A significant decision was reached today in the High Court which will allow Landlords up and down the country to breathe a huge sigh of relief. The High Court considered a claim by the European Read more...
A significant decision was reached today in the High Court which will allow Landlords up and down the country to breathe a huge sigh of relief. The High Court considered a claim by the European Medicines Agency that their 25 year lease of offices in Canary Wharf should be terminated on the grounds of “frustration” in light of Brexit.
Frustration is an English law concept which allows a party to withdraw from a Contract when an event occurs that fundamentally changes the ability of a party to perform. The European Medicines Agency argued that the unforeseeable circumstances surrounding Brexit should allow it to terminate its lease.
The High Court disagreed and confirmed that the obligations under the Lease remained, meaning the European Medicines Agency would still be required to pay the £500 million rent bill for their property.
Whilst the Agency has until 29 March 2019 to make an appeal, the decision does seem logical given the fact that the property which is subject to the lease is still present and available to the Tenant. Citing “frustration” as a way to avoid the obligations has now been regarded as opportunistic rather than a genuine legal claim.
Avi Barr, Partner in the Lawrence Stephens Real Estate Team, commented:
“This decision will come as a much needed boost to landlords, lenders and property investors generally. Had the European Medicines Agency been successful with their claim, the floodgates could have opened with all manner of tenants looking at many different scenarios in order to extricate themselves from legally binding obligations.”
From an employment perspective the decision also comes as positive news, given that the European Medicines Agency employs around 900 people and still has almost 20 years left to run on its lease of 10 floors in Canary Wharf. Subletting would now seem to be the only sensible mitigating option available.