Lease — Trigger notice for rent review — Review date at expiration of 10th year of term — Notice to be served before beginning of two quarters of a year immediately preceding review date — Notice served eight and half months before expiration of 10th year — Whether notice served in time — High Court holding that notice out of time and ineffective — Court of Appeal allowing appeal against that decision — Notice was effective to implement rent review provisions in lease
The plaintiff was the tenant of premises at 122 Cowbridge Road, Cardiff. The lease was dated January 28 1983 for a term from June 24 1982 for 20 years until June 23 2002. The initial yearly rent was £6,000, subject to review for each succeeding five years of the term. The rent was made payable by equal quarterly payments in advance on September 24, December 24, March 24 and June 24 in each year rather than the usual quarter days.
The lease required the landlord’s trigger notice for rent review to be served “before the beginning of a clear period of two quarters of a year … immediately preceding the review date”. The relevant review date was “the expiration of the tenth year of the term”.
The trigger notice was served on October 9 1991, about eight and a half months before the expiration of the 10th year of the term. The issue was whether the notice was served in time. The landlords said that any date before December 24 1991 was in time. The tenant said that it should have been before September 24 1991. Time was expressly made of the essence of the contract so that if the landlords did not serve a trigger notice in the time prescribed, they lost the right to have the rent reviewed. The High Court held that the landlord’s rent review notice was ineffective to implement the rent review provisions contained in the lease. The landlord appealed.
Held The appeal was allowed.
1. The object of construing the lease was to determine the intentions of the parties expressed in the lease. If a literal construction produced a result which did not accord with common sense, the court would prefer a sensible construction.
2. The judge’s construction did not accord with business common sense since in practice it meant that more than nine months’ notice had to be given to give effect to a contractual period expressed to be two quarters in duration.
3. The “review date” did not necessarily refer to a whole day. The object was simply to determine whether the period March 24 to June 23 was a clear quarter of the year under the lease. The review period did not end until midnight on 23/24 June 1992. The review date was the moment in time in between the two days. It did not include any part of June 23 and the quarter of the tenancy March 24 to June 23 could properly be regarded as a clear quarter.
4. Accordingly, the landlord was entitled to serve notice any time before December 24 1991.
Peter Barrie (instructed by Berry Smith, of Bridgend) appeared for the landlords; Jonathan Gaunt QC (instructed by Park Nelson Thompson Quarrell) appeared for the tenant.
