Most commercial contracts will contain a number of standard clauses that the parties will have paid very little attention to. Such clauses, commonly referred to as “boilerplate” clauses, will have been included to cover off various technical legal points.

One of the most common – and least used – of these clauses is a “force majeure” clause. Yet amid the economic uncertainty of the COVID-19 pandemic, these little used clauses might be about to come into their own.

The basis of any contract is to set out what obligations the parties have to each other – essentially, what they have agreed to do to fulfil their part of the bargain. However, very occasionally a party is impeded or prevented from performing its’ obligations as a result of events beyond its’ control. Such an event or circumstance can be a force majeure event.

A force majeure clause – often nestling toward the end of what may be a lengthy contract – will set out the requirements for establishing the existence of a force majeure event in that particular contract. All contracts and clauses are different, but force majeure clauses generally contain some fundamental characteristics.

To invoke the clause, a party will often need to prove that some event has occurred which is beyond that party’s control; that this event could not have reasonably been foreseen when the contract was agreed; and that the effects could not have been avoided or overcome by that party.

The outbreak of a “new” virus resulting in a global pandemic which has largely paralysed economies across the world, would seem to tick all of those boxes.

If a party to a commercial contract is able to successfully rely on a force majeure clause, typically that party can: –
  1. Avoid having to perform the contractual obligations which have been impeded or prevented; and
  2. Avoid having any liability to pay damages for breach of contract during the period that the force majeure event impedes or prevents that party performing the contract.

Often the other party is then also permitted to suspend their performance of the contract – so the contract is effectively “put on hold” whilst the force majeure event is ongoing.

Gavin Evans, Partner in the Commercial Dispute Resolution team at The Wilkes Partnership, comments: –

“The current disruption is exactly the type of event that force majeure clauses were designed for. So now is the time to dust off those clauses and see if they can help your business out of a potentially difficult situation. We can review your contracts and advise on the particular clauses that may be relevant. We can also assist in negotiating with the other party in order to resolve any disputes at an early stage and help to protect you and your business.”

For further information or to discuss how we can help you, contact Gavin Evans at The Wilkes Partnership on 0121 710 5950 or by email at gevans@wilkes.co.uk

Given the current circumstances many of us may have a little more time on our hands than usual to mull over our futures and put plans in place to ensure our personal legal affairs are in order.

Online Wills are on offer all over the place and at a first glance it is easy to see why more and more people are preparing their Wills online.

As with most things in life, if it seems too good to be true it probably is. Verity Shepherd, Senior Legal Executive in the Wilkes Private Client Team, explores the risks with online Wills.

All that is usually involved in an online Will is completion of an online form with basic details, address and credit card details and your Will can be delivered to your door the next working day, or printed out almost instantly.

However, there are some significant pitfalls.  Not all Will writing companies are regulated. Solicitors and some Will writers however are regulated, subject to annual compulsory training and must have professional indemnity insurance. When a solicitor prepares your Will, you have peace of mind that the necessary safeguards are in place.

Online services usually do not offer advice on issues such as tax, businesses or overseas assets.  If you see your solicitor, they will take detailed instructions on what your estate includes. which means they can provide the advice you need. In addition, estate planning laws are constantly changing. Solicitors, as professionals, are required to stay on top of these changes so their advice should be up to date.  In the long run the ‘cheap’ online option could end up costing you a lot more than professional fees.

Trusts are often used in Wills to assist in areas such as protecting against spend thrift beneficiaries, taxes, marriage breakdown and bankruptcy. It is unlikely that online services will provide advice on whether trusts could assist you. Once again, the online service is therefore not tailored to your specific needs.  There are also risks with substandard drafting as what was intended by the Will may not be how the Will is interpreted.

A professional solicitor will also oversee the signing of the Will to ensure that it is executed in accordance with the relevant rules and not fail for falling foul of these rules.

Finally, online services do not verify the identity of their clients. How does the website know that the testator is who they say they are? Or that they have the requisite mental capacity to prepare a valid Will?  Solicitors are subject to strict money laundering obligations and therefore they must always know the source of their instructions.

The Private Client Team at The Wilkes Partnership Solicitors is a Legal 500 ranked team and one of the largest in the Midlands. Our legal specialists are on hand to help and are available for telephone/ video conferencing appointments to suit your requirements.

To book your appointment please email vshepherd@wilkes.co.uk or call us on 0121 733 4333.

Employment law concerns continue to arise in connection with the developing outbreak of Coronavirus (COVID-19). The government is prompting employers to be flexible in terms of employee working arrangements at this difficult time.

Many employees up and down the country are already working from home following advice by the UK government. However, following the shut-down of schools, childcare facilities, closure of pubs and bars in an effort to delay the COVID-19 outbreak, there is no doubt an overwhelming sense of pressure upon both employers and employees.

In these unprecedented times, many employers may need to consider temporary lay-off or short-time working as an option.

Jas Dubb, Senior Associate Solicitor in the Employment team at Wilkes considers the prospect of short time working and lay-offs during this period and what effect they may have on both employers and employees.

Coronavirus Job Retention Scheme

The UK government has announced temporary measures implemented to support employers to retain staff during this challenging period even if they are forced to temporarily shut their businesses. This is a momentous development that will impact on decision-making for employers.

The scheme allows the employer to claim a grant of up to 80% of the employees’ wages for all employment costs (including employer National Insurance contributions and minimum auto enrolment pension contributions), up to a cap of £2,500 per month, which would be equivalent to a salary of £30,000 pa. For those who earn over this amount the statutory cap will see a significant reduction in monthly income.

Some guidance for the scheme were published last week, but further details are expected to be announced. You can read the Governments guidance so far here.

Lay-offs and short time working

Every business goes through ups and downs and sometimes there is a need to make temporary cuts to the workforce when there is less work available.

In this case a ‘lay off’ or short-time working may occur. We advise you seek legal advice in respect of this.

What is lay-off?

Lay-off is when an employee is not provided with work (usually without pay) by their employer for at least one working week or longer. It is used as a response to lack of work, and is expected to be temporary in nature. This is used as an alternative to making redundancies.

There is a statutory pay scheme for lay-off and short-time working, but a clause in the employment contract is required in order to implement these temporary measures. It can also be enacted by agreement from both the employer and employee.

Examples of when this might occur include: if a place of work needs to be temporarily closed for office refurbishment or construction works and or lack of work in general.

What is Short-time working?

Short-time working is similar to lay-off, but rather than providing no work, short-time working occurs when the work (and therefore pay) provided to an employee is less than half a week. Reduced pay will trigger the statutory short-time working protection for employees, subject to eligibility requirements.

Contract

For an employer to lay an employee off there must be an express contractual right under their contract of employment. Such an agreement has contractual force only if it is incorporated into the individual employee’s contract of employment.

Custom and Practice

The right to lay off an employee may also be implied if it can be shown that it has been established over a long period of time by custom and/or practice. There must be clear evidence to show that this is customary and has been used over a long period. Relying on implied terms can be quite fraught so legal advice should be taken.

An agreement may be reached by the employer and employee to alter the terms of the contract to allow layoffs/short-time working by mutual agreement. Where the only alternative is redundancy, employees may consent to the temporary reduction in their hours/ pay.

Pay

Employees who are laid off or put on short-time working may be entitled to a statutory guarantee payment from the employer. This is limited to a maximum period of up to five ‘workless’ days in any period of three months.  The daily amount is subject to a limit, which is reviewed annually and currently is £29.00 per day and rises to £30.00 from 6 April 2020. Part-time payments are calculated pro rata.

An employer could choose to pay more however this would be at its discretion.

Where the lay-off leads to dismissal, the employee may have an entitlement to redundancy pay and, in certain circumstances, he/she may be eligible to complain of unfair dismissal to an employment tribunal. For further information on this, please contact our Employment Team on the details displayed at the end of this article.

How long can a lay-off period last and could this lead to redundancy?

A long lay-off period can last as long as the terms specified in the contract.

However, there is a mechanism within the statutory scheme through which redundancy may be triggered. If the lay-off lasts for four weeks in a row, or six weeks in a 13-week period, employees can opt for redundancy. In this case, a statutory redundancy payment would be triggered if they are eligible.

What if there is no contractual right for the employer to lay off/ implement short-time working?

This may be treated as a breach of contract leading to the employee resigning and claiming constructive dismissal in response to the breach by the employer.

Jas Dubb explains, “Employers may be able to take advantage of contractual lay-offs and short time working provisions where necessary, however, they should be mindful and aim to be transparent with employees as to the reasons for the need of temporary suspension/reduction of work as well as the possible alternatives, including the consideration of redundancies. Specific legal advice is imperative before seeking to implement changes to employee terms and conditions.”

For further guidance on this issue or any other employment related matter, please contact Jas Dubb on jdubb@wilkes.co.uk or 0121 710 5929.

The ongoing situation surrounding COVID-19 is causing a strain on businesses of all sizes across all sectors. Jeremy Parkin, Partner in the Commercial Contracts team at Wilkes highlights some key points that businesses should be aware of.

Are your customers trying to cancel orders due to the COVID-19 pandemic?

You need to look at the terms of your contract with them and see whether there are cancellation rights and, if so, whether you can charge for cancellation.

Do you need to cancel orders with suppliers? What will this cost your business?

Again, you need to look at the terms of your contract with them and see whether there are cancellation rights and, if so, whether you can be charged for cancellation.

Are you prevented from performing your obligations under contracts with customers or suppliers?

There may be “Force Majeure” provisions in the contract which protect you from claims and even entitle you to cancel the contract or order.

Put simply a “Force Majeure” is a provision in a contract that excuses a party from performing its contractual obligations if that becomes impossible or impracticable due to circumstances beyond their reasonable control.

Are any of your suppliers trying to excuse non-performance on the grounds of COVID-19?

They may have a “Force Majeure” defence in the contract, but is the pandemic really preventing them from delivering or are they trying to get out of the contract?

Do you or any of your customers or suppliers need to vary the existing contract to help cashflow or address the new circumstances due to COVID-19?

Contract variations need to be carefully drafted to make sure they capture the commercial terms, deal with what happens when things return to “normal” and that they are enforceable.

Remember you always need to check whose terms and conditions apply to the contract or look at any signed agreement with your customer or supplier.

Our Commercial Contracts Team can review and advise on all of these issues, guide you through the contractual matrix and help protect your business. Please contact Jeremy Parkin – jparkin@wilkes.co.uk – or Helen Smart – hsmart@wilkes.co.uk.

The Wilkes Partnership, in collaboration with Mazars Deal Advisory, has acted on the multi-million pound sale of RSM Partners by leading global enterprise software company BMC Software.

The deal was led by Gareth O’Hara, Managing Partner and Head of Corporate at Wilkes and was supported by Mike Linford, Senior Associate in the corporate department. The team at Wilkes worked closely alongside Rob Burton, Partner and Paul Pownell, Associate Director both at Mazars Deal Advisory. The cross-border acquisition follows the intention of RSM Partners to find a global partner to expand the business on a global stage.

Both The Wilkes Partnership and Mazars Deal Advisory have worked to ensure that following this major acquisition by BMC Software, a $2.2bn global enterprise software company based in the US, RSM Partners will be significantly better positioned to offer enhanced levels of service to its clients.

Nick Davies, Financial Director at RSM Partners says: “This deal is huge for us. We’ve been growing since our formation almost 15 years ago and decided that now was the right time to look to expand the business. Having worked with Gareth and the teams at Wilkes and Mazars Deal Advisory previously, I knew that we would be able to hit the ground running and that we could expect an excellent standard of professional advice and client care.”

“We are really pleased that we have been able to team up with one of the most respected and exciting mainframe software companies in the world in BMC.”

“This deal allows our business to grow and fulfil the ambitions that we set ourselves. We wanted to expand into new markets and give our customers access to even better, more advanced services – and this deal enables us to do that. This feels like the next step in our strategy that can allow us to provide leading services for our customers and be at the forefront of technology in our field. The work of Wilkes and Mazars was integral to that.”

The acquisition follows the growth of Bromsgrove-based RSM Partners from formation in 2006 to becoming one of the most globally recognised providers of mainframe infrastructure services, mainframe security software and expertise. As well as being an IBM Mainframe Business Partner, RSM is also an accredited UK Crown Commercial Service supplier and member of MSPAlliance: a global consortium of cloud, managed service providers and technology enabling vendors.

Gareth O’Hara, Managing Partner at The Wilkes Partnership, says: “This deal marks the progress of RSM Partners, but also recognises the talent we have in the Birmingham area for technology. Throughout this process we worked with colleagues at BMC to get a good deal for all parties and succeeded with a partnership that is going to see the RSM base in Bromsgrove grow and nurture the talent that is already there.”

“Our partnership with Mazars was key to getting making sure that the deal was smooth, especially when working cross-border. However, with the skillsets at Mazars and within the Wilkes team we completed the deal successfully and just before the Budget.”

For help and advice relating to your business get in touch with Gareth O’Hara on 0121 710 5904 or via email at gohara@wilkes.co.uk.

Due to the ongoing situation surrounding COVID-19 there have been some changes in relation to the way in which the Family Court will operate. Aaron Keene, Partner & Head of Family Law at Wilkes outlines some of the changes below and how they might affect you.

Hearings in the Family Court

Since 19th March, the Family Courts have been making changes to their operations, always with the aim of ‘keeping business going safely’, and the President of the Family Division, Sir Andrew McFarlane, stated that all Family Court hearings should be undertaken remotely – either via email, telephone, video, Skype or otherwise.

On Monday 23rd March, ahead of the Prime Minister announcing the nationwide lockdown, Mr Justice Macdonald, provided further guidance on ‘The Remote Access Family Court’ including a ‘Protocol for Remote Hearings in the Family Court and Family Division of the High Court’.

Whilst there is now a detailed procedure for remote hearings which we are studying and following here at Wilkes, there is no ‘one size fits all’ way of approaching remote hearings and no single software platform to be used. Parties are therefore able to choose from a range of different options in order to make remote hearings work best in the circumstances and fit with the needs of our clients.

Included in the types of cases suitable for remote hearings are: all directions and case management hearings; emergency protection orders; interim care orders; injunction applications; and financial cases. Even where a case is urgent, it should be possible for arrangements to be made for it to be conducted remotely. In all cases, provision is being made for E-bundles to be sent into the court.

A range of issues have been considered including access to technology and software to conduct hearings remotely, particularly operating licences, as well as some parties struggling with the rapid technological change that is having to take place. However, the first fully Skype based trial took place in the Court of Protection in front of Mr Justice Mostyn only last week and proved to be a successful test of the technology proving what is possible for the Family Courts.

Unfortunately, given the nature and risk presented by the COVID-19 outbreak, it must also be appreciated that there may be some cases that will need to be adjourned for longer periods of time because a remote hearing is not possible. From 19th March court staff are able to waive the application fee for an adjournment because of coronavirus in certain circumstances.

There is still an urgent need to consider, in respect of each court centre, how proceedings will be issued remotely if all courts in a given area are shut down and how orders will be drawn and sealed and we are expecting guidance to be provided by the Family Courts in due course.

Currently in the Birmingham Family Court, all hearings are to take place by telephone unless the Court informs you otherwise or you have made alternative arrangements with the Court. This is with a view to video or Skype hearings being introduced as soon as everything is in place. Overall, the objective is that the remote hearing should be as close as possible to the usual practice in court.

How does the lockdown affect you?

The government has issued guidance for separated families now that the country is under lockdown conditions being that where parents do not live in the same household, children under 18 can be moved between their parents’ homes.

The President of the Family Division and CAFCASS have also provided some further information and guidance to help get through these difficult circumstances where Child Arrangement Orders are in place.

Firstly, it is important to remember that the guidance does not mean that children must be moved between homes. The decision whether a child is to move between parental homes is for the child’s parents to make after a sensible assessment of the circumstances, including the child’s present health, the risk of infection and the presence of any recognised vulnerable individuals in one household or the other.

Where parents, acting in agreement, exercise their parental responsibility to conclude that the arrangements set out in a CAO should be temporarily varied they are free to do so. It would be sensible for each parent to record such an agreement in a note, email or text message sent to each other.

Where parents do not agree to vary the arrangements set out in a CAO, but one parent is sufficiently concerned that complying with the CAO arrangements would be against current Public Health England/Wales advice, then that parent may exercise their parental responsibility and vary the arrangement to one that they consider to be safe. If, after the event, the actions of a parent acting on their own in this way are questioned by the other parent in the Family Court, the court is likely to look to see whether each parent acted reasonably and sensibly in the light of the official advice and the Stay at Home Rules in place at that time, together with any specific evidence relating to the child or family.

Where, either as a result of parental agreement or as a result of one parent on their own varying the arrangements, a child does not get to spend time with the other parent as set down in the CAO, the courts will expect alternative arrangements to be made to establish and maintain regular contact between the child and the other parent within the Stay at Home Rules, for example remotely – by Face-Time, WhatsApp, Skype, Zoom or other video connection or, if that is not possible, by telephone.

The key message should be that, where Coronavirus restrictions cause the letter of a court order to be varied, the spirit of the order should nevertheless be delivered by making safe alternative arrangements for the child.

Conclusion

What remains to be said is that the situation is constantly evolving on a daily basis, if not hourly. At Wilkes our Family Law team are doing all they can over the coming days and weeks to keep you informed regarding the fast-moving landscape of Family Law during these unprecedented times and are on hand and ready to offer you the support that you need at this difficult time.

The Wilkes Partnership have a large team of Family Law experts on hand to assist you with any matter. To discuss any Family Law related matter please contact Aaron Keene on 0121 710 5947 or abkeene@wilkes.co.uk.

In this article James Leo, Partner and Head of Employment at Wilkes looks at the recent developments around COVID-19 and what it means for the world of Employment Law.

As the UK moved to the ‘delay’ phase of their coronavirus action plan, employers must take action to protect their workforces whether UK-based or working cross-border.

The outbreak of coronavirus, known officially as COVID-19, raises key points for us to consider within employment law, immigration, Health & Safety and data protection law for UK employers.

Social distancing and vulnerable people

Current government advice is for everyone to stop unnecessary contact with other people – ‘social distancing’. This includes:

  • working from home where possible
  • avoiding busy commuting times on public transport
  • avoiding gatherings of people, whether in public, at work or at home
Employers should support their workforce to take these steps. This might include:
  • agreeing more flexible ways of working, for example changing start and finish times to avoid busier commuting periods
  • allowing staff to work from home wherever possible
  • cancelling face-to-face events and meetings and rearranging to remote calling where possible, for example using video or conference calling technology
Vulnerable people

There has also been guidance issued by the government that strongly recommends people with a higher risk of catching coronavirus practice strong social distancing measures.

Employers must especially be aware and take extra steps for anyone in their workforce who falls within a vulnerable group. They include, but are not limited to, those who:

  • have a long-term health condition, for example asthma, diabetes or heart disease, or a weakened immune system resulting from medicines such as steroid tablets or chemotherapy
  • are pregnant
  • are aged 70 or over
  • care for someone with a health condition that might put them at a greater risk
    employers can access the latest government information and advice online.
Key workers

On Monday 23 March 2020, all schools within the UK closed until further notice. This has caused a further strain on employers and employees due to a number of staff subsequently facing childcare arrangement issues. School will only be available to people who are ‘key workers’. A list of ‘key workers’ for whose children schools will remain open, is also now available here.

Employers may reasonably expect their employees to make use of these facilities – where the employee’s partner is a key worker for example – without going into invasive investigation that might breach anyone’s data protection rights.

Self-Isolation and Sick Pay

Employees in self-isolation should follow their workplace’s usual sickness reporting process.

Employees can ‘self-certify’ for the first 7 days off work. This means following their workplace process but not having to get a note from a doctor or NHS 111.

On 20 March 2020, the government introduced a new ‘online isolation note’ service which allow employees to get an online self- isolation note to provide to employers with certification of coronavirus absences. Those self-isolating due to coronavirus for more than 7 days can get an online self-isolation note from the:

Individuals will be prompted to answer a few questions, after which an isolation note will be emailed to them. The service can be also used to produce an isolation note on behalf of someone else, while those without an email address can have the note sent to a trusted family member or friend, or directly to the employer.

It is a good idea to check your workplace’s policy on absence from work. Employers might need to be flexible if asking for self-isolation notes due to the severity of the virus causing hospitalisation in some cases.

Must “vulnerable” employees who are required to self-isolate be paid? Can they be placed on sick leave, or required to use their holiday entitlement?

Employers are most likely unable to specify that employees take holiday for any long period of self-isolation in the absence of a contractual right to do so. These employees may not be “sick”, and may not be covered by sick leave provisions and employers are advised to read into their contracts and policies and consider their position.

Employees who according to government guidance should self-isolate to remain away from their workplace, are more likely to be considered as either working from home or on a period of leave. If the employee should work from home, the employer would be expected to pay the employee as normal.

Furloughed workers

Employers struggling to cover staff costs due to COVID-19, may be able to access support to continue paying part of employee wages, to avoid redundancies. This has been named as the Coronavirus Job Retention Scheme.

Employers who intend to access the Coronavirus Job Retention Scheme, should discuss with employees becoming classified as a furloughed worker. This would mean that they are kept on their employer’s payroll rather than being laid off.

To qualify for this scheme, employees should not undertake work for the employer while they are furloughed. This will allow the employer to claim a grant of up to 80% of the employees’ wages for all employment costs, up to a cap of £2,500 per month.

At the employer’s discretion, it is possible to fund the differences between this payment and the employee’s salary.

James Leo explains, “Specific legal advice should be sought where necessary, as the situation is changing daily. This is an entirely new situation to everyone and employers are having to think about what steps they can take to facilitate home working including encouraging employees to ensure that they have the correct set-up at home to be able to work there if required to do so along with what options are available to staff and ensuring that their businesses are protected.”

For any further guidance on this issue or any other employment related matter, please contact James Leo on 0121 710 5970 or any other member of the Employment Team at Wilkes. You can also email us on employmentteam@wilkes.co.uk and a member of the team will be in touch.

 

The Employment Law team at Wilkes will be doing all they can over the coming days and weeks to keep you informed regarding the fast-moving landscape of Employment Law during these unprecedented times.

We are on hand and ready to offer you the support that you need at this difficult time.

Recent Developments

The last 24 hours saw an amendment to the Presidential Practice Direction on Coronavirus issued last week.

Due to the uncertainty surrounding how long special measures are required for the conduct of Employment Tribunal hearings, a review mechanism has been implemented.

The key message is that ALL in-person Employment Tribunal hearings will be converted to telephone case management hearings if the hearings were due to start on or before Friday, 26 June 2020.

Any in-person hearings due to start on or after Monday, 29 June 2020 will remain listed normally for the time being.

The review dates are 29th April and 29th May 2020, we will be sure to keep you informed as to what this means in practical terms to both employers and employees.

In addition, The Employment Appeal Tribunal (EAT) has announced that they will not be conducting any hearings (including telephone or Skype hearings) from Wednesday, 25 March 2020 until Wednesday 15 April 2020. Any appeals lodged with the EAT during this period can only be lodged by email.

It has also this afternoon (25th March) been announced that all London (Central) Tribunal hearings have been postponed until further notice. It is worth noting that this applies to both in-person and telephone hearings. A review of the situation regarding telephone hearings is currently scheduled for the 30th March.

If you have any questions or queries regarding this update please contact Sarah Begley on 0121 733 4312 or via email on sbegley@wilkes.co.uk.

Commercial Tenants - Factors To Consider During The COVID-19 Outbreak

With the outbreak of COVID-19 causing mass disruption to businesses across all industries commercial tenants could soon find themselves experiencing cash flow problems.

The March quarter day (25th) is looming and many commercial tenants will be concerned to have to find 3 months’ rent to pay to their Landlord.

In most instances it would be hoped that an amicable agreement could be made between landlord and tenant to ensure business continuity, such as a rent holiday or making smaller more frequent payments. However, what are the implications of not paying?

In this article Mark Hodgson, Partner in the Real Estate team at Wilkes identifies some of the possible ramifications that could arise as a result of non-payment of rent of which commercial tenants should take note.

There are a number of remedies available to commercial Landlord when a Tenant does not pay the rent on its due date, these include the following:

Forfeiture

Forfeiture is the Landlord’s right to terminate the lease where a tenant either fails to pay rent or is in breach of covenant or condition of the lease. The landlord’s right and date for forfeiture is based upon the clauses specified within the Lease, but the right usually arises where rent is overdue for between 14 and 21 days.

There are two options with regards to forfeiture for non-payment of rent. A landlord can either:

  1. Change the locks, commonly using a certificated bailiff to do so; or
  2. Forfeit through court possession proceedings, which can be coupled with a claim for arrears.

However, if after the right to forfeit arises the landlord does something which treats the lease as continuing, the right to forfeit the lease on the basis of those particular arrears will be irrevocably lost. Even if the Landlord formally demands rent, they will waive the right to forfeit.

The tenant does have the option of applying to the Court for relief from forfeiture. In very basic terms if the tenant purges the breach and pays the arrears and any landlord’s reasonable costs the Court may exercise its discretion to reinstate the lease. Tenants have six months to make the application or lose the right to do so.

Sue for arrears

The Landlord may issue a demand for payment, coupled with a threat that County Court Proceedings will be issued on expiry of the deadline set in the demand in default of payment.

Although an effective tool, unless court proceedings are absolutely necessary they are often rejected in favour of other methods of recovery because they can be expensive, and it can take months to receive a hearing date, if there are any grounds to dispute the demand.

Winding Up

The Landlord could proceed straight to winding up (liquidation) of the tenant on the basis that they are insolvent, as evidenced by the fact that they cannot pay debts as they fall due. Normally, a statutory demand will be served, but not necessarily. A statutory demand is a formal demand for payment of the debt, which an insolvency court would rely on in order to make a winding up order if the debt is not paid.

This is an expensive route to go down for the Landlord, especially if the tenant is insolvent. However, if the tenant is not insolvent (and has other assets to protect), winding up is a serious threat.

Commercial Rent Arrears Recovery (“CRAR”)

This procedure allows landlords of a commercial premises to instruct an enforcement agent (for example a certificated bailiff), after giving 7 days’ notice, to take control of a tenant’s goods and sell them in order to recover the value of the rent arrears.

If a Landlord proceeds down this route, it would waive their right to forfeit for the current arrears, although a new right would accrue if rent due on the next rent payment date is unpaid. It really depends on whether the landlord’s primary aim is to get the arrears paid, and continue with the tenancy, or to seek possession.

Pursuing a guarantor

If a person or company has agreed to act as a guarantor for the tenant’s covenants under the lease, it is open to the landlord to consider pursuing them if the tenant is in arrears of rent.

Depending on the provisions in the lease and the guarantee given by the guarantor, the usual way to enforce the guarantor’s obligations would be to issue court proceedings.  A landlord may also, in certain circumstances, be able to claim against a former tenant of the premises.

To conclude, how the landlord proceeds is dependent on the solvency of the tenant and whether the landlord wants to prioritise retaining possession. In the current climate they may appreciate the risk of an empty property if a tenant is evicted.

Mark recommends that the first course of action is to start a dialogue with the landlord to achieve a sensible and reasonable compromise.

The Real Estate team and the Property Dispute team at The Wilkes Partnership are on hand to help if you have questions relating to anything in this article. Please call 0121 233 4333 if you need any advice or assistance.

To our valued clients and partners,

 As the impact of COVID-19 continues to evolve we wanted to take the time to reassure you of the actions we are taking to protect our clients, colleagues and the wider communities, whilst working to maintain our services to you at this time.

Our commitment to you

We are open for business and will continue to provide you with the best service we can in the safest way possible.

With this in mind, and in-line with government advice, we have instructed our staff to minimise face-to-face contact until further notice, and where possible our staff will be working from home across all of our offices.

You can contact us as usual in a number of ways by either phone, email or by a pre- arranged video call. Our staff are set up and ready to respond to you as usual. We are working hard to mitigate any disruptions, and will continue to provide you with the legal service and advice you need, delivered with the high-level of service you have come to expect from Wilkes.

If you have an appointment scheduled your legal advisor will be in touch shortly to discuss the options, if they haven’t done so already.

Thank you for your patience during these unprecedented times .We look forward to returning to normal, with a handshake, as soon as possible.

The Wilkes Partnership Solicitors

Birmingham –  0121 233 4333

Solihull –  0121 733 8000