News

Archive for May, 2014

No implied term of apportionment

In our March newsletter we said it was understood that the common law principle relating to apportionment of rent was to come before the Court of Appeal ’soon’.  It was not until mid-May that judgement in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd and anor [2014] EWCA Civ 603 was given.  The appeal court overturned Mr Justice Morgan’s finding that a term may be implied into a lease terminated by the exercising of a break clause to the effect that a full quarter’s rent paid in advance should enable the tenant to get back that part of the rent relating to the period after the break date.  Giving judgement, with which the other judges concurred, Lady Justice Arden said she came to a different conclusion for the primary reason that the lease, read as a whole against the relevant background, “would not reasonably be understood to include such a term”.  There was no express term in the lease requiring the prior quarter day’s rent to be apportioned upon the break date.

Pursuant to the lease, rental was paid quarterly in advance on the usual quarter days.  The lease was for a term which expired on 2 February 2018 but could be terminated by the tenant on 24 January either in 2012 or 2016 by giving six months’ advance notice provided there were no arrears of rent and a substantial premium payment was made by the break date.  The tenant paid the premium by the break date having paid a full quarter’s rent on the December 2011 quarter day.  Having exercised the break, the tenant sought repayment of rent from the landlord for the period after 24 January 2012.  Lady Justice Arden considered whether the tenant was right so to do and followed the reasoning of Lord Hoffman in the Privy Council case of A.G. of Belize v Belize Telecom Ltd and anor [2009] 1 WLR 1988.  He had held that if there is no express term in an agreement none should be implied because the starting point was, as said Lady Justice Arden, “if the parties intended that a particular term should apply to their relationship they would have included a term to that effect rather than left it to implication”.  She concluded “In my judgement, when all the circumstances are considered, the correct inference to draw is that the parties proceeded on the basis that the loss from the payment of rent for the broken period should lie where it fell.  Thus no term for repayment is implied.”  We wait to see if an appeal will be taken to the Supreme Court.