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Unless the lease makes express provision to the contrary a tenant

will not be able to recover from its landlord any prepaid rent or
other sums which relate to the period after a break date.
Marks and Spencer had exercised its right to break under
four leases in West London from its landlord, BNP Paribas.
Despite there being no express provisions in the leases,
Marks and Spencer claimed for recovery of 1.1m of pre-paid
rent and other charges relating to the period after the break
In a ruling last year the High Court departed from the widely
accepted position that, without an express provision to the
contrary contained in a lease, a tenant may not claim a refund
of sums paid to its landlord in advance which related to the
period following the break date. The High Court implied terms
into the leases entitling the tenant to an apportioned refund of
monies which related to the period following the break date,
notwithstanding that the leases were silent on the point.
In their decision last week, the Court of Appeal disagreed.
BNP Paribas have successfully appealed the decision on the
grounds that the High Court wrongly gave Marks & Spencer
a cashback. It was held that the lease, read as a whole
against the relevant background, would not be reasonably
understood to include such a term, and thus the test for an
implied term is not met (Lady Justice Arden).
Landlords can breathe a sigh of relief as the previous
longstanding position that tenants would not be entitled to a
repayment has now been reinstated. This decision stresses
the importance for a tenant of expressly including in any
break clause rights to reclaim prepayments of rents relating
to the period after the break date. In the absence of such
provision, a tenant is likely to end up out of pocket and with
little support in the courts.
A recent case, also involving BNP Paribas, has highlighted that
developers and investors should carefully consider from whom
they require a direct obligation of confidentiality when they seek
funding for a project.
The Dorchester Group were interested in acquiring a
development site and, following significant due diligence, had
an offer accepted (subject to contract).
BNP Paribas were instructed to find funders on Dorchesters
behalf and entered into a non-disclosure agreement with
Dorchester which required back-to-back agreements from
any third parties approached in relation to the information
provided by Dorchester.
BNP Paribas introduced Dorchester to Inter-IKEA, without
requiring such an agreement. Inter-IKEA received information
from BNP Paribas and from Dorchester directly (including the
level of the accepted offer).
Inter-IKEA then gazumped Dorchester and acquired the
site without carrying out any of their own development or
economic appraisals.
The case brought by Dorchester against BNP Paribas and
Inter-IKEA was settled confidentially before a ruling, but the
claimants solicitor has reported in the legal press on the case.
It appears uncertain whether or not the court would have
accepted the claim against either party on the basis that BNP
Paribas provided only a short teaser to Inter-IKEA and the rest
of the information came directly from Dorchester.
Developers and investors should think carefully before relying
on a back-to-back clause in a confidentiality agreement.
The preferred approach is a direct NDA or confidentiality
agreement with the proposed funder or, at the very least, to
insist on seeing any back-to-back agreement. In addition,
careful management of the distribution channels for
confidential information need to be established and enforced.
If you would like any further information on the above matters
please get in touch with your usual Macfarlanes contacts.
MAY 2014
DD: +44 (0)20 7849 2734
Real estate forms an important core area of the Macfarlanes practice. Our combined expertise in real estate and the specialist
practice areas that form part of that group make for a formidable platform from which we are able to deliver a distinctive and client
focused service.
Recent examples of our work include:
T: +44 (0)20 7831 9222 F: +44 (0)20 7831 9607 DX 138 Chancery Lane www.macfarlanes.com
This note is intended to provide general information about some recent and anticipated developments which may be of interest.
It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.
Macfarlanes LLP is a limited liability partnership registered in England with number OC334406. Its registered office and principal place of business are at 20 Cursitor Street, London EC4A 1LT.
The firm is not authorised under the Financial Services and Markets Act 2000, but is able in certain circumstances to offer a limited range of investment services to clients because it is authorised and regulated by the Solicitors Regulation Authority.
It can provide these investment services if they are an incidental part of the professional services it has been engaged to provide. Macfarlanes May 2014
DD: +44 (0)20 7849 2257
We advised Development
Securities on the construction
aspects of 12 Hammersmith
Grove, which was recently
forward-financed by SWIP
Property Trust with a
commitment of 92m. This is
the second and final phase of
a regeneration scheme in the
centre of Hammersmith and will
provide 167,000 sq. ft. of prime
office space over eleven floors
as well as restaurant space
and new public realm, due for
completion in 2016. The first
phase of the development, 10
Hammersmith Grove, was also
funded by SWIP Property Trust
and completed in 2013.
Acting for Stanhope plc as
developer on completion and
opening of the 310,000 sq
ft Old Market Hereford, an
open-air shopping centre
located in the heart of Hereford
city centre anchored by the
citys only department store, a
three-storey, 85,000 sq ft full
offer Debenhams. The scheme
delivers a strong line-up of
fashion retailers including H&M,
Next, Fat Face, TK Maxx and
Outfit as well as LOccitane
and Clarks. Waitrose has also
opened a 24,000 sq ft store, its
first in Hereford.
Advising Arena Racing
Company on the replacement
of the existing all-weather track
at Wolverhampton Racecourse.
The new Tapeta surface will
be installed in time for racing
to resume later in the summer.
This is the first example of the
use of a Tapeta surface at a UK
Acting for Legal & General
Property on the establishment
of its second UK Property
Income Fund (UK PIF II), a fund
targeting a gross asset value
of 750m and established for
the purpose of investing in an
income-focused diversified
portfolio of UK commercial
property. We subsequently
acted on the first property
investment of UK PIF II: the
acquisition of the Overgate
shopping centre in Scotland,
followed by the purchase of
two city centre buildings in
Birminghams business district
from receivers for 87.5m.
For further information regarding our real estate expertise
please contact: