Marks And Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd & Anor
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LADY JUSTICE ARDEN
- LORD JUSTICE FULFORD
Areas of Law
- Contract Law
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
This case examined whether a term could be implied into a lease agreement to allow the lessee, Marks and Spencer, to reclaim rent paid for a period after exercising a break clause to terminate the lease early. The initial court ruling allowed the implication of such a term, but it was overturned on appeal. The appellate court held that the lease, read as a whole and against the relevant background, did not reasonably support such an implied term and that the existing terms of the lease did not necessitate such an implication.
Judgment
Lady Justice Arden :
This appeal concerns a “break clause” in a lease, that is, a clause which permits the tenant to terminate the lease on a date (“the break date”) earlier than the last date of the term. Lessees often negotiate such clauses, recognising that the lessor may well demand compensation, often in the form of a “break premium”, payment of which is made a pre-condition of a “break” under the break clause. Here the parties negotiated a break premium but said nothing about an apportionment of rent, which the lease requires the tenant to pay in advance. Can the court imply a term which enables the lessee to get back that part of the advance payment of rent which relates to a period (“the broken period”) after the break date, by when the lease will have terminated? The closely-reasoned judgment of Morgan J dated 16 May 2013, which is the subject of this appeal, held that the court could do so. The lessor, BNP Paribas (“BNP”), now appeals.
I have come to a different conclusion from the judge for the primary reason that in my judgment the lease, read as a whole against the relevant background, would not reasonably be understood to include such a term, and thus the test for an implied term is not met. I start with the principal terms of the lease, some background about the exercise of the break clause and these proceedings and a summary of the judge’s detailed reasoning. Then I set out my full reasons on the basis of the parties’ submissions on this appeal.
What were the relevant express terms of the lease?
There are in fact four leases (strictly, sub-underleases) between the parties, each for a separate floor of the same office block in Paddington, London. We have considered the terms of only one of those leases as they are all on the same terms, so far as material. The lessee is Marks and Spencer plc (“M&S”). The parties entered into a deed of variation dated 15 January 2010 which “restated” the terms of the lease. The previous terms of the lease are not material. I have set out the critically relevant terms of the lease in the Annex to this judgment.
Basic Rent was payable in advance on the usual quarter days, with additional payments for car parking, insurance and services. The reddendum in clause 2 of the restated lease setting out the grant or demise to the tenant and the terms as to rent (“the apportionment clause”) uses the words “proportionately for any part of a year.” The judge held that the apportionment clause applied not on