Supreme Court backs landlords on rent ruling - Palmers Solicitors

Supreme Court backs landlords on rent ruling

The Supreme Court has refused an application to challenge a Court of Appeal ruling on rent payments during administrations.

In February this year, the Court of Appeal ruled in favour of the landlords of stores occupied by retailer Game when it went into administration in March 2012.

Game had filed its notice of intention to appoint administrators just after the March 2012 quarter day, giving the business a three-month rent-free period.

The Court of Appeal’s decision meant that businesses in administration must pay rent on a “pay as you go” daily basis, irrespective of when rent falls due, with rent being treated as an administration expense.

As a result of the Appeal Court ruling, landlords British Land, Hammerson, Land Securities and Intu were due to receive rent totalling more than £3 million.

The retailer sought permission from the Supreme Court to appeal the ruling but on 31 October, the court said it would not hear the case “because the application does not raise an arguable point of law of general public importance which ought to be considered…bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal.”

Ian Fletcher, director of policy at the British Property Federation, which represents real estate owners and investors, said: “This confirms that the decision made by the Court of Appeal in February was the correct one, and it is a relief to see that there is no more uncertainty surrounding the case. Common sense has prevailed and those administrators who had been holding back on paying rent due to landlords will now have to accept the inevitable.

“The decision has paved the way for a much fairer and sensible system and we would like to see the Insolvency Service take steps to ensure that this case is used as best practice for all future retail insolvencies, to ensure that landlords’ interests are safeguarded in the future.”

The Supreme Court should now give greater certainty to landlords that they will be paid the full rent due for the time property is used during the administration. For more information on insolvency issues, including recovery action, please contact Andrew Skinner.