The Supreme Court has issued a landmark judgment for landlords by dismissing Marks & Spencer’s appeal that it should be able to claw back rent paid after exercising a break clause.
It upheld a decision last year that stripped the retailer of the right to claw back around £1.1m in rent from the owner of its former offices at the Point in Paddington, W2, BNP Paribas Securities Services Trust.
The judgment clarifies the principle that rent payable in advance is not apportionable.
Allen & Overy’s real estate litigation specialist Jane Fox-Edwards, who acted for the landlord, said: “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 closed that door firmly.”
The high court had previously ruled that M&S could claw back the rent it paid for the period after it exercised the break clause, but this was overturned by the Court of Appeal.
Helen Wheddon, partner at Stevens and Bolton, added: “Although the decision may appear harsh on tenants, landlords will be pleased that the courts will think long and hard before rewriting leases freely negotiated between the parties.”
