Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd
| M&S plc v BNP Paribas Ltd | |
|---|---|
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| Court | Supreme Court |
| Decided | 2 December 2015 |
| Citation(s) | [2015] UKSC 72 |
| Court membership | |
| Judge(s) sitting | Lord Neuberger, President Lord Clarke, Lord Sumption, Lord Carnwath, Lord Hodge |
| Keywords | |
| Implied terms | |
Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72 is an English contract law case, concerning the implication of terms in commercial contracts, and business tenancies agreed between multinational corporations.
Marks & Spencer, which was subleasing ‘The Point’ in Paddington Basin, W2 from BNP Paribas, claimed there should be an implied right to recover money that it had paid under its lease when it exercised the right to terminate. The basic rent was £919,800 a year, plus VAT, and a car park licence fee. The rent had to be paid by the quarter. The landlord could recover by rent a ‘fair proportion’ of building insurance costs and building service charges. Clause 8 allowed M&S to end the lease on 24 January 2012 with 6 months advance notice if there were no arrears in rent, and this meant the rent needed to be paid up to the end of the quarter, which was longer than the time M&S occupied the property. M&S did so, and then claimed it should get back the rent from 25 January to 24 March 2012. The default law on apportionability would have suggested the rent could not be recovered, under the Apportionment Act 1870, but it was argued that it was an implication of the contract that it should be.
The Supreme Court held that the term in the lease to recover the extra portion of the rent should not be implied. The Court discussed and affirmed Lord Hoffmann's views in AG of Belize, noting that implication was part of the process of "determining the scope and meaning of the contract".
Lord Neuberger (with whom Lord Sumption and Lord Hodge concurred) said the following.
"[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
19. In Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, 481, Sir Thomas Bingham MR set out Lord Simon's formulation, and described it as a summary which "distil[led] the essence of much learning on implied terms" but whose "simplicity could be almost misleading". Sir Thomas then explained that it was "difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully-drafted contract but have omitted to make provision for the matter in issue", because "it may well be doubtful whether the omission was the result of the parties' oversight or of their deliberate decision", or indeed the parties might suspect that "they are unlikely to agree on what is to happen in a certain ... eventuality" and "may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur". Sir Thomas went on to say this at p 482:
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