A GAME CHANGER? UPDATE – The Supreme Court refuses Game’s application to appeal the Court of Appeal’s February 2014 JudgmentNovember 3, 2014
In February this year we reported on the Court of Appeal’s judgement in the case of Pillar Denton Limited and others v Game Retail Limited and others  EWCA Civ 180.
In this case the Court of Appeal considered the issue of treatment of rent payable by a corporate tenant that enters administration, and whether such rent was payable as an expense of an administration (or liquidation) or whether it was a provable debt. In particular, the Court looked at whether part of an instalment of rent payable in advance could be treated as an expense of an administration (or liquidation). In reaching its decision the Court considered the effect of the judgments given in the Goldacre and Luminar cases; which had left the law in a very “unsatisfactory state” for both office holders and landlords.
The Court of Appeal held that whether or not rent was payable as an expense of an administration (or liquidation) would not simply depend on what date the rent became due, but rather that the rent would be treated as accruing from day to day during any period which the officer holder retained possession of the demised property for the benefit of the administration or the winding up. Arguably this represented a sensible compromise between the Goldacre and Luminar judgments.
Properly incurred rental payments are classed as an expense of an administration. Such expenses are paid in priority to creditors, thus impacting on the overall funds available for distribution to creditors. Game’s landlords claimed they were owed circa £3 million in outstanding rental payments and perhaps unsurprisingly, Game made an application to the Supreme Court to appeal the Court of Appeal’s decision.
On 31 October 2014 the Supreme Court announced that it had refused Game’s application to appeal.
Therefore, the Court of Appeal’s judgment stands.
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