A break for landlords — recent Court of Appeal decision restores certainty

By Lynne Horay

The Court of Appeal has overturned the decision of the High Court relating to the refund of rents for a period after a break option has been exercised.

In Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd & Another [2014], the Court of Appeal overturned a decision of the High Court concerning the repayment of rents made by a tenant to a landlord before a break date, which relate to period after the break date. Last May, the High Court held that where a tenant exercised a right to break part way through a quarter, and where the rent had been paid for the full quarter, a term should be implied into the lease entitling the tenant to a refund of rent for the period from the break date to the end of the quarter. The decision caused some concern and commentators noted at the time that it was a departure from the widely held view that, in the absence of an express provision in the lease, a tenant will not be entitled to a refund of rents paid before a break date that relate to a period after the break date.

The Court of Appeal has now ruled that it is not appropriate to imply a term into the lease entitling the tenant to a refund of rent that it had paid in advance. Lady Justice Arden said: ‘…the lease, read as the whole against the relevant background, will not reasonably be understood to include such a term, and thus a test for an implied term is not met.’ …

Click on the link below to read the rest of the Goodman Derrick briefing. 

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