Tenant Not Entitled to Refund of Rent

The Supreme Court ruled last week that a tenant was not entitled to a refund of rent where it had exercised a break clause falling half way between rent payment dates and where the lease provided for rent to be payable in advance.

The case concerned a lease taken out by Marks & Spencer in 2006 under which rent was payable in advance on the usual quarter days. M&S exercised their right to break the lease on 24 January 2012 and it paid the rent due in advance on the preceding quarter day (25 December 2011). The issue for the court was whether M&S were entitled to a refund of the rent for the period between 25 January and 24 March 2014.

The lease did not expressly provide for reimbursement and so the case rested on whether the court would imply such a term. The High Court allowed such a term, the Court of Appeal did not and, last week, the Supreme Court agreed with the Court of Appeal.

The practical result is that tenants who wish to secure reimbursement of rent where break clauses do not coincide with rent payment dates need to ensure that clauses to this effect are included in their leases.