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On appeal from: [2014] EWCA Civ 603

The Supreme Court unanimously dismissed the appellants, Marks & Spencers, concerning clauses within the commercial leases held between them and respondents, specifically the arrangements contained in their “break clauses”.

The appellants contended that after successfully satisfying the break clause in their lease contract by settling all rent and giving 6 months’ notice to the respondent, they should be entitled to a refund for the rent they had paid up until March 2012 because their lease had been determined on 24 January 2012. They applied to the High Court and it held that they were entitled to the refund. The Court of Appeal allowed the respondent’s appeal against that decision.

In delivering the leading judgment, Lord Neuberger stated that it is well-established that rent, whether payable in arrears or advance, is not apportionable in time in common law. The Apportionment Act 1870, s 2, provides that all rents and other periodical payments should be considered as accruing from day to day and be apportionable in respect of time accordingly. There is no doubt that s 2 applies to rent payable in arrear. Lord Neuberger stated that the conclusion of the Court of Appeal in Ellis v Rowbotham [1900] 1 QB 740 that the 1870 Act did not apply to rent payable in advance, is correct. He therefore concluded that given the clear, general understanding that neither the common law nor statute apportion rent payable in advance on a time basis, it would be wrong, save in a very clear case, to attribute to a landlord and a tenant, particularly where they have entered into a full and professionally drafted lease, an intention that the tenant should receive back an apportioned part of rent payable and paid in advance.

He clarified that the same conclusion applies to the car park licence fee and the insurance rent, but not to the service charge, in respect of which there is specific provision which contemplates repayment.

For judgment, please download: [2015] UKSC 72
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watching the hearing please visit: Supreme Court website