London’s Trocadero Centre in Piccadilly Circus has won a high court battle against cinema chains Cineworld and Picturehouse Cinemas over millions of pounds in unpaid rent.
The owners of London’s Trocadero Centre brought legal action against the two chains and the original tenant, Gallery Cinemas, over outstanding bills since June 2020.
The three firms, which are all members of the Cineworld group, were accused of owing rent and service charges “in the region of £2.9m” related to Picturehouse’s flagship venue Picturehouse Central.
The cinemas argued they were not liable for rent and service charges for the time when the premises could not legally be used as a cinema due to Covid-19 restrictions.
The court heard that between closing in the first coronavirus lockdown on March 23 of last year and May 16, 2021, the cinema was only open for 71 days with takings of about £247,000. This was compared with the Piccadilly Circus cinema’s takings of £8.92m for the same period pre-pandemic.
Bid for summary judgment
In January, the Trocadero Centre launched a bid for summary judgmen, a legal step that would see the case resolved without a trial – over the arrears.
Today, Judge Robin Vos found in the centre’s favour, finding the cinemas had “no realistic prospect of defending the claims” about the rent and service charges.
At a hearing in July, the cinemas argued it would be “uncommercial to expect the tenant to pay the rent if the cinema cannot open”. However, this argument was rejected by the judge.
Judge Vos said: “In my view, the requirement for the tenant to pay rent even though the premises could not be used for the intended purpose as a result of unforeseen, extraneous events does not deprive the leases of business efficacy or mean that they lack commercial or practical coherence.”
He added: “There is no good commercial reason why the loss should necessarily be borne by the landlord.”
“The risk that the premises cannot be lawfully used in this way has therefore been allocated… by the terms of the leases to the tenant,” he concluded.
Picturehouse Cinemas made a counterclaim related to £621,000 paid as part of their insurance policy. Judge Vos ruled it was up to the parties to decide the “precise amounts” they would pay to the Trocadero Centre.
However, he ordered the final figures would include a reduction of £621,000 from Picturehouse’s total arrears and a “proportionate” reduction of that amount for Cineworld.