Is rent an expense of an administration?

In November 2009, we posed the question: Is rent an expense of an administration? The question was answered in the affirmative, on the basis of obiter comments made by Mr Justice Briggs in the case of Lomas & Ors v RAB Market Cycles (Master) Fund Ltd & Ors [2009] EWHC 2545 (Ch). Now, we have a Chancery Division decision in which the point was central to the case: Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] EWHC 3389 (Ch). This case positively decides the point in favour of the landlord. Where the administrator makes use of the tenant’s premises during the period of administration (e.g. to continue trading, or, perhaps, to grant licence to occupy to a buyer of the tenant’s business under a pre-pack), rent falling due for the period of use will become an expense of the administration. This does not necessarily mean that the rent is paid on time: the administrator will have to weigh up other competing priority claims. But it takes the landlord ahead of the vast bulk of unsecured creditors lacking such priority.