Lease of business premises — Rent review clause — Break clause — Provision that on expiration of notice term should determine — Whether following expiration of term landlord could invoke rent review during statutory continuation of tenancy — County court holding that he could — Appeal allowed against that decision — Tenancy not term of lease continued under provisions of Landlord and Tenant Act 1954
By a lease dated April 15 1981 38 Monmouth Street, London WC2, was demised by the landlord’s predecessor in title for a term of 20 years from September 29 1980, subject to earlier determination by the landlord for demolition or reconstruction in accordance with clause 4(7) of the lease, at the annual rent of £8,000 subject to five-year upwards-only reviews. On November 17 1989 the landlord gave six months’ notice to the tenant pursuant to clause 4(7) determining the term of May 18 1990. The second review date fell on September 29 1990, a date subsequent to the expiration of the term.
A question arose whether, following the expiration of the term granted by a lease of business premises, the landlord could still successfully invoke the provisions of a rent review contained in the lease during the statutory continuation of the tenancy under the provisions of Part II of the 1954 Act. The assistant recorder held that the term of years granted by the lease came to an end on May 18 1990 (the date of the expiration of the common law notice) and that thereafter the tenancy created by the lease continued in force under the provisions of Part II of the 1954 Act until a new lease was granted. The tenant appealed.
Held The appeal was allowed.
1. The 1954 Act drew a clear distinction between the original contractual term and the statutory estate that followed and “the term” was not to be confused with “tenancy”: see Bowes-Lyon v Green [1963] AC 420.
2. The break clause notice was effective to cut down the term demised to May 18 1990. It was effective to convert the 20-year term granted by the lease to a term of approximately 10 years: see Scholl Manufacturing Co Ltd v Clifton (Slim-line) Ltd [1967] Ch 41.
3. It followed that there was no longer any term after May 18 1990 in respect of which the rent review provision could be invoked. The term had gone. It was the tenancy and not the term that was continued under the 1954 Act. It was the estate in the land that was prolonged.
4. In any event, clause 4(7) itself expressly provided that upon the expiration of such notice “the term shall thereupon determine”.
5. The recorder’s decision on the point, if right, would mean that a surety who was also a party to a lease, would be liable for the rent due during the statutory continuation of that tenancy. Such a result would be contrary to authority: see A Plesser & Co Ltd v Davis (1983) 267 EG 1039.
6. If it were intended that the landlord should be able to invoke the rent review provisions during the statutory continuation of that tenancy under the Act, then the expression “the term” would have been defined, as it was frequently defined in modern leases, as meaning the contractual term or “any statutory continuation thereof” or words to that effect.
Richard Moshi (instructed by Sidney Torrance & Co) appeared for the tenant; David Brook (instructed by Speechly Bircham) appeared for the landlord.
