In these unprecedented times, Axiom Stone Solicitors will, in common with other businesses, be following the Government's official advice on social distancing and social isolating.

Public health measures must have the highest priority and, as a result, some staff will be working from home. Also, our offices will be closed to visitors.

However, we wish to reassure existing and potential clients that we will continue to provide the highest levels of service.

Please be assured we have a robust business continuity plan in place that is designed to minimise the impact on our service to you.

In addition, please continue to contact us electronically or by phone in relation to the progress of your matters or on any issues of concern to you.

Until further notice, service of claim forms, application notices and all other court documents and contractual notices must be made to our head office only (we shall not accept service through any other means). Our head office address is at Axiom Stone Solicitors, Axiom House, 1 Spring Villa Road, Edgware, Middlesex, HA8 7EB. We ask that all other correspondence be sent by email to the relevant member of Axiom Stone Solicitors. In the event that service of court documents or contractual notices is attempted by post, courier, DX, or fax to any address other than that of our Head Office, we cannot provide any assurance that they will be received or processed. We are grateful for your understanding at this time.

We will update this information regularly on our website (Please see COVID-19 Updates Here) and via social media.

Finally, we urge everybody to follow the official advice on fighting the virus outbreak so enabling you to stay safe and well.

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COVID-19: Commercial Premises

In response to the COVID-19 epidemic, the Government has made various changes designed to protect tenants and their businesses:

  • A moratorium on forfeiture by peaceable re-entry until 30 June 2020
  • Where proceedings for forfeiture for non-payment has been commenced in the court, any order for possession will not require the tenant to give possession until after 30 June 2020
  • Where an order has been made by the High Court:
    • Requiring possession before 30 June or
    • Forfeiture before 30 June 2020 unless the arrears are paid a tenant can apply to vary the order and the Court must ensure that possession is not  given prior to 30 June 2020
  • Where an order for possession has been made in the County Court, the date for possession will be treated as having been extended and expires on 30 June
  • Where a lease has the protection of security under the Landlord & Tenant Act 1985, the landlord is unable to oppose the grant of a new lease due to the tenant’s failure to pay/delays in paying the rent (s.30(1)(b))
  • A temporary ban on the service of statutory demands until 30 June 2020
  • A suspension of bankruptcy and winding up petitions until 30 June 2020
  • Landlords are unable to use the Commercial Rent Arrears Recovery (“CRAR”) unless the arrears are 90 days or more

Some of the above measures may be extended.

What can a Landlord do?

Landlords can take the following steps:

  • A landlord with a charge may apply to have the company placed into administration   
  • Serve a CRAR notice subject to there being at least 90 days arrears
  • Issue proceedings out of the County Court for a County Court Judgment. However, the difficulty arises with regard to enforcing that judgment by, for example, petitioning for  bankruptcy or winding up
  • Landlords can still serve s.25 Notice under the 1954 Act.  However, they are unable to include ground 30(1)(b)
  • Where the lease was created before 1 January 1997, a notice may be served on the previous tenant(s)/guarantor(s) requiring them to pay
  • Where there is a guarantor under the lease, subject to the terms of the lease, notice may be given requiring the guarantor to pay the arrears 
  • If there is a rent deposit deed, subject to the terms of that document, the landlord may be able to draw down on this and serve notice requiring the tenant to top up the rent deposit deed.

The future

The Corporate Insolvency and Government Bill (“the Bill”) had its second reading on 9 June 2020 and it is anticipated that it will progress through the House of Lords as quickly as it did through the Commons. The Bill makes provisions to assist companies in financial difficulties including temporary changes to the law relating to governance and regulation of companies and other entities. 

Among the various changes, the Bill incudes further emergency measures to protect commercial tenants from winding up proceedings which includes restrictions on the making of a winding up order where the debtor is unable to pay the debt because of the Covid-19 outbreak. Further, all winding-up petitions which have been presented between 27 April 2020 and 30 June 2020 and are based on the company’s inability to pay its debt will be reviewed by the court before being issued.

Despite the Bill not yet being enacted, the courts have taken the Bill into account in the recent case of Re A Company (Injunction to Restrain Presentation of Petition) [2020].  In this case the tenant failed to pay the rent and service charge in mid-April 202. The landlord served a statutory demand and then applied for a winding up petition. At the hearing the Judge held that it was likely that hearing of the petition would take place after the Bill can into force and the provisions would apply retrospectively from 27 April 2020. 

Accordingly, the court had to consider whether the COVID-19 outbreak had a financial effect on the Tenant, prior to presentation of petition, and if so whether the tenant would have been insolvent but for the outbreak. The court found that COVID-19 had a financial effect on the company and the petition would not have otherwise been made.The Injunction was, therefore, awarded restraining the landlord from proceeding with its winding up petition against the tenant.

On 19 June 2020, the Government announced that it will be extending the moratorium on forfeiture from 30 June 2020 to 30 September 2020, and:

  • It will be making changes to the law preventing landlords from using the Commercial Rent Arrears Recovery (“CRAR”) mechanism unless the arrears are at least 189 days.  Accordingly, no arrears can be recovered using CRAR until 30 September 2020
  • An amendment to the Corporate Insolvency and Government Bill extending the temporary ban on the use of statutory demands and winding up petitions until 30 September 2020
  • A new voluntary code of practice which has been developed with the retail, hospitality and property sectors, relating to all businesses affected by the COVID-19 outbreak. The code is said to encourage “best practice” and to support all the parties, and requires all parties to act reasonably.

Summary

If the Government puts into effect the extensions it announced on 19 June 2020, the landlord’s ability to take enforcement with regard to serving statutory demands, using the CRAR procedure or peaceably forfeiting the lease, has been curtailed until 30 September 2020.

In relation to any existing petitions for winding up/bankruptcy, if the tenant is able to show that but for the COVID-19 outbreak they would have been solvent, it is unlikely that a landlord’s petition will proceed. Unless it can be shown otherwise, petitioning for winding up/bankruptcy would not be recommended.

 


 

This article is not a substitute for legal advice.  Should you require assistance in relation to property litigation issues, please contact a member of our property litigation team:

Toby Matthews, Senior Associate Tel No. 0203 827 6107 Email: TM@axiomstone.co.uk

Mira Arezina, Associate Tel No. 0203 827 6100 Email: MIA@axiomstone.co.uk