Important ruling on the merits: rent reduction due to corona!

The Hague District Court has the honor as the (first known) judge on the merits to decide on rent reductions for a tenant due to a mandatory closure by measures due to corona.

This ruling, published on January 27, shows that landlord and tenant must share the pain. For the period when the catering business was compulsorily closed, the tenant only has to pay 50% rent. For the period when the catering business was open with restrictions, a rent of 75% is due.

Deficiency and unforeseen circumstance

As in so many cases, there was a compulsory closure of the catering business. Despite the parties first trying to work things out between themselves, at some point the tenant stopped paying rent. The proceedings ultimately involved rent arrears of two months. The court first ruled that this was insufficient to dissolve the lease. The tenant was not obliged to vacate the leased property.

This was followed by the usual assessments, as also addressed in several summary judgments. Among other things, the judge ruled that the mandatory closure due to a government measure constituted a defect. The judge also determined that unforeseen circumstances existed. The lease agreement did not provide for the current situation. The lease is in imbalance. Neither party is at fault for this. Therefore, the pain must be shared fairly. The standards of reasonableness and fairness result in the lease being amended. The fact that the lease agreement did not allow for rent suspension did not prevent the invocation of unforeseen circumstances. The court also referred to one of the few decisions on appeal in summary proceedings, that of the Amsterdam Court of Appeal of September 14, 2020.

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Sufficiently substantiated revenue loss

It is important to emphasize, however, that the court found that the tenant had sufficiently substantiated the loss of turnover. Various documents such as annual accounts had been submitted as evidence. This will vary from case to case. If insufficient relevant financial documents had been submitted, the verdict could also have been different. Also, it cannot be ruled out that some rental agreements already provide for this type of situation. In that case, too, the judgment could have turned out differently.

How to move forward?

The ruling is expected to be cited often by tenants. But one swallow does not make a summer. Each case stands on its own. Parties can go to court, but know that reasonableness and fairness by judges play an important role in such issues. Advice is and remains, therefore, to reach mutual agreements on the amount of rent owed.

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