Our Managing Partner recently found himself accidentally locked out of both his home and the office. This tickled me given the rest of us are in lockdown, and gave me the idea for the title of this article.
If you are a tenant of commercial premises, and if your landlord is interfering with your use of the property, or worse has changed the locks or prevented you from access, this article should be a good starting point for your legal remedies.
First of all, it is important to understand the reason for the landlord’s actions.
Forfeiture for non-payment of rent?
If the reason for changing the locks is for non-payment of rent, then that could be unlawful under recent legislation: s.82(1) of the Coronavirus Act 2020 Act prohibits commercial landlords from forfeiting a lease for non-payment of rent within the ‘relevant period’, currently due to end on 30 June 2020 but which could be extended. ‘Rent’ for the purposes of this Act is defined by s.82(12) as ‘any sum a tenant is liable to pay under a relevant business tenancy’.
If it is for rent and within the relevant period, your legal remedy would be to apply for relief from forfeiture and possibly an injunction for the landlord to reinstate you to the premises. I expect a Court would be highly disapproving of the landlord's actions and may penalise them by a substantial costs order in your favour. Another thing to bear in mind is that a landlord is still able to exercise the right to re-enter the property on other grounds, for example, for breaches other than non-payment of rent.
If the rent missed relates to rent due after the relevant period, you should pay the rent immediately and make an application for "relief from forfeiture", whereby the Court may allow you back in if you have paid the rent due and your landlord’s legal costs before the first hearing.
Why else might the landlord be preventing access or interfering?
The remainder of this article focuses on actions taken by a landlord which do not relate to re-entry for non-payment of rent. For example, this could be harassment or steps to intimidate the tenant simply to try and get rid of them. It could also be because the landlord may have taken the steps to change the locks, prevent access or otherwise interfere on the basis they consider it to be a licence which they brought to an end by serving notice, or a tenancy at will which does not have the statutory right to a new tenancy under the Landlord and Tenant Act 1954. There are many cases where despite the agreement drawn up between the parties (and in cases where there is no written agreement) what one might view as a licence or tenancy at will is in fact a business tenancy with certain protections.
Whatever the reason, if you consider that your landlord is not entitled to take the steps they have taken in excluding you from the property or interfering with your use of the property (such as cutting off electricity, placing obstructions to your access, or anything else which disrupts your business) you may want to consider an injunction.
An injunction is an order made by a Court and which:
stops a party from doing a wrongful act such as trespassing or interfering (prohibitory injunction), and/or
compels a party to do something, or to undo something, such as taking down a building or removing chains from a gate (mandatory injunction).
Courts are reluctant to compel parties to do something, or not to do something, and prefer to make such decisions having ventilated the evidence throughout the normal trial process. For those of you who have experienced any litigation, you will know that this could take anywhere between 9 months and 2 years to reach a trial depending on the complexity and value of the claim. That timescale obviously does not help you if you need action immediately to recommence your business, and this is where you might need to make an application for an interim injunction. This application is in addition to your claim at Court for losses and a final injunction. An interim injunction has the same power as a final injunction, but it usually is made at an early stage and lasts until the trial or further order from the Court.
What is the test for an interim injunction?
Because the Courts will not be able to properly make a decision about the merits of the case and whether you are entitled to a final injunction until a trial, there are particular factors which they will consider at an early stage of the case for an interim injunction.
The power of the Courts to grant interim injunctions comes from Section 37(1) of the Senior Courts Act 1981 which provides that the High Court may grant an injunction "in all cases in which it appears to the Court to be just and convenient to do so". This means that interim injunctions are a matter for the Court's discretion, and Judges will follow the guidelines set down in the leading case of American Cyanamid Co v Ethicon Ltd  AC 396 and which are as follows:-
A) Is there a serious issue to be tried?
You will need to show that there is an issue for which there is some supporting material and an outcome which is uncertain. In practical terms, you need to establish the legal relationship clearly by evidence (this could be the lease itself or agreed terms, correspondence or even emails), as well as what you say the landlord’s unlawful actions are (with photos or other evidence), and which give rise to your claim. If your opponent is able to show that you are very unlikely to succeed in your case at trial, a Court will be less inclined towards granting an injunction.
B) Balance of convenience
If there is a serious issue to be tried, then the Court will consider the "balance of convenience". A common mistake by applicants is to focus with lengthy witness statements to establish that there is a serious question to be tried, and not enough focus on the balance of convenience part which deserves attention. The Judge will usually take this second part in 3 stages:-
Will damages be an adequate remedy? What this means is, if you don’t get the injunction, can your losses suffered be quantified in monetary terms? If it can, the Court may say you will have some justice at the end of the case, albeit in the form of money and not, in the case of this article, getting back into the property. This could potentially allow for a surprising and unfair outcome, so all the more reason to focus in the evidence in support of the application showing why damages/money would not be sufficient. You might consider the loss of employment for employees of your company if the injunction is not granted you cannot trade, and other non-financial factors.
Protection for the respondent? Apologies for the legal jargon, but a Court will usually require you to give a ‘cross-undertaking in damages’ if you are seeking an interim injunction. What this means is that it effectively acts as an insurance policy for your opponent, so that if it turns out at the final trial they were in the right, they have some recourse. That depends of course on your undertaking is good for the money. If, for example you are bordering on insolvency, it may be that your undertaking in damages is insufficient protection, and that might point towards not granting the interim injunction.
Balance of Convenience? If the Court considers damages not to be an adequate remedy, it will consider the balance of convenience more widely, or what is sometimes known as ‘special factors’. If evenly balanced the Court may look to the status quo immediately before the actions taken by your landlord. At this stage the Court will also consider the merits of the case (how likely are you to succeed at trial) and will ask what is the minimum required to preserve the status quo?
In short, if you can establish you have a case with real prospect of succeeding at trial (showing your landlord is not entitled to take the steps they’ve taken), you should get over the first hurdle. Then, you also need to show that your loss, if the injunction is not granted, cannot readily be dealt with by an award of money at the end of a trial. You need to give thought to showing with evidence that your undertaking in damages is worth something and gives some security to your opponent. If you can shows that an injunction would restore the status quo before your landlord’s actions (in which you were operating your business at the premises without serious default on your part), this will help get you over the final hurdle.
Strategic points to consider
Given the high hurdles to get over in an interim injunction application, you should consider and make settlement offers in relation to how the application is dealt with. You could offer to accept undertakings from the landlord instead of an injunction from the Court. These could be done before and after you make the application, and on a ‘without prejudice save as to costs of the application’ basis, meaning that the Judge will not see such communication until after the decision is made. If you are successful and obtain an injunction, your settlement offer, if it has been ignored or rejected, can then be shown to the judge and may help you obtain a more favour award for your legal costs.
These matters are highly technical and can be finely balanced. There can be a lot at stake, not to mention significant legal costs and the risk of paying the other side's costs if you lose. As such you should seek advice from a solicitor at an early stage.
Toby Walker, Partner and Head of Dispute Resolution at Allan Janes. Our solicitors are highly experienced in property disputes. Please do not hesitate to get in touch via our contact page or for a free no-obligation telephone consultation.