A victory for commercial lessors
The Court of Cassation has confirmed what the lawyers for lessors of tourist residences had been arguing for, except of course for those who had advised their clients to waive their rent claims. Operators of tourist residences must pay Covid rent in full.
Lessors of tourist and student residences (and in particular Pierre et Vacances, Residetudes, Belambra, etc.) can rejoice: the Cour de cassation has rejected all the operators’ arguments concerning Covid rents!
Positive law in this area rejects breach of the obligation to deliver and the exception of non-performance, as well as force majeure and partial loss of the property, which are inapplicable in this case.
The Court of Cassation’s rejection of the lessee’s arguments (force majeure, obligation to deliver, partial loss of the property)
On 30 June 2022, the Cour de cassation handed down two rulings confirming the positive law rejecting force majeure, breach of the obligation to deliver and partial loss of the property in the case of unpaid covid rent.
It even issued a clear statement on the substance and form:
“The general and temporary measure prohibiting the tenant from receiving members of the public does not result in the loss of the rented property and does not constitute a breach by the landlord of his obligation to deliver. A tenant is not entitled to rely on this as a case of force majeure in order to avoid paying his rent.
The question referred to the Court of Cassation
Were the shopkeepers, who were prohibited from receiving members of the public, entitled not to pay their rent?
Legal grounds and debates
The General Prosecutor’s Office of the Court of Cassation submitted a memorandum from the Ministry of the Economy, Finance and Recovery on the impact of the health crisis on shop rents.
This note shows that :
up to 45% of retail outlets were closed during the crisis ;
the total amount of rent and rental charges tied up in this way is estimated at more than €3 billion;
these businesses were able to benefit from three successive aid schemes (solidarity fund, fixed costs and rent assistance), as well as other support measures.
Court of Cassation rulings
State of emergency and ordinary contract law
Benchmark: the state of health emergency
Law of 23 March 2020: a state of health emergency is declared throughout France.
Decrees of 23 March 2020 and 14 April 2020: it is forbidden to leave your home until 11 May 2020, except to make essential purchases or purchase supplies required for your professional activity.
The aforementioned decrees and orders of 14 and 16 March 2020 issued by the Minister for Solidarity and Health:
the ban on receiving the public applies to businesses whose activity is not essential to the life of the nation and whose offer of goods or services is not a basic necessity.
The measures taken by the public authorities to combat the spread of Covid-19 have not ruled out the application of ordinary law to contractual relations.
State of emergency and loss of the leased property ruled out by the Cour de cassation
Key point: loss of the leased property
Article 1722 of the Civil Code: A tenant may ask for the price of the lease to be reduced or for it to be terminated if he has lost the thing he is renting under fortuitous circumstances.
The ban on receiving members of the public during a health crisis could not be equated with a loss of the leased property within the meaning of article 1722 of the Civil Code.
This prohibition :
was general and temporary ;
was aimed solely at protecting public health; and
was not directly related to the purpose of the leased premises as set out in the contract.
The shopkeepers were therefore not entitled to request a reduction in their rent.
State of emergency and the landlord’s obligations
Key point: the landlord’s obligations
The lessor is obliged to deliver the rented property to the lessee and to guarantee peaceful enjoyment of it, in accordance with its contractual purpose.
The general administrative police measure prohibiting the reception of the public does not constitute a breach by the lessor of his obligation to deliver.
Consequently, the shopkeepers could not rely on the defence of non-performance to suspend payment of their rent.
State of emergency and force majeure
Article 1218 of the Civil Code: In contractual matters, force majeure occurs when an event beyond the debtor’s control prevents him from performing his obligation.
It is an event: which could not reasonably have been foreseen when the contract was entered into; the effects of which could not be avoided by appropriate measures.
It follows from article 1218 of the Civil Code that a creditor who has not been able to benefit from the consideration to which he was entitled may not obtain rescission of the contract or suspension of his obligation by invoking force majeure.
Accordingly, the Court of Appeal correctly held that the lessee, as the creditor of the obligation to deliver the leased property, was not entitled to rely on force majeure.
The two rulings by the Cour de cassation confirm the solutions adopted by the courts, notably in the ADAGIO / PIERRE ET VACANCES cases and more generally in the case of tourist residences and unpaid rent covid :
- Grenoble Court of Appeal, Commercial Division, 5 November 2020, no. 16/04533
- Interim order of the Versailles Court of First Instance, 28 June 2021
- Interim order of the Versailles court of 28 January 2022
- Judgement of the Meaux judicial court of 10 March 2022
- Judgement of the Avignon judicial court of 24 March 2022
- Judgement of the Lisieux judicial court of 15 March 2022
- Judgement of the Mulhouse judicial court of 11 February 2022
- Judgment of the Meaux judicial court of 5 May 2022, 1st chamber, No. RG 21/01536
- Judgement of the Evry judicial court of 7 April 2022, 8th civil chamber, RG n°21/01846 and n°21/01848
- Judgment of the Judicial Court of Nanterre of 8 June 2022, RG n°21/09021
- Judgement of the Judicial Court of Nanterre of 8 June 2022, RG n°21/08985
- Interim order of the Nanterre judicial court of 12 August 2022, RG n°22/01425
- Interim order of the Nanterre judicial court of 18 January 2023, RG n°22/01744
- Judgement of the Paris judicial court of 22 March 2023, RG n°21/01226
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