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UK Supreme Court upholds Landlords’ position in M&S v BNP Paribas case

 

Today the UK Supreme Court handed down its much anticipated judgment in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited (and another) and ruled unanimously for the landlords.

The case concerned whether M&S could recover from its former landlords rent relating to the period after the break date in its lease and the end of the rent quarter in which it fell. M&S served a valid break notice in July 2011, paid the December quarter’s rent in full and on time and paid the break premium on 18 January 2012. Having validly exercised the break, M&S then demanded repayment of the basic rent that related to the post break period. There was no express term in the lease entitling M&S to a reimbursement.

The Supreme Court found that, save in very exceptional circumstances, an express term would be needed to entitle a tenant to a refund of rents paid in advance relating to the period after a conditional break date. In giving its judgment the Supreme Court took the opportunity to clarify the law on implied terms generally and to confirm that the Apportionment Act 1870 does not apply to rent payable in advance. Allen & Overy’s Head of Real Estate, Imogen Moss, and Real Estate Litigation specialist, Jane Fox-Edwards, acted for the landlords, the BNP Paribas companies as trustees for Britel Fund Trustees Limited and WELPUT.

Jane commented: “The case law surrounding break clauses has produced some harsh decisions for tenants over the past few years. The tenant here was looking for a way of ameliorating the effects of unfavourable lease terms but the Supreme Court has firmly closed that door. In so doing, it introduces some welcome certainty which benefits everyone. But the judgment applies to contract law more widely. In keeping with other judgments this year, the message from the Supreme Court is clear. Where there is a detailed commercial contract the Court will respect the bargain struck and veer away from interfering with what the parties have said.

To read the full judgment please click here.

For all media enquiries please contact Rebecca Hooper, rebecca.hooper@allenovery.com, on +44 (0) 20 3088 2152.

 

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