Pillar Denton Ltd & Ors v Jervis & Ors

Pillar Denton Ltd & Ors v Jervis & Ors

The salvage principle, founded in equity, requires that rent be paid as an administration expense for the period during which the office holder retains possession of the property for the benefit of the administration, treating rent as accruing from day to day regardless of whether it is payable in advance or arrear. The principle overrides common law and statutory non-apportionability, and the duration of beneficial retention is a question of fact. Previous first instance decisions (Goldacre and Luminar) are overruled.

Parties
Appellant: Pillar Denton Limited; Appellant: Highcross (No.1) Limited; Appellant: Highcross (No.2) Limited; Appellant: CSC (Eldon Square) Limited; Appellant: CSC Lakeside Limited; Appellant: Ravenscroft Properties Limited; Respondent: Michael John Andrew Jervis; Respondent: Stuart David Maddison; Respondent: Game Retail Limited
Jurisdiction
England and Wales
Judgment Date
24 February 2014
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal and cross-appeal allowed. Previous first instance decisions overruled.
Legal Topics
Administration Expenses, Rent Apportionment, Salvage Principle, Provable Debts, Liquidation, Leasehold, Priority of Debts
Insolvency Property Law Administration Expenses Rent Apportionment Salvage Principle Provable Debts Liquidation Leasehold +1 more

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Parties

Pillar Denton Limited

Appellant

Highcross (No.1) Limited

Appellant

Highcross (No.2) Limited

Appellant

CSC (Eldon Square) Limited

Appellant

CSC Lakeside Limited

Appellant

Ravenscroft Properties Limited

Appellant

Michael John Andrew Jervis

Respondent

Stuart David Maddison

Respondent

Game Retail Limited

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether rent payable in advance under a lease held by a corporate tenant entering administration can be treated as an administration expense and apportioned for the period of beneficial retention.
  2. 2 Whether the salvage principle applies to rent payable in advance, overriding common law and statutory non-apportionability.

Ratio Decidendi

The salvage principle, founded in equity, requires that rent be paid as an administration expense for the period during which the office holder retains possession of the property for the benefit of the administration, treating rent as accruing from day to day regardless of whether it is payable in advance or arrear. The principle overrides common law and statutory non-apportionability, and the duration of beneficial retention is a question of fact. Previous first instance decisions (Goldacre and Luminar) are overruled.

Court Disposition

Appeal and cross-appeal allowed. Previous first instance decisions overruled.

Orders

  • Rent is payable as an administration expense for the period of beneficial retention, apportioned on a day-to-day basis.
  • Goldacre (Offices) Ltd v Nortel Networks UK Ltd and Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd are overruled.