Landlord and tenant — Rent review — Assumption that premises fully equipped and fitted out — Whether tenant’s fixtures taken into account and rentalised at rent review
The plaintiff and an associated company,
CU, each own a shop occupied by the defendant tenant under leases containing
rent review
appointed to determine the rent at review decided that the tenant’s fixtures
should be rentalised and included in the reviewed rent; in the case of the
other shop a second arbitrator decided that the tenant’s fixtures should not be
so rentalised. The tenant and the landlords applied for leave to appeal the
respective awards, the tenant additionally applying to extend time for seeking
leave. In support of their applications the landlords relied on an assumption
(‘assumption B’) in the respective rent review clauses that the premises have
been fully fitted out and equipped so as to be ready for immediate use and
occupation by a willing tenant.
leave to appeal was extended and the tenant and the landlords were given leave
to appeal. The first award contained an error of law, in that on the true
construction of the lease tenant’s fixtures are not to be rentalised.
The following cases are referred to in
this report.
Co-operative Wholesale Society Ltd v National Westminster
Bank plc [1995] 1 EGLR 97; [1995] 01 EG 111, CA
Ipswich Borough Council v Fisons plc [1990] Ch
709; [1990] 2 WLR 108; [1990] 1 All ER 730; [1990] 1 EGLR 17; [1990] 04 EG 127,
CA
Laura Investment Co Ltd v Havering London Borough
Council [1992] 1 EGLR 155; [1992] 24 EG 136
London & Leeds Estates Ltd v Paribas Ltd [1993] 2
EGLR 149; [1993] 30 EG 89, CA
MFI Properties Ltd v BICC Group Pension Trust
Ltd [1986] 1 All ER 974; [1986] 1 EGLR 115; (1986) 277 EG 862
Mount Charlotte Investments plc v Prudential Assurance
[1995] 1 EGLR 15; [1995] 10 EG 129
New Zealand Government Property
Corporation v
HM&S Ltd [1982] QB 1145; [1982] 2 WLR 837; [1982] 1 All ER 624;
[1982] 1 EGLR 52; (1981) 262 EG 765, CA
Young v Dalgety plc [1987] 1 EGLR 116;
(1987) 281 EG 427
This was a hearing of applications by the
landlords, Ocean Accident & Guarantee Corporation and Commercial Union
Properties Ltd, for leave to appeal under section 1(3)(b) of the
Arbitration Act 1979 an award of an arbitrator. The tenant, Next plc, applied
to extend time for seeking leave and for leave to appeal a second arbitrator’s
award.
Erica Foggin (instructed by Stones
Porter) appeared for the landlords; David Neuberger QC (instructed by
Eversheds) represented for the tenant.
Giving judgment, Mr Stanley Burnton QC said: These
applications and (if leave to appeal is granted) appeals raise the issue
whether tenant’s or trade fixtures, that is items affixed to the demised
premises but which can be removed without causing significant damage to the
property, are to be taken into account, or ‘rentalised’, on a rent review
containing provisions standard to a number of leases between the parties or
their associated companies, and similar to rent review provisions in common use
elsewhere.
Next plc (‘the tenant’) is the lessee
under a lease dated February 6 1987 of the shop premises at 52 Mostyn Street,
Llandudno, and under a lease dated January 30 1987 of the shop premises at 241
High Street, Bangor. The lessors of both of these premises are associated
companies, in the case of the Llandudno shop Commercial Union Properties Ltd
and in the case of the Bangor shop Ocean Accident & Guarantee Corporation.
For convenience, I shall refer to both of these companies as ‘the landlords’,
since it is unnecessary to distinguish between them.
The terms, including the rent review
provisions, of both of the leases of these premises are materially identical.
There are a number of other leases between the parties, or their associated
companies, which are in the same form. The disputes between the parties as to
the reviewed rents of both premises were referred to arbitration pursuant to
the arbitration clause contained in each lease. In the case of Llandudno, the
arbitrator was Mr Thomas Evans [frics];
in the case of Bangor, it was Mr MJ Postlethwaite [frics]. In both arbitrations there was a dispute as to
whether the reviewed rent should include a sum in respect of the tenant’s
fixtures: to put it in the jargon, whether the tenant’s fixtures should be
rentalised. The disputes involved questions of fact and of law: whether certain
items constituted tenant’s fixtures, and if so whether, on the true
construction of the provisions of the lease in question, those items should be
rentalised. Mr Evans held that tenant’s fixtures were to be rentalised; Mr Postlethwaite
held that they were not to be rentalised. I shall refer to Mr Evan’s award as
‘the first award’, and to Mr Postlethwaite’s award as ‘the second award’.
I have before me:
(a) an application on behalf of the
tenant to extend its time for seeking leave to appeal against the first award
and (if such time is extended) an application by it under section 1(3)(b)
of the Arbitration Act 1979 for leave to appeal against the first award; and
(b) an application on behalf of the
landlords for leave to appeal against the second award.
Before me the landlords opposed the
tenant’s application for time and for leave to appeal; the tenant accepted that
it was unlikely that I should extend its time to apply for leave to appeal and
give it leave to appeal while refusing the landords leave to appeal,
notwithstanding the authorities which indicate that leave should be given only
if the court considers that a strong case has been made out that the arbitrator
erred in law: clearly, one of the arbitrators whose awards are before me must
have been right, and the tenant submits that it was Mr Postlethwaite.
Because the decision whether to extend
the tenant’s time, and to grant leave to appeals, may depend on the merits of
the substantive appeal, and to avoid a duplication of hearings, I heard
argument on the substantive appeals of both the tenant and the landlords, so
that if leave were given I could give judgment on the appeals themselves.
I can most conveniently state my
conclusions in reverse order.
(a) I have come to the clear conclusion
that the first award contains an error of law, in that in the true construction
of the lease tenant’s fixtures are not to be rentalised.
(b) Given that the rent review provisions
in question, and the issue before me, are common to a number of leases between
the parties, subject to the question whether the tenant’s time should be
extended to permit it to seek leave to appeal, it is appropriate for leave to
be given so that an authoritative ruling can be given by the court, to avoid
further inconsistent arbitration awards between, effectively, the same parties.
(c) The tenant’s time for applying for
leave to appeal should be extended.
Extension of time on the tenant’s
application
Mr Evans’ award is dated May 31 1995. The
summons and originating notice of motion for the appeal should have been issued
by June 21 1995. It was not until June 9 1995 that the papers were sent to
counsel by Mr Paul Collier [arics],
the surveyor acting for the tenant. Counsel advised on the merits of an appeal
on June 18 and drafted the necessary proceedings. The papers, counsel’s opinion
and draft proceedings were received back at Mr Collier’s office on June 22
1995. The opinion informed Mr Collier of the time-limit for seeking leave to
appeal, which was in any event something of which Mr Collier, as an experienced
surveyor practising in the field of rent review, should have been aware, but of
which he was not. Unfortunately, Mr Collier was on holiday between June 15 and
26 1995. The papers were left to be dealt with by Mr Collier on his return. On
June 26 Mr Collier forwarded the papers to the tenant’s estate manager. He read
them on June 29. Solicitors were immediately instructed and the proceedings
issued on July 4 1995.
There was thus a delay of some two weeks
beyond the time laid down by Ord 73 r5 of the Rules of the Supreme Court. I am
conscious of the desirability for finality and expedition in arbitrations. I
accept that the events to which Mr Collier deposes are not consistent with due
diligence on the part of the tenant and its representatives. None the less,
given the complete absence of prejudice to the landords resulting from the
delay, and the unsatisfactory situation, to which I refer below which will
prevail if time is not extended, I consider that this is an
precedent of Arden J in Mount Charlotte Investments plc v Prudential
Assurance [1995] 10 EG 129*, who extended time in a case in which the delay
had been considerably greater and was not satisfactorily explained. Like Arden
J, I have regard to the merits of the substantive appeal and the consequences
of its not being heard in arriving at my decision to extend time.
*Editor’s note:Also reported at [1995] 1
EGLR 15
Leave to appeal
Under section 1(2) of the Arbitration Act
1979, an appeal lies to the High Court on a question of law arising out of an
award. Miss Erica Foggin contended that the first award did not disclose that the
arbitrator decided the issue of the rentalising of tenant’s fixtures as a
matter of law rather than as a matter of fact. She pointed out that the parties
had been in dispute as to which items constituted tenant’s fixtures, and
submitted that the first award was consistent with the arbitrator having
determined the issue on the basis that he rejected the contention of fact of
the tenant that the items in dispute constituted tenant’s fixtures.
I reject this submission. The relevant
part of the first award sets out the contentions of the parties as to the construction
of the rent review provisions of the lease, and in giving his reasons for
accepting the landords’ contention the arbitrator referred only to those
provisions. It is clear that the arbitrator decided this issue as a question of
construction, so that there is a question of law arising out of the award
within the meaning of section 1 of the 1979 Act.
I turn to consider whether, on that
basis, leave to appeal should be given to the tenant. At an early stage in the
argument I came to the conclusion that the tenant had made out a strong prima
facie case that the arbitrator had erred in law. In considering whether the
strength of the tenant’s case merits the grant of leave to appeal, I have
regard to the guidance given by the Court of Appeal in Ipswich Borough
Council v Fisons plc [1990] Ch 709*, especially at pp724B to 725A. I
take into account the fact that in the case of the first award, there will be
further rent reviews under the lease of the Llandudno premises with effect from
August 1996, 2001 and 2006; and that it is arguable that on such reviews the
decision of Mr Evans on the construction of the lease will be binding between
the parties as res judicata, or by issue estoppel; so that, if the tenant’s
submissions as to the true construction of the rent review provisions are
correct, these future arbitrations would be conducted on an incorrect basis
which does not accord with the agreement between the parties. It is all the
more appropriate to give leave to appeal where the issue of law in question
arises under other leases between the same parties, so that if leave is not
given there may be further inconsistent awards, or attempts to bring the same
point of law before the court, involving unnecessary costs on both sides. It is
far better that the issue of law in question, an issue of construction of a
common form of lease so far as these parties at least are concerned, should be
resolved as soon as possible.
*Editor’s note:Also reported at [1990] 1
EGLR 17
The amount at issue in the first
arbitration is significant, but not enormous: some £5,500 per year, about 8% of
the rent, amounting to some £110,000 over the unexpired term of the lease. The
amount at issue in the second arbitration is considerably less, some £1,000 per
year, and about 3% of the rent. However, the fact that the issue raised in
these applications is common to other leases outweighs any considerations based
on the relatively insubstantial sums involved in the particular appeals. It is
clear that the determination of the question of law raised in both of these
appeals substantially affects the rights of the parties to the arbitration
agreements in question. In these circumstances, the tenant has established a
sufficiently strong case of error on the part of the arbitrator in the first
arbitration to justify the grant of leave to appeal.
Accordingly, I grant the tenant leave to
appeal against the first award.
So far as the landord’s appeal is
concerned, since I consider that the arbitrator in the second award correctly
decided the question of law in issue, it would be normal to refuse leave to
appeal. If I take this course, my decision can be challenged provided I give
leave to appeal under section 1(6A) of the 1979 Act. However, since the
question of law is common to both awards, it seems to me preferable, where
inconsistent awards are before the court and it is proposed to give leave to
appeal in respect of one of them, to give leave in both cases, so that, if
there is an appeal to the Court of Appeal, it has a judgment dealing with both
awards. Accordingly, I give leave to the landord to appeal against the second
award.
The substance of the appeals
The general approach to the construction
of rent review clauses was not in dispute before me. So far as is relevant, the
relevant principle may be summarised as follows:
(a) In the absence of an express
provision to the contrary, on a rent review, the demised premises are to be
valued as they are, taking into account any improvements or alterations
effected by the rent review date, irrespective of who effected them: Laura
Investment Co Ltd v Havering London Borough Council [1992] 1 EGLR
155. There is a so-called ‘presumption of reality’: see Co-operative
Wholesale Society Ltd v National Westminster Bank plc [1995] 1 EGLR
97 at pp99–100.
(b) However, fairness to the tenant makes
it understandable that the parties would not expect the reviewed rent to be
increased by reference to improvements effected by the tenant at his own
expense: the Co-operative case at p99, citing MFI Properties Ltd
v BICC Group Pension Trust Ltd [1986] 1 All ER 974*, at p976. On the
other hand, one would expect improvements made by the tenant pursuant to an
obligation contained in the lease (which one would expect to have been
reflected in the original rent and other terms of the lease) to be taken into
account in the reviewed rent. The presumption of reality favours a reviewed
rent being fixed on the assumption that the hypothetical tenant will not have
to move in and fit out, because the actual tenant has already done so: see the Co-operative
case at p994.
*Editor’s note:Also reported at [1986] 1
EGLR 115
(c) In the absence of express terms to
the contrary, one would not expect a reviewed rent to take account of trade
fixtures which may lawfully be removed by the tenant at the expiration of his
term, and even though they may have been affixed by the tenant pursuant to an
obligation contained in the lease: Young v Dalgety plc [1987] 1
EGLR 116 (where it was common ground that tenant’s fixtures were not to be
taken into account); New Zealand Government Property Corporation v HM&S
Ltd [1982] QB 1145*.
*Editor’s note:Also reported at [1982] 1
EGLR 52
These principles are however subject to
the express terms of the lease in question. The rent review provisions of the
lease of the Llandudno premises are contained in clause 6. Clause 6(3) is as
follows:
(a) The Reviewed Rent shall be whichever
is the greater of:
(i) the rent payable hereunder
immediately prior to the Relevant Review Date or
(ii) the yearly rack rent at which the
Demised Premises might reasonably be expected to be let at the Relevant Review
Date in the open market by a willing landlord to a willing tenant with vacant
possession for a term equal to the term originally granted by this lease and on
the same terms in all other respects as this lease.
Assuming:
(A) that the Demised Premises may be used
for any use within the same Class in the Schedule to the Town and Country
Planning (Use Classes) Order 1972 as any use from time to time permitted
hereunder
(B) that the Demised Premises have been
fully fitted out and equipped so as to be ready for immediate use and
occupation by such willing tenant for such a use
(C) that all the Tenant’s obligations
herein have been complied with
(D) that any destruction of or damage to
the Demised Premises has been made good before the Relevant Review Date
(E) that any additions or alterations
carried out on or to the Demised Premises during the Term which have diminished
the rental value of the Demised Premises have been removed or reinstated
but Disregarding:
(F) any effect on rent of the fact that
the Tenant any authorised sub-tenant or their respective predecessors in title
have been in occupation of the Demised Premises
(G) any goodwill attached to the Demised
Premises by reason of the carrying on thereat of the business of the Tenant any
authorised sub-tenant or their predecessors in title
(H) any increase in rental value of the
Demised Premises attributable to the existence at the Relevant Review Date of
any improvement to the Demised Premises or any part thereof carried out after
the date hereof with consent where required otherwise than pursuant to an
obligation to the Landord or its predecessors in title by the Tenant any
authorised sub-tenant or their respective predecessors in title at their own
expense during the Term or during any period of occupation prior thereto
arising out of any agreement to grant such term but for the avoidance of doubt
not disregarding the works to be executed to the Demised Premises pursuant to
an agreement dated 29 August 1986 made between Next Properties Limited (1) the
Landord (2) and the Tenant (3).
These provisions must of course be read
in conjunction with the other terms of the lease. It is to be noted that ‘the
Demised Premises’ are defined as ‘the property described in the Schedule hereto
and all additions and improvements from time to time made thereto and the
landord’s fixtures and fittings therein’. This definition does not include the
tenant’s fixtures, which are not ‘additions’ or ‘improvements’ (see the New
Zealand Government Property Corporation case at p1160), and which is in any
event made clear by the express reference to the landlord’s fixtures and
fittings.
Clause 3(27) of the lease is a covenant
by the tenant:
(a) Immediately upon the grant of this
lease (if and to the extent that such works shall not prior thereto have been
so carried out) to equip and fit out each part of the Demised Premises for the
purpose for which the Demised Premises may be used as permitted hereunder and
for such ancillary purposes thereto as may be appropriate for each such part.
(b) Throughout the Term to ensure that
each part of the Demised Premises remains fully equipped and fitted out as
aforesaid in accordance with the standards appropriate to a good class shop.
Clause 3(9) is the following covenant of
the tenant:
To yield up the Demised Premises with the
fixtures and fittings and additions thereto (tenant’s or trade fixtures or
fittings only excepted) at the expiration or sooner determination of the Term
in good and substantial repair and condition and decorated in accordance with
the several covenants herein contained and to make good any damage caused to
the Demised Premises by the removal of any tenant’s or trade fixtures or fittings.
By virtue of the definition of ‘the
Demised Premises’ in clause 1, the yearly rack-rent referred to in clause
6(3)(a)(ii) is a rent for which the premises without the tenant’s fixtures
might reasonably be expected to be let. Accordingly, subject to the other
provisions of the lease to which I refer below, tenant’s fixtures are not to be
rentalised. The fact that the tenant is free to remove his fixtures at the end
of the lease, by virtue of clause 3(9), is consistent with the conclusion that
such fixtures are not to be taken into account in determining the reviewed
rent, and is similarly consistent with the reference to ‘Demised Premises’ in
clause 6(3)(a)(ii).
The landlords argued that the assumptions
set out in paras (A) to (E) of clause 6(3) require a different conclusion.
Particular reliance was placed on assumption (B). However, I think it clear
that this provision is not aimed at rentalising tenant’s or trade fixtures, or
indeed any items of fitting out or of equipment. In the first place, it does not
identify the fitting out and equipment to which it refers. The fitting out and
equipment to which it refers are those required by the hypothetical willing
tenant referred to in clause 6(3)(a)(ii), and not the actual tenant. It is
therefore impossible to identify the items of fitting out and equipment which
are assumed to have been effected or brought into the premises by or for the
hypothetical tenant, and similarly impossible to quantify any amount of rent
attributable to them.
In addition, that with which premises are
‘equipped’ within the meaning of assumption (B) will include, at least in part
(and perhaps wholly consist of) items which are not affixed to the premises at
all, simply chattels, such as telephones, which are necessary for the immediate
use and occupation of the premises. It would be extraordinary for a lease to
require a reviewed rent to be based in part on chattels belonging to the tenant
which are not fixed to the premises, and which he is normally free to remove
during, or at least at the end, of the term: very clear words indeed would be
required to produce such a result. I think it clear that the assumption (B)
does not require equipment which is not fixed to the premises to be rentalised.
If so, it would be incongruous to interpret it as having a different effect in
relation to fitting-out works: the wording of assumption (B) does not justify a
different treatment of equipment from fitting-out works. The reference to
equipment makes it quite clear that assumption (B) is not concerned with the
rentalisation of the items to which it refers.
This approach to the construction of
assumption (B) receives some further reinforcement from the fact that the use
referred to at the end of assumption (B) is ‘any use within the same Class in
the Schedule to the Town and Country Planning (Use Classes) Order 1972 as (sic)
any use from time to time permitted hereunder’, as set out in assumption (A),
so that if consent were given by the landlord pursuant to clause 3(21), there
could in theory be use otherwise than the current use.
In my judgment, the function of
assumption (B) is simply to avoid an argument that the hypothetical tenant
requires an allowance in reduction of his rent on the basis that the premises
are not immediately ready for him to trade.
This conclusion as to the meaning and
effect of assumption (B) is supported by the decision of the Court of Appeal in
London & Leeds Estates Ltd v Paribas Ltd [1993] 2 EGLR 149.
In that case the assumption in question was contained in clause 6(b)(1) of the
lease:
That the demised premises are fit for
immediate occupation and use and in a state of good repair and condition and
that all fitting out and other tenant’s works required by such willing tenant
have already been completed.
The case was initially argued before the
Court of Appeal on the basis that the arbitrator on a rent review had to
determine what fitting out and other works would have to be carried out. The
court rejected this approach. Nourse LJ, in a judgment with which Stuart-Smith
and Waite LJJ agreed, said at p150H:
The clear purpose of the first part of
clause 6(b)(1) is to preclude the actual tenant from arguing before the
arbitrator that the hypothetical tenant would be entitled to a discount
on the best open market rent on account of the actual state of repair
and condition of the premises. It is impossible to read that provision as
having any other purpose or effect. Equally, the purpose of the second part of
clause 6(b)(1) must be to preclude the actual tenant from arguing for a discount
on the ground that the hypothetical tenant would have required further or
different works from those carried out by the actual tenant, the cost of which
would necessarily be borne by the hypothetical tenant, with a corresponding
reduction in the rent that he would be willing to pay. There is simply no
warrant for reading into the second part of clause 6(b)(1), any more than into
the first part, some requirement for the arbitrator to determine what
hypothetical works the hypothetical tenant would have required. If the parties
had intended that there should be such a requirement, they could and should
have made express provision for it.
This passage applies equally, mutatis
mutandis, to assumption (B) of clause 6(3)(a) of the present lease.
Moreover, I read the words ‘by such willing tenant’ in assumption (B) as
relating back to ‘fitted out and equipped’, the phrase ‘fully fitted out and
equipped so as to be ready for immediate use and occupation’ being a composite
phrase. On this basis the present is a clearer case than the lease considered
in London & Leeds Estates Ltd v Paribas Ltd, where the lease
did not expressly identify at whose expense the notional fitting out and other
works were to be carried out. The present lease stipulates that the assumed
equipping and fitting out have been carried out by the notional tenant; and it
would be unfair that the notional tenant, having paid for equipping and fitting
out the premises, should pay a rent increased to take account of them.
None of the other provisions of the lease
leads me to a different conclusion. Assumption (C) requires the arbitrator to
assume that all the tenant’s obligations have been complied with. It must
therefore be assumed that the tenant has equipped and fitted out the premises
in accordance with clause 3(27)(a), and ensured that the premises remain fully
equipped and fitted out in accordance with cause 3(27)(b). However, the tenant
none the less has the right, under clause 3(9), to remove his fixtures and
fittings at the end of the term, a right which
nothing in clause 27 requires the tenant to retain the same equipment and
fitting-out works throughout the term: the tenant is entitled to change his
equipment and fitting-out during the term, provided they are ‘in accordance
with the standards appropriate to a good class shop’. Assumption (C) is clearly
insufficient to require the arbitrator to rentalise equipment consisting of
unfixed chattels brought on the premises by the tenant pursuant to clause
3(27)(a), and retained on the premises pursuant to clause 3(27)(b). In the
absence of very clear words (and there are none here) the tenant is entitled to
remove them at the end of the term and they are not to be rentalised on a rent
review. As I stated above, very clear words indeed would be required to have
any other effect.
Similarly, I do not think that assumption
(E) is concerned with trade fixtures. The alterations and additions to which it
refers are of a structural nature. Trade fixtures brought on and affixed to the
premises do not result in an addition or alteration on or to the premises
within the meaning of this paragraph. It is all the more difficult to construe
‘any additions or alterations carried out on or to the Demised Premises’ as
including trade or tenant’s fixtures where, as here, ‘the Demised Premises’ by
definition does not include such fixtures. The restriction of (E) to additions
or alterations which have diminished the rental value of the demised premises
affords scant support for a general rentalisation of trade fixtures, which are
not part of ‘the Demised Premises’. Finally, by virtue of the definition of
‘the Demised Premises’, the phrase in (E) ‘the rental value of the Demised
Premises’ itself excludes the rental value of trade or tenant’s fixtures.
Lastly, disregard (H) is irrelevant,
since tenant’s or trade fixtures are not ‘improvements’: see New Zealand
Government Property Corporation v HM&S Ltd [1982] QB 1145.
My conclusion, therefore, is that the
tenant’s or trade fixtures are not to be rentalised, but are to be ignored on a
rent review under this lease, and I so hold.
Order to be made in respect of the first
award
Mr Evans made alternative awards,
depending on whether the submissions of the tenant or of the landlord on the
issue of rentalisation of trade fixtures were to be upheld. However, it is
unclear from his award whether he decided the issue of fact as between the
parties as to whether the items in dispute were or were not removable without
causing significant damage to the property. On one reading of his award, he did
not decide this factual issue, on the basis that it was irrelevant by reason of
his decision as to the construction of the lease. It may well be that he
accepted the tenant’s contentions on this issue of fact, but fairness requires
that the uncertainty be removed. I shall therefore order that the award be
remitted for his reconsideration in the light of my opinion on the construction
of the lease, so that the necessary clear findings of fact can be made.
Order to be made in respect of the second
award
For the reasons given above, I shall give
leave to appeal against the second award, notwithstanding my opinion that Mr
Postlethwaite correctly decided the question of law before him, in order to
keep the proceedings in respect of both awards in step. I shall however dismiss
the appeal.
However, Mr Postlethwaite made no finding
as to whether the air management system in the premises was practically
removable without damage, and therefore did not find whether or not it
constituted a trade or tenant’s fixture. I have some sympathy for him in this
respect, since there was no evidence before him as to the practicability of its
removal without damage. The rent determined by the second award did not include
any sum in respect of the air management system. If it is found as a fact that
the air management system cannot be removed without causing significant damage
to the premises, it does not constitute a trade or tenant’s fixture and should
be rentalised. If I am against the landlord on the question of law raised by
these awards, the landlord seeks remission of the second award to the
arbitrator for him to make the necessary findings of fact as to the air
management system and, if appropriate its effect, if any, on the reviewed rent.
The landlords’ proceedings did not
include an appropriate application for remission, whether under section 22 of
the Arbitration Act 1950 or under section 1(2) or (5)(b) of the 1979
Act. In the present case, the question of law having been decided correctly by
the arbitrator, the relevant power to remit is that in the 1950 Act, on the
basis that the arbitrator did not decide all of the issues between the parties.
Mr David Neuberger QC, for the tenant, did not object to remission if I were
against Miss Foggin on the question of law, notwithstanding the defect in the
landlords’ summons for leave to appeal and notice of originating motion. The
amount of rent which turns on the matter to be remitted is not great, but the
costs of remission should be small, since the matter can be dealt with by
written submissions. Having regard to the attitude of the tenant I shall make
an order for remission for Mr Postlethwaite to make the necessary findings on
the outstanding issues of fact.
Costs
In substance the tenant has succeeded. No
separate costs are attributable to the application of the landlord to remit the
second award, and I shall therefore make no special or separate award arising
out of it. The tenant is entitled to the costs of its application for leave to
appeal, and of its successful appeal against the first award, save in relation
to its application for an extension of time. The costs of the landlords of and
incidental to that application are to be borne by the tenant. The landlords
must pay the tenant’s costs of the landlords application for leave to appeal
and of their unsuccessful appeal against the second award.
I shall ask counsel to agree minutes of
the order to be made in each case.