Marks & Spencer loses legal battle over rent with former landlord BNP Paribas

The Supreme Court recently dismissed an appeal by Marks & Spencer seeking the return of an overpaid amount of rent from its former landlord BNP Paribas. The retailer had claimed it had paid rent for two months without occupying the building.

M&S had earlier occupied four floors of the BNP-owned building The Point in Paddington, London. In July 2011, it served a break notice and paid BNP three months of rent and service charges from 25 December 2011. However, its lease ended on 25 January 2012, meaning it had paid for two extra months though it did not occupy the building.

The London-headquartered retailer filed an appeal for the return of this excess amount that came up to £1.1m (€1.55m, $1.64m). This was initially allowed by the High Court, but BNP successfully counter-appealed. On 1 December, M&S lost its second appeal in the Supreme Court marking an end to the long-drawn legal tussle between the two companies.

M&S had argued that there should be an obligation implied in its lease requiring the landlord to return the rent for the unoccupied period even though nothing in this regard has been specified in the contract. However, the justices unanimously rejected this argument favouring the Paris-headquartered banker.

According to Ian Whitehead, property and litigation expert at Pinsent Masons, "[Supreme Court's decision confirms that] the status quo prevails and provides landlords with much-needed certainty regarding breaks which fall between rent payment dates".

He added that though the High Court's decision seemed to provide some chance for occupiers to claim back overpaid rent, the Supreme Court's decision closes all doors in this regard. "The Court's decision is pragmatic and landlords will be breathing a sigh of relief. They are now unlikely to face a barrage of claims from those tenants who have been watching M&S' claim progress with interest," Whitehead said.

While the company is disappointed with the Supreme Court's decision, it would accept the same, an M&S spokesperson said.