Rent review — Use of premises — Whether to be assumed as commercial premises — Effect of planning permission — Class B1 use — Hypothetical term — Declaration in favour of landlord
The plaintiff tenant holds the term of a 24-year lease of Sir John Lyon House, 5 High Timber Street, London EC4, granted in July 1970; the defendant is the landlord. Each party sought declarations as to the meaning and effect of the rent review provisions in the lease for the June 1989 review. By clause 5(i) the current market value at the rent review date is to be assessed as the rent at which the demised premises might reasonably be expected to be let in the open market by a willing landlord to a willing tenant with vacant possession for a term of years and on conditions and terms similar to the terms in the lease. By clause 2(12) the tenant is to use the premises as commercial premises with ancillary offices and showrooms and for no other purpose save with the previous written consent of the landlord, which shall not be unreasonably withheld. The plaintiff contended that it had to be assumed that the premises were so used and the hypothetical tenant will use the premises as such for the relevant term. The defendant contended: (1) that the current market value is to be assessed reflecting any potential of the premises for class B1 of the Use Classes Order 1987 and it is not to be assumed that the hypothetical tenant will or will be obliged to use the premises in the manner used by the plaintiff tenant or that the hypothetical tenant will not or will be obliged not to use the premises as class B1 offices; (2) that the term of the hypothetical lease was equivalent to the original term of 24 years; and (3) that the review rent was payable from the June 1989 review date whether or not a landlord’s notice of the new rent had been served before or after that date.
Held 1. Although the plaintiff tenant had been granted a personal planning permission for some office use of the premises in 1970, following a change in planning policy in 1986, the landlord obtained planning permission for general office use of the premises in 1988. There was no legal bar on office use, as by clause 2(12) of the lease the landlord could not unreasonably refuse his consent to a change of use. Although there was an implied obligation in clause 2(20) on the tenant not to apply for planning permission if the landlord objects, there was no bar on the landlord. Accordingly, the defendant landlord was entitled to the declaration it sought on this issue.
2. The term of the hypothetical lease was not for 24 years but for the residue of the unexpired term of the actual lease.
3. The reviewed rent became payable as from the June 1989 review date.
Terence Cullen QC and Christopher Pymont (instructed by Stephenson Harwood) appeared for the plaintiff; and David Neuberger QC and Jonathan Gaunt (instructed by the solicitor to British Coal) appeared for the defendant.
