Rent review — Open market rental value to be determined — Whether to be determined as at the date of the surveyor’s determination — Whether to be determined as at the beginning of the review period — Lessees’ appeal allowed
The respondents are the lessors of a lease of a ground-floor lock-up shop at 532 Kingsbury Road, London NW9; the appellants are the lessees. The lease was granted in 1977 for a term of 15 years with five-year rent reviews. The rent at review was to be the higher of the rent for the previous period and the “open market rental value”. “Open market rental value” was defined in clause 5(1) of the lease “… as being at the time of such determination the annual rental value of the demised premises”. In the event of a disagreement, the rent was to be determined by an independent surveyor.
A dispute arose in respect of the 1987 review; it was submitted on behalf of the respondents that the rent payable during each review period is to be determined by reference to the open market rental value as at the date on which the surveyor actually makes his determination. That submission was accepted by Mr Michael Wheeler QC (sitting as a deputy judge of the Chancery Division) [1988] 2 EGLR 149. The lessees appealed.
Held The appeal was allowed.
The objection to the respondents’ construction is that it is contrary to the whole purpose of a rent review provision if the reviewed rent is to be fixed by reference to values prevailing at a date significantly later than the start of the period in respect of which it is payable: see British Gas Corporation v Universities Superannuation Scheme Ltd [1986] 1 EGLR 120.
The words in clause 5(1) confirm the effect of the reddendum, which is that, what is to be looked for is the open market rental value for the particular review period. Although the natural meaning of the words in clause 5(1), “at the time of such determination”, is that contended for by the respondents, the parties may have intended a different meaning; the words were capable of meaning “at the time for such determination” or “at the time to which such determination relates”. The intention of the parties is not clearly and unequivocally expressed; accordingly a construction can be favoured that produces a far more sensible and realistic commercial result. The time for the determination of the review rent is the start of the review period to which it relates.
London & Manchester Assurance Co Ltd v G A Dunn & Co
(1982) 265 EG 39 and 131 distinguished.
Kirk Reynolds (instructed by Fayers & Co) appeared for the appellants; and Paul Dickens (instructed by Druces & Attlee) appeared for the respondents.
