No Returns Following Supreme Court Ruling

04 February 2016

The Supreme Court has confirmed that save for exceptional circumstances it is reluctant to step in and imply a rent apportionment clause into a commercial lease.

As a result, a tenant cannot recover an apportioned amount of rent that it has paid quarterly in advance if it exercises a break clause mid-quarter and the lease contains no apportionment clause.

The ruling puts the onus back on the tenant to negotiate, at an early stage, an apportionment clause into their leases to ensure there is express provision to recover any overpaid rent.  Commercially the decision is not helpful for retail clients.  For example, as a result of the decision M&S was liable to pay a whole quarter's rent despite the fact the break date fell soon after a quarter day, and a break premium had already been paid.

For those readers who are interested in the decision please click here to read our case summary on RPC's Built Environment blog.

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