More than two years into the COVID-19 pandemic, anecdotal reports are that there have been many disputes between landlords and tenants about how the pandemic might affect the tenant’s payment obligations. Tenants reportedly have sought to take refuge in arguments such as (a) alleged frustration of the tenancy agreement and (b) triggering of the rent abatement clause.
A recent Hong Kong decision The One Property Limited v The Swatch Group (Hong Kong) Limited (HCA 268/2021) and Silvercord Limited v The Swatch Group (Hong Kong) Limited (HCA 269/2021) ([2022] HKCFI 362, 8 February 2022, heard together) considered some of these defences but the defences were rejected by the Court.
Brief Facts
The Tenant (as Defendant) had entered into two separate tenancy agreements with respective Landlords (as Plaintiff) for Premises in large shopping arcades. The Tenant defaulted on payments of rent under both tenancy agreements. Both Landlords accepted the Tenant’s breach and terminated the tenancy agreements.
The Landlords applied against the Tenant for summary judgment in respect of the claims for rent arrears and loss of rent.
The Tenant raised the following defences and argued that its payment obligations were discharged and/or suspended:
https://www.bclplaw.com/en-US/insights/frustration-and-rent-abatement-in-commercial-leases-hong-kong-court-rules-on-the-impacts-of-covid-19-pandemic.html