Coronavirus. Claim your losses.

COVID -19 – Business  Interruption

 New Legislation 

The Coronavirus Act, 2020 (the “Act”) was passed by the British Parliament on 24 March 2020. The Act was legislated to enforce emergency procedures for all persons and business being affected due to the recent outbreak of Covid – 19 (the “virus”).

Amongst the various categories of affected entities there is a large category which comprises of landlords and tenants.

Residential Tenancies

According to Schedule 29 of the Act (read with Section 81) the minimum notice period for eviction of a residential tenant within the “the relevant time period” is three months. The relevant time period is from 24 March 2020 till 30 September 2020. Therefore, any notice for proceedings to evict a residential tenant must have a notice period of 3 months before proceedings can be commenced under the various legislations through which the tenancy may have been effected.

Business Tenancies

Section 82 (1) of the Act provides that no landlord can enforce re – entry and forfeiture of any tenancy due to non-payment of rent during the relevant period. The relevant period is defined as the time period between 24 March 2020 and 30 June 2020.

It is further provided in the Act that for all orders passed by a High Court for repossession and forfeiture of tenancies, the tenant is not required to give up possession of the tenancy before the expiry of the relevant time period.

For proceedings initiated before the County Courts or for Orders for possession which may have been passed before or during the relevant period shall not be deemed to be enforced or continued with till the expiry of the relevant time period.

Can the landlord initiate proceedings for non-payment of rent during the relevant period:

The simple answer to this question is NO.

Section 82(11) reads as follows:

“For the purposes of determining whether the ground mentioned in section 30(1)(b) of the Landlord and Tenant Act 1954 (persistent delay in paying rent which has become due) is established in relation to a relevant business tenancy, any failure to pay rent under that tenancy during the relevant period (whether rent due before or in that period) is to be disregarded.”

The aforesaid section clearly mentions that a Court while deciding whether the tenant has persistently delayed in payment of rent or not shall not give any regard to the failure of the tenant to pay rent during the relevant time period. Therefore, the relevant time period acts as a blanket immunity for the tenant in the event of non-payment of rent.

Insurance relief

Most of the business owners as well as landlords have insurance policies covering their losses which arise from business interruption. While different insurers have different language, however, some insurances have stricter clauses that the business should be interrupted due to a “specified disease”. Most policies would not be having Covid -19 listed as a specified disease and hence on a plain reading of the policy the insured person may not get coverage. As of now there has been no specific legislation by the Government on the interpretation of the “specified disease” which leaves the situation ambiguous for both the insurer and the insured.

However, there is another clause in most policies which is named as “Business Interruption due to Government Action”. The government from 8:30 PM 23 March 2020 has ordered all non-essentials businesses to shut down. Which means that all these businesses are having to close, suffer loses due an action of the Government. This may look like a viable clause for the all non-essential business owners through which the insurer can be approached for covering the loses suffered by them till the time of the closure of the business.

Assuming that the insured person fails to get the coverage from the insurer the other option available to the insurer then is to approach the Government and financial institutions seeking the various business benefits and loans introduced by the Chancellor of the Exchequer. Some of the benefits amongst others include payment of salary to furloughed employees to a maximum of £2,500.00 per month and interest free loans being offered to business for a period of twelve months.

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MARSANS can assist businesses to advise and assist with the implementation of the new measures put in place by the government including dealing with Insurers, Landlords, HMRC and other government departments/agencies to claim the losses suffered as a result of the Covid-19 Lockdown.

We can be reached either by telephone on 020 7499 0620 or by email at email@marsans.co.uk. 

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