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Marks & Spencer loses appeal over refund on prepaid rent

Marks & Spencer has lost its appeal against a court decision that it was not entitled to a refund after exercising a release clause in a commercial property lease.

The case involved four floors of office space at The Point in London.

M&S had a commercial lease which was due to expire in 2018. The terms included a break clause that offered it the option of terminating the lease in either January 2012 or January 2016.

M&S exercised the clause at the first opportunity and paid the basic rent for the whole quarter.

The lease ended on 24 January 2012 and so M&S demanded a refund on the rent it had already paid, for 25 January to 24 March 2012. It claimed that it was implied in the terms of the lease that it would receive a refund for sums paid in advance if it exercised the break clause.

The High Court ruled that M&S was entitled to a refund as it was implied in the terms of the lease.

However, the Court of Appeal overturned that decision. It pointed out that it would have been possible to envisage this situation at the time the lease was drawn up yet neither party had felt it necessary to stipulate that a refund would apply.

From the wording of the lease, there was no basis for implying a repayment of rent and other charges for the period following the break and therefore M&S was not entitled to a refund.

The Supreme Court has now upheld that decision.

M&S issued a statement saying: “We are naturally disappointed with the outcome but accept the decision. It wouldn’t be appropriate to comment any further.”

Please contact us for more information about the issues raised in this article or any aspect of renting or leasing a property.