firm news

Russell May
Russell May,
SENIOR ASSOCIATE - SOLICITOR
more
Tenant not entitled to refund of rent after exercising break clause
02 December 2015

Marks and Spencer plc was the tenant, and its lease contained a break clause that allowed the lease to be determined on 24 January 2012. Rent was payable in advance in equal instalments on the usual quarter days. The break clause was conditional on payment of arrears plus an additional payment of a penalty equivalent to a year's rent. Marks and Spencer complied with the notice requirements of the lease when exercising the break clause. Although the landlord invoiced it for an apportioned amount in relation to the period from the final rent payment day up to the proposed break date, Marks and Spencer took a cautious view and paid a full quarter's rent.

Following the termination of the lease, it requested a refund of rent from the Landlord in respect of the period from the break date up to the next rent payment day. The Landlord refused. Marks and Spencer applied to Court, arguing that it was entitled to such a refund, and surprisingly the High Court agreed.

However, and unfortunately for Marks and Spencer, the Court of Appeal overturned the original High Court decision. The case was then appealed to the Supreme Court, which has now confirmed that the correct legal position was as practitioners had previously thought, namely that a tenant could not recover rent paid in advance for the period after the break date, unless there was a specific provision in the lease that allowed the tenant to do this.

So the advice to any tenant is this; if your lease is going to contain a break provision, either:

Make the break date the day before rent falls due (and therefore a rent refund is irrelevant); or

If the break date is going to be mid-way through a rent period, ensure that the lease also expressly provides for the tenant to be able to claim a rent refund, after the lease has been broken, in respect of the rent for the period after the break date.

If you have any queries regarding a property dispute, please contact our Dispute Resolution Team on 0118 959 7711 or submit an enquiry.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

award winning law firm

Boyes Turner are proud to have received the following awards and recognition.

awards