Supreme Court dismisses Marks and Spencer's appeal for repayment of overpaid rent following lease break

Supreme Court dismisses Marks and Spencer's appeal for repayment of overpaid rent following lease break

In what circumstances is a tenant entitled to reimbursement of overpaid rent for a period following a lease break? The Supreme Court decided that a term for the rent to be repaid to the tenant for the period after termination could not be implied into four leases.

Background

Marks and Spencer plc (Appellant) v BNP Paribas Services Trust Company (Jersey) Limited and another (Respondents) [2015] UKSC 72

Marks and Spencer (M&S) were tenants of four floors in a building under four leases on the same terms. They served notice to break the leases. The break clause was conditional on there being no arrears of basic rent or VAT on the basic rent and on payment of a lump sum of just under £1m—reflecting exactly a year’s rent.

The break date fell in the middle of a quarter on 24 January 2012. On the quarter day prior to the break date (25 December 2011), M&S paid the full quarter’s rent, full quarter’s ‘car park licence fee’ (also reserved as rent) and the full quarter’s on-account service charge. Approximately six months prior to the break it also paid a year’s insurance premium.

The High Court allowed M&S' claim to be reimbursed the amount which related to the period after the break date ie from 24 January 2012 to 24 March 2012.

The Court of Appeal allowed the landlord’s appeal, deciding that the lease, read as a whole against the relevant background, would not reasonably be understood to include a term providing for such reimbursement and so the test for an implied term was not met.

M&S appealed to the Supreme Court.

What was the issue involved?

M&S accepted that there was no provision in the leases expressly obliging the landlord to pay the apportioned sum to the tenant. Accordingly, in order to succeed, M&S had to establish that such an obligation had to be implied into the leases.

What did the Supreme Court decide?

The Supreme Court dismissed M&S’ appeal.

It

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.