Appeal Is Unanimously Dismissed

The Supreme Court’s ruling today in the landmark break clause case involving Marks & Spencer (M&S) will be of great interest to landlords and tenants, says a leading property litigation lawyer at law firm Irwin Mitchell.

The high street retailer was claiming the rent back from its landlord BNP Paribas Securities Services after it exercised a break clause on 24 January 2012 to end a lease on its premises at The Point in Paddington.

M&S had paid rent quarterly up to 23 March 2012 and sought to recover a refund for the two months period when it was not using the building.

Prior to the controversial High Court decision in May 2013 it had long been accepted that, without a clear and express apportionment provision the tenant is not entitled to a refund. However, the High Court implied a term into the lease allowing Marks & Spencer to reclaim the rent.

This decision was overturned in the Court of Appeal in May last year and was referred to the Supreme Court for a hearing on 7 October where today it handed down its judgment and unanimously dismissed the appeal.

If Marks & Spencer had been successful in this case, it was expected to have led to calls from a significant number of tenants for a portion of rent and services charges to be refunded, even if the lease failed to provide an express provision for this.   

The judgment provided a clear approach in relation to the issue of implied contractual terms with the Supreme Court stating that a 'term will only be implied if it satisfies the test of business necessity or it is so obvious that it goes without saying.'