In the case of Marks & Spencer v BNP Paribas Services Trust Company (Jersey) Ltd and another [2015] UKSC 72. Marks & Spencer were granted a lease by BNP – from 20 January 2006 to 2 February 2018 – for a property in Paddington, London.
The Terms of the Lease
Under the terms of the lease Marks and Spencer were:
to pay the rent in equal, quarterly instalments in advance;
entitled to terminate the lease under a ‘break notice’ by giving BNP 6 months prior written notice. The break notice would only have effect if:
by the break date – 24 January 2012 – there were no arrears of rent; and
Marks & Spencer had also paid BNP £919,800 plus VAT;
Marks & Spencer complied with those terms.
Implied term?
Following this, Marks & Spencer brought a claim for the return of the apportioned rent for the period 25 January 2012 to 24 March 2012. It was Marks & Spencer’s argument that there should be an implied term in the lease to say that if they exercised the break clause they should be entitled to a refund from the landlord from the period 25 January 2012 up to including 24 March 2012 as they would not be occupying the property during that period.
In the first instance the Court found in Marks & Spencer’s favour stating that it should be an implied term that the money was returnable. This was reversed by the Court of Appeal and Marks & Spencer duly appealed to the Supreme Court. Unfortunately for Marks & Spencer, the Supreme Court agreed with the Court of Appeal and dismissed Marks & Spencer’s appeal.
Business Necessity
The Court’s reasoning relied upon the test for implication of contractual terms. It was said by the Court that a term will only be an implied term if it satisfied the test of ‘business necessity’, i.e that it is so obvious that it goes without saying. The Court found that after the rent was paid in advance, under previous precedents it would be wrong saving a very clear case to attribute and apply that the rent should be returned to Marks & Spencer.
The Court dismissed Marks & Spencer’s argument that it would make commercial common sense for it to be returned. The Court said that any anomaly within the working of the lease does not establish that a contract itself is unworkable or that the result would be commercially absurd.
If you have a dispute regarding your lease then please contact our property disputes solicitors in Leeds, Wakefield and Manchester on 0113 244 9931.
