Further to my
article last week, we have today learned that the Court of
Appeal has found in favour of landlords in the much anticipated
case of Jervis & Others v Pillar Denton and Others
(the Game administration).
To recap: Game entered administration one day after its quarter
rent date fell due in March 2012 and its administrators relied on
previous case law (Goldacre and Luminar) that
they were not liable to pay sums that fell due (rent and service
charges) prior to their appointment, as an administration expense.
The landlords would have to prove for those sums in the usual way
as unsecured creditors.
The landlords challenged this and today succeeded. Accordingly, we
will now be dealing with a 'pay as you go' scenario in
which, if the administrators are using the leasehold premises for
the purposes of the administration, rent and service charges will
be payable as an administration expense for the period in which
they are in occupation.
This is a landmark decision which will have huge ramifications for
both administrators and landlords. Landlords will naturally be
pleased to see their position ameliorated in the current insolvency
regime. At first glance, it is a blow to administrators and other
classes of creditors as there will be less sums to distribute after
having satisfied landlords. However, at least administrators will
have certainty of their rental liabilities, if they occupy the
premises for the purpose of the administration. This may not be the
end of the matter, however, as an appeal to the Supreme Court is
being considered.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.