Archive for March, 2014

Game, set and match?

The administration of the Game group of companies left many landlords clambering for their rent.  If the administrators enabled trade to continue from a store, could it be claimed by the landlord that rent was payable as an expense of the administration or did the landlord simply have to prove for the debt along with all other claimants?  Game was the tenant of many hundreds of leasehold retail properties the landlords of which grouped together to bring an appeal before the Court of Appeal in Pillar Denton Ltd and others v Jervis and others [2014] EWCA Civ 180.

Giving judgement, Lord Justice Lewison set out the common grounds between the parties.  Firstly, “rent (whether payable in advance or in arrear) is not apportionable in respect of time; and it is also common ground that the rent payable in advance is not apportionable under the Apportionment Act 1870”.  Secondly, pursuant not to the common law but to equity, “whether rent is payable as an administration expense is not a question of an exercise of the court’s discretion.  Either it counts as an expense, or it does not.”

Reviewing the relevant cases, Lord Justice Lewison said the law was “in a very unsatisfactory state”.  In his judgement, however, the office holder (administrators in this case) must make payments at the rate of the rent for any period during which he retains possession of the demised property for the benefit of the winding up or administration.  The rent will, he said, accrue from day to day.  The duration is a question of fact “and is not determined merely by reference to which rent days occur before, during or after that period”: a very satisfactory outcome for the landlords in this case.

It is understood that the common law principle relating to apportionment of rent is also to come before the Court of Appeal soon.  We await the outcome of that case, too, with interest.  If you wish to hear more in the meantime, contact Hatherleigh Training.