Valuer acting as expert for purpose of rent review – Lease requiring valuer to determine increase if any payable – Lease further providing for certain matters to be disregarded and assumed – Lessee taking out construction summons relating to those matters – Lessor claiming that valuer be sole judge – Appeal by lessee allowed
The plaintiff lessee held some 3,400 sq yd of land adjoining the Grand Union Canal in the Ealing London Borough under a 60-year lease granted by a predecessor of the defendant lessor in 1964. There were provisions for rent review at intervals of 15 years, under which, in default of agreement, the “question of whether any and if so what increase ought to be made in the rent payable” was to be referred to “the valuation of a single valuer”. Para (4) of those provisions required the valuer to determine “the question so referred to him” by ascertaining the open market rent as between a willing lessor and willing lessee having regard to the terms of the lease, but disregarding, inter alia, the effect on rent of occupation by the lessee and of any voluntary improvement carried out by the lessee. Following the service of a trigger notice by the lessor in February 1994, the parties were unable to reach agreement on the rent to be paid as from June 24 1994, the lessee having proposed £25,000 pa as against the lessor’s proposal of £915,000.
In December 1995 the president of the RICS appointed a valuer to whom the parties made various legal submissions. In March 1997 the lessee took out a High Court summons for the determination of a number of points of construction, notably: whether the land should be assumed not to have been built upon; whether improvements effected by the lessee’s predecessor (Central Electricity Generating Board) fell to be disregarded; and whether the plaintiff lessee fell within the category of willing lessee. In November 1997 the lessor applied to have the lessee’s summons struck out on the ground that the court had no jurisdiction to determine the matters raised. That application was allowed by the trial judge, who held that he was bound by the decision of the Court of Appeal in Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 to find that the questions raised were ones that the expert had to determine “along the way to determine the rent” and had accordingly been remitted by the terms of the lease to the expert, exclusively of the power of the court. The lessee appealed.
Held The appeal was allowed.
The valuer having been appointed not as an arbitrator but as an expert, it was common ground that the question of whether the rent review provisions excluded the jurisdiction of the court to construe the lease turned on the construction of the particular lease. The question referred to the valuer was whether any and if so what increase ought to be made. If the lease had stopped there, then the court would have had no jurisdiction to entertain the proceedings brought by the lessee. Howeve, the lease had gone on to require the valuer to ascertain the rent in accordance with certain contractual directions, which he could not disregard without going outside his terms of reference. The lease did not confer on the valuer exclusive power to determine whether he was acting within the perimeter of his contractual power: see the dissenting judgment of Hoffman LJ in Mercury Communications Ltd v Director General of Telecommunications (unreported July 22 1994), which was upheld in the House Lords in [1996] 1 WLR 48. There were no such directions in the agreement considered in Norwich Union (supra), which was accordingly distinguishable.
Jonathan Brock QC and Alexander Hill-Smith (instructed by Brookstreet des Roches, of Witney) appeared for the plaintiff appellant; Guy Fetherstonhaugh (instructed by Wallace & Partners) appeared for the defendant respondent.
Alan Cooklin, barrister
