Construction — Rent review clause — Landlord giving notice of proposed rent review figure — Tenant’s offered election for rent to be determined by independent surveyor — Lease stipulating election by counternotice in writing within one month of landlord’s notice — Tenant writing letter to landlord disagreeing with landlord’s figure — Whether letter sufficient to constitute counternotice for rent review purposes — High Court holding that letter satisfied legal requirements of lease and was valid election
This case concerned the lease of premises known as 117 High Street, Chesham, Buckinghamshire. The term of the lease was 20 years from May 21 1982 and there were provisions for rent reviews at four-yearly intervals. The landlord was to specify in a notice in writing to the tenant the rent required. In the absence of agreement between the parties, the rent was to be determined at the election of the tenant by counternotice in writing, not later than one month after the landlord’s notice (time to be of the essence), by an independent surveyor appointed for that purpose.
By a notice of February 14 1990, the landlord stipulated a rent figure of £17,500 pa. A reply to that notice was sent on March 5 1990 stating that the tenant did not agree to the proposed rent review figure. It suggested a lower figure of £9,000 and proposed negotiations on the review. The letter stated that “… in accordance with clause 2 of the lease please acknowledge this letter on the landlords’ behalf as formal notice of our disagreement to your rent proposal”.
There was no response to that letter and so the tenant wrote again on March 21 to which a reply was received on March 23 stating that the tenant was stopped from arguing that the review rent should be less than the proposed figure since no counternotice had been received. An issue arose whether the letter of March 5 1990 served as a valid counternotice. It was common ground that there was no other document which was sent within the one month period and that the letter was therefore the only possible counternotice.
Held The letter of March 5 1990 did constitute a valid counternotice.
1. It was of great importance to remember that in this type of situation the task of the court was to construe a document, ie the lease and then in the light of that decision to conclude whether on the facts of the particular case, the communication made by that particular tenant did or did not satisfy the requirements of the document construed. The court had to deduce from the cases the principles of law with which to approach the task of construction and apply them to the facts of the case before it and to the lease. The court could then conclude whether in the facts of a particular case the communication made by that particular tenant satisfied the requirements of the instrument which had just been construed. It would be quite wrong slavishly to take decided cases and to say that because a letter had been written in identical terms in relation to an identical clause, the court then had to reach the same conclusion as in other cases. In such manner a jurisprudence was being constructed about the phraseology of rent review clauses and even of letters in response to them, which was entirely misguided.
2. It was sufficient that to be an effective counternotice a letter made it clear that the tenant was exercising the relevant election; and the tenant might do that either by indicating that the letter was a counternotice under the relevant clause of the lease or by spelling out the consequences which he sought to achieve. The counternotice should be in terms which were sufficiently clear to bring home to the ordinary landlord that the tenant was purporting to exercise his right under the relevant clause of the relevant lease: see Old School v Johns (1980) 256 EG 381; Amalgamated Estates Ltd v Joystretch Manufacturing Ltd (1980) 257 EG 489; and Nunes v Davies Laing & Dick Ltd [1986] 1 EGLR 106.
3. In the present case one had to read the letter in the context of not just the lease but in the context of the letter to which it was responding. The requirements of the lease were that there be a counternotice, that it be in writing and that it be within time. Any reasonable landlord reading the letter, although he might not instantly have known that this was an election, would immediately have consulted with his lease and have known that the relevant notice had been served upon him. The letter was responding to the trigger notice. It was served with the same degree of solemnity and particularly by recorded delivery and was served by a writer who clearly was anxious that the letter get to its addressee in time and who not merely sent it by recorded delivery, but asked for acknowledgement “as formal notice …”. Although it was not a model of drafting it satisfied the legal requirements of this particular lease and was a valid election. It was the clear giving of a counternotice under the relevant clause of the lease.
Jonathan Steinert (instructed by Masons) appeared for the plaintiff; Jeremy Carey (instructed by Sinclair Roche & Temperley) appeared for the defendant.
