As reported in a previous Briefing Note, the Court of Appeal gave judgment earlier this year in an important case for landlords and administrators known as Re Game Station (Pillar Denton Ltd and others v Jervis and others  EWCA). The case is about rent payable by tenant companies in administration. The Court of Appeal’s decision is a return to the “pay as you go” approach that was law before the much talked about Goldacre case, which is no longer good law. The Court of Appeal’s ruling meant that where an administrator makes use of leasehold property for the purposes of the administration, the rent under the lease is payable as an expense of the administration for the period of the administrator’s use of the premises. The rent is to be treated as accruing from day to day. This applies whether the rent under the lease is payable in arrears or in advance and it does not matter whether the quarter’s rent is payable before, during or after the period of the administrator’s use of the property.
The Court of Appeal’s decision is now settled law as the Supreme Court recently announced that it has refused to hear an appeal in the case. The Insolvency Rules 1986 are currently under review and it is possible that the amended rules will include amended provisions on the liabilities that rank as expenses of an administration. However, we do not expect this particular point, now settled in the courts to be subject to further change, although there may be clarification on the ranking of other types of liabilities as expenses in administration.
For further information about the Court of Appeal decision please see the article Rent in Administration proceedings: the Court of Appeal decision in Re Game Station by Richard Baines, Partner and Head of Corporate Restructuring which appeared in the June issue of The In House Lawyer.