Retailer loses long-running landlord and tenant dispute

A landmark case at the Supreme Court should provide some reassurance to landlords, commercial dispute resolution partner Lisa Ginesi has said.

The case in question, which concluded last month, involved a long-running legal battle between Marks & Spencer and its former landlord BNP Paribas.

The retail giant had claimed to have overpaid £1.1million in rent and had launched a bid to have the money repaid.

The dispute dates back to 2011, when M&S served a break notice on four floors of its former premises in Paddington, London.

The store paid the landlord rent and service charges for a three month period from Christmas Day 2011 – even though its lease came to an end on January 25th, 2012.

This meant that M&S had paid charges for two months when it wasn’t actually occupying the building.

This triggered the legal battle over whether the chain could claw back the money it had paid for the period it wasn’t at the premises.

Judges agreed unanimously that the retailer’s argument – that there should be an obligation implied in its lease requiring the landlord to give back the two months’ money – did not hold water.

The decision effectively preserves the status quo and will be welcomed by landlords, who were concerned about the possible implications had the highest court in the land found in favour of the former tenant.

A spokesman for M&S said: “We are naturally disappointed with the outcome but accept the decision. It wouldn’t be appropriate for us to comment further.”

The decision should result in astute tenants insisting that new leases, that include a landlord or tenant’s break option, also include an express requirement that any rent paid in advance beyond the expiry date of the break notice is refunded.