Landlords can rejoice following the Game administration decision

Landlords can rejoice following the Game administration decision
When will unpaid rent accrued during the administration period have to be paid? Joe Bannister, restructuring partner, and Mathew Ditchburn, real estate disputes partner with Hogan Lovells comment on the ruling in Pillar Denton v Jervis and say it’s a good decision for landlords.

Original news

Pillar Denton Ltd and others v Jervis and others [2014] EWCA Civ 180, [2014] All ER (D) 212 (Feb)

The Court of Appeal has returned to the ‘pay for what you use’ principle in its decision in the Game appeal handed down on 24 February 2014. In a leading judgment by Lord Justice Lewison, the Court of Appeal decided that an office holder (be it an administrator or liquidator) must make payments at the rate of the rent for the duration of any period during which he retains possession of the property for the benefit of the administration or liquidation (as the case may be). The rent is to be treated as accruing from day to day and is payable as an expense of the administration or liquidation.

The decision, which overruled both Goldacre (Offices) Ltd v Nortel Networks UK Ltd (in administration) [2009] EWHC 3389, [2010] All ER (D) 54 (Jan) and Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd (in admin) [2012] EWHC 951 (Ch), [2012] 4 All ER 894, applied the salvage principle (an equitable principle) which deems that a liability incurred before liquidation or administration to pay rent under a lease relates to the period of use for the purposes of administration as if it were a debt incurred by the administrators or liquidators, and thus is payable as an expense. The inability at common law to apportion rent that is payable in advance accordingly does not apply.

What happened in the case?

The Game group was yet another retailer making an attempt to negotiate a rescue which didn’t work out and on the rent quarter day (25

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