Dear ODG members,

The UKSC today handed down its judgment in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2015] UKSC 72. It can be found at:

The case concerned a commercial lease which required rent to be paid quarterly in advance. The lease also contained a break clause, allowing the tenant to terminate it part way through a rent quarter. The issue in essence was whether a term would be implied requiring the landlord to repay the portion of advance rent representing the period following the break date. The primary judge unconvincingly said yes, CA unanimously no, SC unanimously no. The SC felt obliged to clarify the law on implied terms in light of Belize Telecom. Their Lordships differed as to the utility of the Belize Telecom approach, but were unanimous that it did not water down the strict requirements for implication.

Lord Neuberger (with whom Lord Sumption, Lord Hodge and Lord Clarke agreed) held that Belize Telecom did not change the law and did not dilute the requirements that must be satisfied before a term will be implied. At [24]: 'The Singapore Court of Appeal were in my view right to hold that the law governing the circumstances in which a term will be implied into a contract remains unchanged following Belize Telecom.' Lord Neuberger assimilated the Belize approach with the traditional tests, and in so doing took all of the wind out of its sails. He said at [23] that the Belize Telecom formulation is 'quite acceptable' provided the reasonable reader 'would consider the term to be so obvious as to go without saying or to be necessary for business efficacy.' In other words it is quite acceptable as long as it doesn't have any effect at all. 

Lord Carnworth was more favourably disposed towards the interpretative spirit of Belize Telecom, and less favourably disposed towards the analysis the of Singapore CA, but agreed that Belize 'is not to be read as involving any relaxation of the traditional, highly restrictive approach to implication of terms.'

There is some useful dicta (e.g., at [21] that necessity and obviousness can be treated as alternatives), and the treatment of Belize Telecom (and BP Refinery) will no doubt be much discussed, but the judgments don't really advance the law on implied terms. If anything they take it backwards. That is a shame but it seems to me that it is not the fault of their Lordships: the case was not a good vehicle for developing the law or for thinking through the implications of Belize Telecom.