Yorkshire lawyers welcome court ruling

YORKSHIRE lawyers have welcomed the outcome of the court case which ruled that computer games retailer Game has to pay around £3m in unpaid rent to landlords.

The payment follows the latest part of the legal battle related to rent not paid while the company was in administration.

In 2012, a decision was made to place Game into administration a day after a rent quarter day, which meant administrators were not obliged to pay rent to landlords including Land Securities, Hammerson and British Land during the first three months of occupation.

However, Yorkshire-based lawyers said the landmark decision made in the Court of Appeal closes the legal loophole which the case revolves around, meaning the retailer is liable to pay the outstanding rent.

Following the ruling, Game said the decision would have a “significant financial impact” on landlords, tenants and insolvency practitioners and added that an appeal to the Supreme Court was under consideration.

Duncan Grubb, head of credit at Hammerson, added that the judgment provided “a workable, common sense resolution to the payment of rent as an administration expense”.

Danny Revitt, partner at the Sheffield office of Irwin Mitchell, said: “Game’s administrators had avoided paying rent as a result of the landmark Goldacre and Luminar decisions, which led to a common practice of companies being placed in administration just after a rent payment date – which mean administrators could get up to three months of use of premises before rent becomes their expense.

“The ruling has provided vital clarity to this area, closing the loophole and ensuring landlords are on a surer footing when it comes to administrations. However, it will be interesting to see whether the case is now taken to the Supreme Court for an absolute final decision on this vital issue.

“The outcome of the appeal means administrators will be required to pay rent as an expense of the administration calculated on a daily basis, as long as they occupy and use the premises for the benefit of the creditors.

“This is a logical and sensible outcome and reverts the position to the old regulations pre-Goldacre, providing an element of certainty for all parties involved. However, it will be interesting to see what the next step in this long-running legal saga is.”

Andrew Todd, property litigation partner at Yorkshire law firm Gordons, said: “The decision of the Court of Appeal means administrators of failed companies have to operate by the same rules as everybody else. It is a ‘pay as you go’ principle, rather than administrators taking advantage of a three-month rent-free window under the previous legal ruling. This will be a welcome boost for many local landlords, who will have had the unfortunate experience of administrators taking advantage of the previous rule.”