On 24 February 2014 the Court of Appeal delivered its unanimous judgment in the long awaited ‘Game’ appeal (Pillar Denton Ltd and Ors v Jervis & Ors  EWCA Civ). The decision has clarified the obligations on the part of administrators to pay rent to a landlord where a tenant company goes into administration.
It is now confirmed that rent accruing during a period where the administrator uses the premises for the purposes of the administration will be treated as an expense of the administration irrespective of the date on which the rent fell due. Rent will therefore be calculated on a daily basis for the period in which the administrator uses the premises and paid accordingly.
The previous decisions in Goldacre and Luminar Lava have therefore been overruled. The change will be a welcome one for landlords who were becoming all too used to tenant companies entering administration on the day immediately following a quarter day, thus avoiding liability to pay rent even where administrators used the premises for the purposes of the administration, for example by continuing to trade. This also means that rent will be paid as a priority ahead of other provable debts, thus increasing the chances of recovering rent arrears.
It is almost certain that the decision will be appealed to the Supreme Court but, at the moment, the pragmatic decision of the Court of Appeal remains. Watch for further comment and analysis from the Real Estate Dispute Resolution team in due course.