The Court of Appeal has today handed down judgment in the hugely anticipated litigation involving the Game group of companies, deciding that, where a company goes into administration and continues to trade from property, rent will be payable on a daily basis for the period during which the company actually occupies the premises.

Following a practice that had been developing since the decision in Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] EWHC 3389 (Ch), the Game group of companies went into administration on 26 March 2012, the day immediately after rent became due on the March quarter day. A pre-pack sale to a new company, Game Retail Limited, enabled the new company to take over the business and occupy more than half of the stores under a licence from the administrators. The rent that fell due for subsequent quarters was paid as an expense of the administration. The question that came before the Court of Appeal was whether rent should be paid for the period from the day the administration started until the next quarter day.

In his leading judgment, Lewison LJ concluded that the decisions in Goldacre and Leisure (Norwich) II Ltd and others v Luminar Lava Ignite Ltd (in administration) and others [2012] EWHC 951 (Ch) had "left the law in a very unsatisfactory state". Most landlords will be well aware of that effect: those administrators who were able to put the company into administration immediately after a rent payment date occupied the premises rent free until the next rent payment date. Equally problematic for administrators was the counter-position which meant that, if the premises happened to be occupied on a rent payment date, rent had to be paid as an expense of the administration for a full rental period, even if occupation was, say, only for a matter of a few days.

In a judgment that considers the previous case law and the statutory provisions in considerable depth, Lewison LJ (with whom Sharp and Patten LLJ agreed) concluded that the rent should be "treated as accruing from day to day". He also made clear that this rent was to be payable as an expense of the administration or liquidation.

In general, this decision will be seen as good news for landlords, who have no control over the timing of the administration of their tenant and have been very frustrated by the perceived unfairness of carefully-timed administrations, such as that of the Game group of companies. The decision will end the windfall that was, on occasion, afforded to either the landlord or the administrator by the old regime. It should create a fairer system whereby the landlord is paid rent for the period that the premises are actually used.

It is understood that the Court of Appeal has refused leave to appeal to the Supreme Court but an application to the Supreme Court for leave to appeal may still be made.

Pillar Denton Limited and others v Michael John Jervis, Stuart David Maddison and Game Retail Limited [2014] EWCA Civ 180