M&S loses in the Supreme Court

The Supreme Court has recently handed down a decision which finally provides clarity as regards a tenant’s obligation to pay rent at the end of a lease.

Marks and Spencer ( “M&S”) occupied office space at The Point in Paddington. In 2011 M&S exercised a break clause in the lease which had the effect of terminating the lease in January 2012. After the notices had been served M&S paid the rent that fell due in December 2011in full. This covered the period to March 2012. The lease terminated on the 24th January 2012 and M&S argued that they were entitled to a refund of £1.1 million for the period in which it had paid rent but no longer occupied the building.

The Landlord resisted the claim.

The question for the court to decide was whether the tenant could claim a refund of the rent that it had paid which covered the period after it had left the building. At first instance the court held that it was entitled to a refund. The Court of Appeal disagreed and said that M&S was not entitled to a refund.

The Supreme Court had to decide the point.

In a unanimous decision the Supreme Court agreed with the Court of Appeal. They decided that the tenant was not entitled to a refund. They said that the terms of the lease were clear and did not provide for a refund. Of course, the situation can be avoided by clear drafting at the outset so that the position is expressly covered by the lease. This is an important decision not just in the field of property law but has wider implications for all commercial agreements.

Ballantyne Grant are frequently involved in property cases and have the experience that you need when dealing with property law issues. If you are contemplating litigation or find yourself facing a claim then please do  not hesitate to contact Andrew Grant at our Chester office on 01244 394 230.

This article is for guidance only and should not be relied upon as specific legal advice.

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