In a blow to non-essential retailers already struggling financially due to the Covid-19 pandemic, Frasers, the lifestyle retail group, has been ordered by the High Court to pay rent arrears. The case involved Sports Direct, owned by Frasers, and the landlords, AEW UK Reit and Bank of New York Mellon (International), were granted summary judgment for an undisclosed amount of unpaid rent related to a Sports Direct store in Blackpool.
Justice John Dagnall made it clear that the voluntary code of practice for commercial property relationships during the pandemic does not prevent landlords from claiming unpaid rent. He emphasized that as long as there is a clear case for unpaid rent, the existence of the voluntary code should not hinder landlords from obtaining summary judgment. Although sympathetic to retailers that have been greatly impacted by the pandemic and forced store closures, Justice Dagnall highlighted the lack of online alternatives for many non-essential retailers in the entertainment, hospitality, and non-essential retail sectors, resulting in significant revenue losses.
Frasers has yet to provide any comment on the ruling. This decision follows a previous ruling in favor of Westfield London’s owners against The Fragrance Shop, where the High Court ordered them to pay over £160,000 in unpaid rent and service charges during the pandemic. These judgments are anticipated to set a precedent for future cases, making it more challenging for retailers to evade paying rent for extended periods when their stores have been closed due to multiple lockdowns. The outcomes of these cases could potentially determine the survival of businesses.
While some critics argue that large retailers should have been able to pay rent despite the circumstances, others express sympathy for them, considering the unprecedented challenges they have faced. These retailers have been expected to pay rent for stores that remained closed for significant periods, operated under strict restrictions, and experienced drastically reduced footfall, factors that were not present when their rental agreements were initially established. Ultimately, these rulings bring some relief to landlords who have only received a fraction of the rent owed to them over the past year.
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