Knights’ Property Litigation team successfully advised First Property Group (Fprop) in a “landmark” arbitration ruling that dismissed a well-known high street retailer’s attempt to obtain relief from £450,000 of rent arrears.

The ruling is the first known arbitration award under the Commercial Rent (Coronavirus) Act 2022 – legislation put in place by the UK government to cover rent arrears accrued during the Covid-19 pandemic.

Having closed its stores during the pandemic, Signet Trading Ltd – which operates around 300 retail stores under the H Samuel and Ernest Jones brands – also sought rent relief for its offices in Borehamwood, which spanned four floors.

Signet claimed that its offices were affected by the Covid-19 closure requirement that forced it to shut its retail stores – claiming relief for the quarters commencing on 25 March 2020, 25 December 2020 and 25 March 2021, with total arrears standing at £448,043.

Led by Clare McKay, Knights’ team successfully supported Fprop in arguing that Signet’s office space did not satisfy the requirements of the 2022 Act and was not liable for rent relief.

Clare McKay, Senior Associate at Knights, said:

“This decision will set a precedent for hundreds of similar arbitration awards related to the Covid-19 pandemic, so we’re delighted to have successfully supported Fprop in what could prove to be a landmark decision. It’s a great outcome for our client and provides more clarity for others in a similar situation with rent arrears.”

Martin Pryce, Investment Director at First Property Group , said:

"This landmark ruling is testament to how seriously we take rent collection. Unlike many of our peers, rent collection is a function which we always perform in-house.

"That it is the first arbitration award under the legislation shows the speed at which we act when a tenant is in breach of its contractual obligations, and the quality of the advice we received from Knights."

Summing up the decision, arbitrator Gary Cowen QC said:

 "It is plain that the applicant is not offering goods for sale in a shop from these premises. Accordingly, it was not adversely affected by coronavirus for the purposes of section 4 of the 2022 Act. It follows that there is no protected rent debt in this case.”