It has been over six months since our blog post on administration expenses, in particular, the treatment of rent. In our previous post we updated you that the Court of Appeal had adopted a common sense approach, so where administrators use leasehold property, they must then pay rent (calculated on a daily basis) as an expense of the administration.
Most recently in the Game Station litigation, the Supreme Court (being the highest appeal Court of the UK) didn’t get spooked by the previous case law and on Halloween confirmed that the Court of Appeal’s decision will stand. The Supreme Court said that the appeal did not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court, particularly given that the case has already been the subject of judicial decision and reviewed on appeal.
If there are administrations and liquidations which have been kept open pending this decision, then steps can be taken to close these. Conversely, this decision means that the legal position is taken as always being this, so landlords may now start reviewing their portfolios to see if they have lost out. There is a risk of expense claims being brought in closed administrations and liquidations.
Of course, given the more flexible approach there will still be room for debate and further litigation. For example:
- how long have the administrators actually been in occupation?
- what do you need to do to terminate your occupation? Best practice would seem to be a written notice to the landlord, served in accordance with the lease.
- what happens with dilapidations claims, insurance, utilities and service charges?
Also, we understand that the Insolvency Service is considering whether more detailed provision on expenses should be included in the Insolvency Rules 2016. So it probably isn’t safe to say ‘game over’ just yet…