Cineworld rebuffs landlord AEW's legal demands for rent during Covid-19, saying it was "illegal" for it to trade

Cineworld, which is heavily in debt, is shuttering all of its 127 UK cinemas after a string of delays to the release of Hollywood blockbusters including the new James Bond film.

Fighting the claim from AEW over rent at one of its sites in Hengrove, Bristol, Cineworld argued it had followed government orders to close in mid-March when it “became illegal…to operate a cinema”.

“There has been a substantial and wholly unforeseen interference with the defendant’s ability to use and enjoy the premises”, Cineworld’s barrister Philomena Harrison set out in court papers.

“The effect of the interference amounts to an event of supervening illegality that has significantly changed the contractual obligations of the parties under the lease,” she argued.

That had the effect of temporarily suspending its obligation to pay the rent due in March and June, she said.

Ms Harrison pointed out that the government had published guidance on “responsible contractual behaviour” which encouraged landlords and tenants to work together on rent deals during the pandemic crisis.

She said a further line of defence from Cineworld was that it is implied in the lease that “if the permitted use of the premises by the tenant under the lease were to become illegal due to a public health emergency then the obligation to pay rent otherwise due under the lease would be suspended and cease to be payable for that period.”

Cineworld has pursued similar actions against David Lloyd, whose chief executive Glen Earlam told the Evening Standard: “We found them an incredibly aggressive landlord, especially in the context of the government’s protections for tenants. Their actions seem to go against the spirit of what the government is trying to achieve.”

Commenting on the legal action against Cineworld, a spokesperson from AEW UK Investment Management Limited said: “It’s our responsibility to our investors to ensure that we pursue unpaid rents on their behalf, where possible.

"When tenants withhold their rent in this way it is our investors who are ultimately losing out, most of these are pension funds – ordinary people saving for their retirement.”

It is suing for two rent payments of £154,238 which were due on March 25 and June 24. The case has not yet come before a judge.