Break Notices – a Term Will Not Be Implied to Refund the Excess Rent Following the Break

Case Study: Lessons Learned from a Break Notice Dispute

The Supreme Court has handed down the eagerly awaited decision in the case of Marks and Spencer PLC v BNP Paribas Securities Trust Company (Jersey) Ltd.

This case concerned the tenants, Marks and Spencer PLC, operating the break clause in their lease. Marks and Spencer PLC had paid a full quarter’s rent that fell due in advance and wanted to reclaim the overpayment for the period after the break date.

The Court unanimously held that a term would not be implied to refund the excess rent and other payments following the exercise of a break clause. Under the terms of the M&S lease the rent was payable in advance, and the court held that there was no basis upon to which imply provisions for apportionment. The terms of the lease were negotiated and were carefully and professionally drafted with the benefit of legal advice. Therefore it could not be found that there was an intention between the parties that M&S should be refunded an apportioned part of the rent payable and paid in advance especially as this has not been expressly stated in the lease. Nor could it be found that the implied provision for apportionment was necessary for the lease to make commercial sense.

What this means

A tenant will not be able to claim a sum of apportioned rent from his landlord following the determination of his lease mid-quarter if this is not expressly provided in the lease. Tenants should ensure there is an express clause in the lease providing that the landlord refunds any overpayment following termination, or ensure that the termination date falls at the end of a rental period.

Case: Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2015] UKSC 72