the insurance cover.
…….
5. Suspension of rent
5.1 Paragraph 5.2 applies if the Premises are damaged by an Insured Risk or if the Facility is so damaged as to affect materially and adversely the Premises, except in the circumstances and to the extent that insurance cover is vitiated by an act or default of the Tenant.
5.2 The Principal Rent and the amount payable by the Tenant pursuant to paragraph 2 of Part 1 of schedule 2, or a fair proportion of them according to the nature and extent of the damage sustained, are to be suspended and cease to be payable until the Premises have been reinstated and made fit for occupation, use and enjoyment, or, if earlier, until the expiry of the period for which loss of rent insurance has been obtained.
……
5.4 A dispute as to the amount of abatement of the Principal Rent or the Additional Rents or the duration of the period of abatement shall be submitted to an independent chartered surveyor who shall act as an expert and the provisions of clause 13 shall apply.
……
8. Uninsured Acts of Terrorism
8.1 The following provisions of this paragraph 8 apply if the Facility or the Premises are damaged or destroyed by an Uninsured Act of Terrorism so as to render the Premises unit for occupation, use or enjoyment.
……
8.9 Paragraph 5.2 is to apply in relation to any destruction or damage referred to in paragraph 8.1…..
……
and paragraphs 5.3 and 5.4 are to apply accordingly.
Note 1 All the material terms of the lease are set out in an Appendix. [Back] Note 2 It is common ground that COVID-19 is a notifiable disease. [Back] Note 3 Mark Rowlands v Berni Inns Ltd [1986] 1 QB 211 [Back] Note 4 Frasca-Judd v Golovina [2016] 1 WLR 107 (QB) at para 48 [Back]