Latest Ruling To Be Welcomed By Landlords

A High Court decision which would have allowed Marks & Spencer to claim a refund of £1.1m in rent has today (14 May) been overturned by The Court of Appeal.

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 has now been overturned.

If Marks & Spencer had been successful in this case, it was expected to have led to a significant number of landlords being forced to refund tenants a portion of rent and services changes, even if the lease failed to provide an express provision for this.

Expert Opinion

The Court of Appeal’s unanimous decision will be a welcome decision for landlords and follows a long and clear line of authority before the controversial decision in May last year. It also reiterates the importance for tenants of ensuring that any break clause is either on a date immediately before a rent payment or that the lease includes an express repayment provision. Given the sums involved in this case, however, we wait to see if Marks & Spencer will try their luck with an appeal to the Supreme Court.”