Property Matters January 2010

Rent as an administration expense

On 7 December 2009, His Honour Judge Purle QC sitting as a high court judge, decided that where administrators were using, for the benefit of the company in administration, part of a site held by that company under two leases, the quarter’s rent due under those leases falling due on the 25 December 2009 was payable in full from that date as one of the costs and expenses of the administration. The judge also pointed out that as the rent falling due is a payment in advance and not subject to the Apportionment Act 1870 the amounts payable would not fall to be apportioned even if the administrators vacated the premises during the quarter. This decision was made in the case of Goldacre (Offices) Limited v Nortel Network UK Limited (in administration).

This will be welcomed by landlords as clarification of their entitlement. It was made clear, however, that the administrators were not necessarily obliged to make the payment on the due date. If the sufficiency of realisable assets is in doubt the landlord may have to wait and see to what extent the assets will be enough to satisfy his claim as there may be other claims also having priority.