Rent review clause provides for ‘such rent as shall thereupon be agreed between the landlord and the tenant,’ nothing being said as to the position in default of agreement–Lease is not void, tenant must pay on use-and-occupation basis
This was an
originating summons by Mr Anthony Wilders Beer, of Barnet, London, Mr William
Paul Elliott De Beer, of Richmond, London, and Mr Michael Wills De Beer, of
Ontario, Canada, asking what, on the true construction of a clause in a lease
of 54-56 Torbay Road, Paignton, Devon, to the defendant, Mr Harold Herbert
Bowden, was the basis for calculation of the rent of the demised premises for
the period from March 25 1973 to March 24 1978.
Mrs E B
Solomons (instructed by Scott, Son & Chitty) appeared for the plaintiffs,
and Mr G W Jaques (instructed by Boxall & Boxall, agents for R Hancock
& Son, of Callington) represented the defendant.
Giving
judgment, FOSTER J said that the summons arose out of a rather curious question
in regard to what was supposed to be a rent review clause. By a lease dated
July 17 1968 the plaintiffs demised to the defendant premises known as 54-56
Torbay Road, Paignton, Devon, for 10 years from March 25 1968. In May 1971 a
memorandum was made by which the parties agreed to extend the term to a period
of 14 years. In the original lease the reddendum was expressed:
Until the
twenty fourth day of March one thousand nine hundred and seventy three (yearly
and proportionately for any fraction of a year) the rent of £1,250 per annum
and from March 25 1973 such rent as shall thereupon be agreed between the
landlords and the tenant but no account shall be taken of any improvements
carried out by the tenant in computing the amount of increase if any and in any
case not less than the yearly rental payable hereunder such rent to be paid in
advance by four equal quarterly payments on the four usual quarter days the
first of which payments shall be made on March 25 1968 . . . .
The memorandum
of 1971 provided:
In
consideration of the covenants on the part of the tenant contained in the
within written lease the landlords agree that the term of years . . . shall be
read and construed as if the term of fourteen years were substituted in the
place of ten years and the reference . . . to a rent review in respect of the
rent to be charged for the said premises from March 25 1973 shall be read and
construed as if there were also inserted reference to a rent review for the
rent to be charged for the said premises from March 25 1978. . . .
The parties
had failed to agree what the rent should be on the first review date, from
March 25 1973. The plaintiffs had obtained a valuation to the effect that a
proper rent for the period in question would be £2,850, and they were in fact
prepared to take £2,650, but the defendant did not agree with that or any other
figure. On the question raised by the summons, the plaintiffs submitted that he
(his Lordship) should read into the reddendum of the lease, after the words
‘such rent as shall . . . be agreed between the landlords and the tenant,’
words such as, ‘and if there shall be no agreement the rent payable shall be a
proper and reasonable rental having regard to the market value thereof to be
fixed by the court.’ For the tenant, it
was suggested that if one found that a new rent had not been agreed the rent of
£1,250 was to continue, and reliance was placed on the words ‘in any case not
less than the yearly rental payable hereunder.’
He (his
Lordship) thought that it was perfectly clear that the original rent of £1,250
was to be paid only up to March 24 1973 and was not to be paid thereafter. The
words relied on for the tenant, ‘in any case not less than the yearly rental
payable hereunder,’ in truth quite plainly assumed that some other rent was
going to be paid after March 24 1973, and not the original rent; they were to be
applied only if that rent happened to be less than £1,250. In his (Foster J’s)
judgment, there was a complete hiatus as to the rent to be paid after March 24
1973 and again, because of the memorandum, after March 24 1978, but there was
in contemplation a rent different from the original rent. It had been suggested
on behalf of the plaintiffs that if no rent was in fact agreed or provided for
in a lease the term was void, and that accordingly the lease now in question
was void from the date specified for the first review, March 25 1973. He (his
Lordship) considered, however, that where one found a hiatus such as this it
was incumbent on the tenant to pay the landlord a sum in respect of the use and
occupation of the premises while the tenancy was in existence. The amount the
tenant must pay for use and occupation would be subject, in the present case,
to no account being taken of any improvements he had made, and would in any
case be not less than £1,250. The summons should accordingly be sent back to
the master for him to decide what was the proper sum the defendant should pay
during the currency of the lease for use and occupation. This would be a matter
of evidence before him with experts on each side. After March 25 1973,
therefore, and in the absence of agreement again in 1978, the proper amount
which the tenant should pay was the amount referable to his use and occupation
during the currency of the tenancy. When counsel drew up an agreed minute they
could use the phrase ‘for use and occupation’ or ‘what the premises were
worth’; the phrases meant the same thing.
