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Marks And Spencer V BNP Paribas Securities Services Trust Co (Jersey): Rent And Break Clauses

Post Scriptum: this decision was reversed on appeal.

In the case of Marks and Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2013] EWHC 1279 (Ch) the High Court held that M&S was entitled to reimbursement of over £750,000 in respect of rent and other charges it paid prior to exercising a break clause in its lease.

The lease required M&S, as a condition of the valid exercise of its break clause, to have paid all rent and other charges due up to the date the break notice expired. Rent was payable under the lease quarterly in advance (in four instalments, payable on the four quarter days).

M&S served the break clause to expire on 24 January 2012. It complied with the rent payment clause by paying the rent falling due on 25 December 2011 for the quarter from that date up until 23 March 2012.

Having exercised the break clause to bring their lease to an end on 24th January 2012, M&S subsequently sought to recover the part of the rent and other payments it had made on 25 December 2011 that related to the period from 25 January to 23 March 2012 i.e. the period after the lease had come to an end by reason of the service of the break notice.

The Judge at trial accepted that although the lease did not expressly provide that such overpaid rent and other charges should be repaid, such a term should be implied into the lease because a reasonable person would infer that any such overpaid rent and other charges would be repayable in the same circumstances. This decision represents a development away from a strict construction of the written contract between landlord and tenant and will be welcomed by tenants finding themselves in the same position on exercising break clauses in their leases.

If you want more information on this case, please contact Julian Johnstone, partner or Benjamin Lomer, senior associate, in Druces LLP’s Property Litigation Team.

This note does not constitute legal advice. It is general guidance only on the law as it as at 12 September 2013.

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