17 December, 2016
The Court of Appeal has reversed the decision of the High Court in the controversial case of Marks and Spencer plc v BNP Paribas Securities Trust Company (Jersey) Ltd and ruled unanimously for the landlords.
Marks and Spencer v BNP – Court of Appeal Decision
On December 2nd 2015 the Supreme Court handed down their eagerly anticipated Judgment in the long running case of Marks and Spencer plc v BNP Paribas Services Trust Company (Jersey) Ltd & another. This case reviewed the situation where the tenant exercised a break option but where the break date fell within a rental period.
The main question was whether the tenant was entitled to a return of the rent, which dealt with the period after the break date. By way of background, in July 2011 M&S gave notice to break all four of the leases it held with BNP. The lease did not expressly provide for a repayment of an apportioned amount. M&S sought to recover the sum of £1,147,696.25 from the landlord, money which accrued after the break date.
M&S argues that a repayment provision should be implied into the lease to allow them to recover the rent, insurance charge and the car parking fee paid in advance. They argued that it was contrary to their reasonable expectation that they would have to pay the whole quarter’s rent when they had only occupied for one month after the last payment date.
In the first instance the Court held that there was an implied term and that M&S would receive their advanced payments back. Both the Court of Appeal and the Supreme Court found that it would be unreasonable to imply such a term. M&S therefore would not be refunded the payments that they had made in advance.
M&S also argued that the Apportionment Act should be interpreted to apply to payments in advance not just in arrears, which Lord Neuberger rejected.
How will this impact on Landlords and Tenants?
It is easy to see the effect this Judgment will have. Landlords could easily take advantage of this and draft the break date to fall a day after a rental payment period, which would render the tenant liable for the rest of the rent for the payment period. Tenants should be aware of this and either try and include an apportionment clause or budget accordingly.
If you would like to discuss this case in more detail or would like to consider your legal options with our property litigation solicitors in Bournemouth please contact Peter Rolph on 01202 294 566 or email email@example.com.