The Supreme Court has dismissed Marks & Spencer’s appeal in its dispute with the landlord of its former head office at The Point, Paddington.
Lords Neuberger, Clarke, Sumption, Carnwath and Hodge upheld a Court of Appeal decision last year which stripped the retailer of the right to claw back around £1.1m in rent and other charges after exercising a break clause in its lease of the premises.
Lord Neuberger said that it was “well established” that rent payable in advance is not apportionable.
In May 2014, the Court of Appeal overturned a High Court ruling that permitted M&S to claw back around £1.1m in rent and other charges after exercising a break clause in its lease of the premises.
Landlord BNP Paribas Securities Services Trust Company (Jersey) persuaded the Court of Appeal that the first instance decision wrongly gave M&S a “cashback” when it exercised its break clause to determine four leases of floors three, four, eight and nine of The Point, which it used as overflow space to its new HQ at nearby Waterside House, on 24 January 2012.
Lord Justice Arden overturned the ruling by Justice Morgan that the court could imply a term into the lease to enable apportionment of rent paid in advance for the period after the break date, in circumstances where the parties negotiated a break premium but said nothing about such apportionment of rent.
The order the Court of Appeal made was that, instead of the £1.1m the landlord was ordered to pay, M&S should only recover £204,972.
Helen Wheddon, partner at Stevens and Bolton LLP said: “The Supreme Court has given a clear restatement of the current law. Although the decision may appear harsh on tenants, landlords will be pleased that the courts will think long and hard before re-writing leases freely negotiated between the parties.”
