In what appears to be one of the first published awards under the arbitration scheme introduced by the Commercial Rent (Coronavirus) Act 2022, H Samuel's application for relief against a landlord's claim for £450,000 of outstanding rent due under the lease of its head office premises in Hertfordshire fell at the very first hurdle.

Last week, Gary Cowan QC of Falcon Chambers, acting as Arbitrator, dismissed H Samuel's reference at the preliminary issue stage on grounds that its office accommodation remained capable of occupation. 

Had the government intended the regulations introduced under Covid legislation to have been interpreted otherwise would, he said, have led to a "two tier system" whereby offices occupied by tenants whose principal business was the sale of goods in shops were required to close those offices whereas occupiers of offices unconnected to a retail business were entitled to remain open. This was not the position in 2020 or subsequently. The applicant's continued use of the premises where H Samuel retained minimal staff to operate the mail room and security was considered consistent with there being no closure requirement.

Arguments around office workers being unable to use the premises due to regulations making it an offence to leave their place of residence wasn't considered of any assistance to H Samuel's case either. Gary Cowan QC added that the regulations "imposed an obligation on individuals and not on persons carrying on business" even if the indirect effect was that many offices remained empty.

The decision offers clarity that the Act in reality offers office occupiers of retail businesses little protection from claims over covid-rents. In reality, most landlords and tenants have struck commercial deals in which case the Act will not apply to them anyway.

As this decision comes over half-way through the referral period for arbitrations under the Act, which started on 24 March and is currently due to end on 23 September 2022, one suspects that the flood of referrals from retail tenants originally anticipated in March is now even less likely to materialise. Landlords will also be encouraged by the decision to challenge any office tenants who continue to refuse to pay Covid-related arrears on similar grounds.