Key Point

A term will only be implied into a contract if it satisfies the test of business necessity or if it is so obvious it does not require express inclusion.

The Facts

Marks and Spencer (M&S) held sub-underleases (the “Leases”) of four different floors of a London commercial property running from 25 January 2006 to 2 February 2018. Rent was payable “yearly and proportionally for any part of a year by equal quarterly installments in advance on the usual quarter days”. The Leases contained a break clause exercisable on 24 January 2012. On 7 July 2011 M&S served a break notice on BNP but made payments of rent due up until 24 March 2012. M&S brought a claim for the return of rent for the period between 24 January 2012 and 24 March 2012, arguing that a term stating that, if the tenant exercised the break option, it should be entitled to a refund of a proportion of rent, should be implied into the Leases.

The Decision

The Supreme Court dismissed the appeal. A term will only be implied into a contract if it satisfies the test of business necessity or if it is so obvious it does not require express inclusion.

Comment

The test was clear and had been consistently applied by the courts. Rent, whether payable in arrear or advance, is not apportionable in time under common law and the rule in Ellis v Rowbotham confirmed that the Apportionment Act 1870 did not apply to rent payable in advance. Neither the common law nor statute supported M&S’s claim.

Marks and Spencer plc (Appellant) v BNP Paribas Securities Services Trust Company (Jersey) Limited