A recent court decision in England offers a glimmer of hope to landlords whose tenant has gone into administration, and where the administrator is still occupying all, or even only a small part, of the premises. 

In the case of Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) the Chancery Court ruled that if a tenant who is in administration is continuing to occupy even a small part of premises on the first day of the rent quarter, then rent for the full quarter is payable.  If the administrator vacates the premises during the quarter, he is not entitled to any refund of rent for the unused part of the quarter.

The Court did explain, however, that the obligation on the administrator to pay the landlord does not give the landlord an immediate right to be paid on the rent payment day itself, as the landlord has to wait to find out what other claims there are that also have priority besides his own, and that if there is not sufficient money available then he may not be paid at all or in full.

This decision, although not binding in Scotland, and although possibly subject to appeal, does give some hope to landlords in the face of the all too commonly occurring problem of tenants going into administration.

Further information
For further information on liabilities and enforcement of leases, please contact Ken Gerber, Fiona Stephen or Katrina Lumsdaine.

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