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Insurance (landlord and tenant) – Liability of tenants for rent during COVID-19 pandemic – Whether obligation on landlord to insure extended to loss of rent – Business interruption losses – Frustration – Illegality – Failure of consideration
Bank of New York Mellon (International) Ltd (BNY) was the landlord of a number of premises from which tenants conducted commercial operations. The businesses were forced by legislation to close from 22 March 2020 to July 2020, and again from 2 December 2020. BNY sought to recover rent under the leases for the period of closure. Each of the leases required BNY to insure the premises against defined "insured risks" with the interest of the tenant noted on the policy. The insurance had to cover damage by insured risks and loss of rent. The insured risks were physical perils, including fire, explosion, storm, tempest, flood and landslip. Each lease contained a "Cesser of Rent" clause whereby if the property became unfit to use by reason of an insured peril, payment of the rent was suspended. BNY obtained an insurance policy which covered property damage and also loss of rent where there was interruption with the business following the outbreak of any human infectious disease within 25 miles of the premises. It was agreed that the ruling of the Supreme Court in The Financial Conduct Authority v Arch Insurance (UK) Ltd  UKSC 1 meant that loss of rent was recoverable under the policy. BNY sought summary judgment for the rent.
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