Landlord and tenant — Problem caused by oddly drafted rent review clause in lease which stated earliest date for setting in motion rent review machinery, but did not specify any latest date for doing so — First review period began on December 25 1977 — Notice by lessors specifying a figure of open market rental value for the review period had to be served not earlier than December 25 1976 — In fact such notice was not given until March 19 1980 — The first rent review period was due to expire on December 24 1982 — Lessees challenged the effectiveness of lessors’ notice, contending that it should have been served not later than the expiry of the 12 months’ period immediately preceding the rent review period, ie not later than December 24 1977 — Lessors sought declarations by originating summons that they were entitled to call for a rent review with effect from December 25 1977; that they were entitled to apply under the lease for an independent surveyor to determine the revised rent; and that such rent should be determined by reference to rental values current at the date of the award — Lessees contended that a notice in respect of rent for a review period must be served before the commencement of the period and that time was of the essence of that obligation — In the alternative they argued that the notice was invalid on four grounds, common law election, promissory estoppel, estoppel in pais or by representation, and unreasonable delay — These arguments were rejected by the judge, who held that they could not prevail against the express wording of the review clause — Interesting argument based on the agricultural holdings case of Sclater v Horton rejected — Declarations made in favour of the lessors as requested in the summons
In this
originating summons the plaintiffs, London & Manchester Assurance Co Ltd,
sought declarations favouring their construction of a rent review clause
against the defendant lessees. The rent review clause in question was contained
in a 21-year lease of ground-floor shops and basements at 54 and 56 Oxford
Street and 57 and 58 Rathbone Place, London W1. The defendant lessees were the
outfitters, G A Dunn & Co.
K Lewison
(instructed by Wilde Sapte) appeared on behalf of the plaintiffs; Derek Wood QC
and George A Ward (instructed by Wright, Johnson & Cheales) represented the
defendants.
Giving
judgment, PETER GIBSON J said: This case provides another illustration of the
difficulties to which rent review provisions in a lease can give rise.
By a lease and
deed of surrender made on February 4 1971 four ground-floor shops and the
basements thereunder at the corner of Oxford Street and Rathbone Place in
London, and known as 54 and 56 Oxford Street and 57 and 58 Rathbone Place, were
let to the defendants, GA Dunn & Co, the well-known outfitters. The term of
the lease was 21 years from December 25 1970. The rent was expressed to consist
of two items, only the first of which is material.
The relevant
part of the reddendum in clause 1 reads as follows:
. . . YIELDING
AND PAYING therefor during the said term the said yearly and proportionately
for any fraction of a year first the rents hereunder set out
(a) for the first 4 years of the said term the
yearly rent of £13,100
(b) for the next 3 years of the said term the
yearly rent of £14,600
(c) During the next 5 years of the term
commencing on December 25 1977 (hereinafter called ‘the first review period’)
the rent payable by the Lessee shall be whichever shall be the higher of
£18,000 per annum and the open market value of the demised premises for the
review period
(d) During the next 5 years of the term and
during the last 4 years of the term (hereinafter respectively known as ‘the
second review period’ and ‘the third review period’) the rent payable by the
Lessee shall be whichever shall be the higher of the reviewed rent in the 12th
and 17th year of the said term and the open market value of the demised
premises for the second review period and the third review period respectively.
Such reviewed
rents to be determined in accordance with the provisions in that behalf
contained in clause 5 hereof . . .
Clause 5
provides:
PROVIDED THAT
AND IT IS HEREBY AGREED as follows:
(1) The expression the open market rental value
as aforesaid means a sum in relation to the review period or second review
period or third review period as the case may be determined in manner
hereinafter provided as being at the time of such determination the annual
rental value of the Demised Premises in the open market on a lease for a term
of years certain equivalent to the number of years then unexpired of the term
granted by this Lease with vacant possession at the commencement of such term
but upon the supposition (if not a fact) that the Lessee has complied with the
obligations as to repair and decoration herein imposed on the Lessee such lease
being on the same terms and conditions other than as to the amount of rent and
the length of the term as are herein contained without the payment of any fine
or premium and disregarding (if applicable) those matters set out in paragraphs
(a) (b) and (c) of section 34 of the Landlord and Tenant Act 1954 as amended by
section 1 of the Law of Property Act 1969 other than subsection (1)(d) thereof
(2) The said open market rental value shall be
determined as follows:
(a) It shall be such sum as shall be specified in
a notice in writing by the Lessor to the Lessee at any time not earlier than
twelve months prior to the expiration of the period of seven years in the case
of the first review period immediately preceding the first review period or not
earlier than 12 months prior to the expiration of the periods of 5 years in the
case of the second review period and the third review period as the case may be
or
(b) As shall within three months after such
notice be agreed between the parties in writing in substitution for the said
sum or
(c) It shall be determined at the election of the
Lessee by counternotice in writing to the Lessor not later than three months
after the Lessor’s said notice (time to be of the essence hereof) by an
independent surveyor appointed for that purpose by the parties jointly in
writing or upon their failure to agree upon such appointment within one month
after the date of the said counternotice then by an independent surveyor
appointed for that purpose by the President for the time being of the Royal
Institution of Chartered Surveyors and every such determination shall be made
in accordance (so far as not inconsistent herewith) with the provisions of the
Arbitration Act 1950 or any statutory modification or re-enactment thereof for
the time being in force and shall be subject to the further provisions of the
next succeeding sub-clause hereof
(3) In the event of the determination by such
independent surveyor not having been made and communicated to both parties
hereto prior to the commencement of the first review period or the second
review period or the third review period as the case may be for any reason
whatever then in respect of the period of time (hereinafter called ‘the said
interval’) beginning with the said commencement and ending on the quarter day
immediately following the date on which such determination shall have been made
and communicated as aforesaid the rent payable hereunder shall continue to be
paid at the rate payable immediately prior thereto
PROVIDED that
at the expiration of the said interval there shall be due as additional rent
payable by the Lessee to the Lessor on demand a sum of money equal to the
amount whereby the first reviewed rent or the second reviewed rent or the third
reviewed rent respectively shall exceed the rent payable immediately prior
thereto but duly apportioned in respect of the said interval.
The reference
in the second line of clause 5(1) to ‘the review period’ must of course be a
reference to the first review period. The first review period was therefore to
commence on December 25 1977 and to expire on December 24 1982, and the lessor
could serve a notice under clause 5(2)(a) in respect of that period not earlier
than December 25 1976.
In June 1977
the reversion immediately expectant on the term granted by the lease became
vested in the plaintiff, London & Manchester Assurance Co Ltd. Prior to
that time no notice under clause 5(2)(a) had been served by the then lessor nor
did the plaintiff thereafter until some 21/4 years into the first review
period. The plaintiff demanded and received rent at the rate of £18,000 per
annum for the first nine quarters of the first review period. On March 19 1980
the plaintiff’s agents wrote to the defendants saying that they were giving
notice pursuant to clause 5(2)(a) that the plaintiff required the rent to be
reviewed and suggesting £140,000 as the open market rental. By letter of June 6
1980 the defendants’ solicitors informed the plaintiff’s agents that the
defendants regarded the notice as invalid, but without prejudice to that
assertion they preserved their position by giving the counternotice under
clause 5(2)(c), thus satisfying the strict condition as to time in that clause.
No independent surveyor has been appointed.
On April 14
1981 the plaintiff took out the originating summons herein by which it seeks
three declarations:
1. A
declaration that upon the true construction of the reddendum in clause 5 of the
above-mentioned lease and in the events which have happened the plaintiffs are
entitled to call for a review of the rent payable under the above-mentioned
lease with effect from December 25 1977.
2. A
declaration that upon the true construction of the reddendum in clause 5 of the
above-mentioned lease and in the events which have happened the plaintiffs are
entitled to apply to the President for the time being of the Royal Institution
of Chartered Surveyors for the appointment of an independent surveyor as
arbitrator to determine the amount of the reviewed rent to be paid by the
defendant as aforesaid.
3. A
declaration that upon the true construction of the reddendum in clause 5 of the
above-mentioned lease and in the events which have happened the arbitrator
should determine the amount of the reviewed rent by reference to rental values
current at the time of his award.
There are two
main issues between the parties. First, on the true construction of the lease
is the lessor obliged to serve his notice under clause 5(2)(a) in respect of
rent for a review period before the commencement of that period and, if so, is
time of the essence of that obligation?
If the answer be ‘Yes’, as Mr Wood appearing for the defendants submits,
then the plaintiff was too late with its notice of March 18 1980 and the second
issue does not arise. If the answer be ‘No’, as Mr Lewison for the plaintiff
submits, then the second issue arises: that is to say, in the events that
happened is the plaintiff’s notice invalid?
Mr Wood, in submitting that the notice is invalid, puts this part of his
case on four grounds which may be labelled as follows:
(1) common law election
(2) promissory estoppel
(3) estoppel in pais
(4) unreasonable delay
I start with
the first issue, the question of construction. Both sides agree that the
draftsmanship of the rent review provisions leaves much to be desired. A
comparison of those provisions in this lease with those in the lease the
subject of the decision of Goff J in Accuba Ltd v Allied Shoe Repairs
Ltd [1975] 1 WLR 1559 shows that in all probability a common precedent was
used and adapted in each case; and it appears from the Accuba case (at p
1560) that that precedent is to be found in the 1966 edition of the Encyclopaedia
of Forms and Precedents. The lease before me differs from that in the Accuba
case in at least two material respects. First, whereas the lessor’s notice in
the lease before me is to be served ‘at any time not earlier than 12 months
before the first review period’, in the Accuba lease it was to be served
at any time before the end of a period ending a year before the review period.
Second, there is an inevitable rent increase in the first review period in the
lease before me subject only to the possible temporary effect of clause 5(3),
whereas in the Accuba case the rent for the single review period was the
higher of the previous fixed rent and the rent as determined in accordance with
provisions the same as in clause 5(3).
The rent
review provisions contain one remarkable feature. On the literal wording of
clause 5 there is no fixed date such as the start of the review period for the
date at which the open market rental value is to be determined. Mr Lewison (by
way of primary submission) and Mr Wood are at one in saying that that rental
value falls to
ground that whether the determination of the rental value occurs before or
after the review period has commenced, the rental value at the start of the
review period is not the relevant value. As the determination by the independent
surveyor pursuant to clause 5(2) is to be made in accordance with the
Arbitration Act, it is clear that there could be considerable delays after the
lessee had elected for a determination by an independent surveyor before the
determination was made, for example, if there was a case stated for the
decision of the High Court. When one bears in mind that the determination is to
be of the rental value of the premises in the open market on a lease for a term
of years certain equivalent to the number of years then (ie at the date of
determination) unexpired of the term and that those provisions are applicable
in respect of all the review periods including the third which comprises the
last four years of the term of the lease, it is readily apparent that the
result of having the rental value determined at the date of determination could
be very strange indeed. It may be that it was in the light of such obvious
difficulties that in the Accuba case it was apparently not in dispute
that the determination was to be of the rental value at the commencement of the
review period (see the report at p 1565 C-E and p 1566 C-D). In the present
case Mr Lewison made an alternative submission that as the rental value was, in
the words of clause 1, the open market value of the demised premises for the
review period, on a determination after the start of the review period values
over the whole period should be looked at. But this gives little or no effect
to the express provisions of clause 5(1) that the open market value is to be
the sum determined as being at the time of such determination the annual rental
value, and I can see no escape from giving literal effect to those words,
however curious a result they could produce.
Mr Wood
submits that a term is to be implied in clause 5(2)(a) that the notice under
that clause should be given not later than the expiry of the 12 months period
immediately preceding the rent review period. He accepts that in the absence of
any contraindication time is not of the essence of a timetable for completion
of the various steps for reviewing rent under a lease (United Scientific
Holdings Ltd v Burnley Borough Council [1978] AC 904). But he
submits there is a contra-indication in this lease. He relies on the provision
for the determination of the rental value as at the time of determination both
for implying the term in clause 5(2)(a) and as the contra-indication making
time of the essence of the implied time-limit. Further he relies on the
decision of the Court of Appeal in Sclater v Horton [1954] 2 QB 1
as authority for implying a mandatory timetable in the present case.
Mr Wood’s
submissions are nothing if not bold. The lease expressly states the earliest
date for the service of a notice under clause 5(2)(a) and in marked contrast it
does not state the latest date for such service; moreover the absence of a
latest date is emphasised by the words ‘at any time’. A further striking
contrast is provided by the express time-limit for the lessee’s notice of
election, which was also expressly made subject to a provision that time was to
be of the essence. Mr Wood accepts, as he must in the light of the United
Scientific case, that the fact that the lessor alone had the right to
initiate a rent review would not make time of the essence of a time-limit for
initiating the rent review. Still less would that fact justify implying a
time-limit not expressed. The only provision of the lease on which Mr Wood
relies is the provision for determining the rent at the time of determination.
He says that because of the possible injustice to either lessor or lessee if
the rental value at the date of determination were much lower or higher than it
was at the start of the review period, the lease must be read in such a way
that that determination will take place about the time of the start of the
review period. I accept that it would have been entirely fair and reasonable
for the parties to the lease to have agreed that the lessor’s notice should be
served by the start of the review period. But it is not permissible for the
court to imply a term merely because it is fair and reasonable. Necessity is
the appropriate test (see Liverpool City Council v Irwin [1977]
AC 239). I do not see how in this lease it could be said that the suggested
time-limit was a necessary implication. The lease expressly contemplates that
the determination may take place after the start of the review period, and Mr
Wood accepts that even with his implied term there could be a long delay
thereafter before the determination. Further, Mr Wood’s submission must proceed
from the premise that the parties intended that the rent for a review period
should be the rental value about the commencement of that period. But the very
terms of the provision on which Mr Wood relies, providing as it does for the
rental value to be determined as at the date of determination, whenever that
determination might be, appears to me to be inconsistent with that premise.
Then there is the insuperable difficulty of reconciling the words ‘at any time’
with the suggested implied time limit. In my judgment, therefore, as a matter
of construction of the language of the lease, Mr Wood’s submission cannot
succeed.
Does Sclater
v Horton compel a different conclusion?
That was a decision on the construction of section 8 of the Agricultural
Holdings Act 1948 concerning rent reviews in agricultural tenancies. In that
case the court was prepared to imply a term that a particular date referred to
in the section had to precede another date referred to in the section, that
being, as Sir Raymond Evershed MR put it at p 10, ‘the necessary and inevitable
implication of the language which Parliament has used’. Mr Wood submitted that
because the section contained terms to be incorporated into tenancy agreements,
it was in his words in pari materia. I cannot accept that. What
Parliament may be presumed to have intended as a fair term in agricultural
tenancies generally may be wholly different from what parties to a particular
business tenancy may be presumed to have intended. More important, there is no similarity
between the language of section 8 and the language of the lease which I have to
construe and the machinery for rent review laid down by the section is very
different from that laid down by the lease. The reasoning which led the members
of the Court of Appeal to their conclusion was largely based on the particular
wording of the section. Mr Wood placed reliance on a passage in the judgment of
Sir Raymond Evershed at p 11 where, after referring to the contrary argument as
leading to the consequence that rents would be fixed by reference to a date
when circumstances would have been quite different from those existing when the
rent became payable, he said: ‘If a rent is to be fixed, the normal and fair
date at which it should be fixed is the date when it begins to operate’. But
that was said in the context of statutory provisions which did not contain
anything corresponding to the provisions in clause 5 expressly recognising as
they do that the determination might take place after the date when the rent
was to begin to operate. Sclater v Horton seems to me to be
plainly distinguishable and I cannot find in it any principle applicable to the
present case. I should also record that Mr Lewison reserves the right to say
elsewhere that Sclater v Horton was wrongly decided as, he says,
the decision proceeded on the erroneous footing that rent had to be ascertained
by the time it becomes due.
In the result
I must reject Mr Wood’s submission on the first issue. In so doing I do not
overlook that there are difficulties if clause 5(2)(a) is construed literally
as enabling the lessor to serve his notice ‘at any time’ after the earliest
date specified without any limit in time, and indeed Mr Lewison was prepared to
concede that the lessor could not serve a notice under clause 5(2)(a)
initiating the rent review procedure for a review period at a time when the
rent for an earlier period had not yet been determined. He was also prepared to
accept that a notice for the first review period could not be served later than
December 24 1981, the day before the earliest date when a notice for the second
review period could be served. It is unnecessary for me to pronounce on the
correctness of these concessions. Suffice it to say that, in my judgment, on
the true construction of the lease the lessor was not obliged to serve his
notice before the commencement of the first review period or before the date
when the plaintiff in fact served its notice. In reaching this conclusion I am
comforted by the thought that this is at least consistent with the decision of
Goff J in the Accuba case. In that case it was held that time was not of the
essence in respect of the express time-limit for the service of the lessor’s
notice. It would be surprising if the lessor in the present case, where there
was no time-limit expressed, was to be subject to a more stringent condition as
to time. Of course the argument that Mr Wood has advanced in the present case
on the significance of the provisions for determining rent at the date of
determination does not appear to
case was wrongly decided. While the reasoning of Goff J, based as it was on the
then supposed dichotomy between option clauses and machinery clauses was
incorrect, Lord Diplock in the United Scientific case (at p 936)
expressly stated that the decision was right, and I respectfully agree.
I turn now to
the second issue, and to Mr Wood’s four grounds of attack on the validity of
the notice in the light of the events that happened.
(1) Common Law Election:
The relevant
rule is stated in Spencer Bower and Turner’s Estoppel by Representation,
3rd ed at p 324 thus:
When A in his
dealing with B, being at liberty to adopt either of two mutually exclusive
steps, proceedings, courses of action, or attitudes, in relation to B, elects
to take or adopt one of them and to reject the other, or to ‘waive’ his right
in respect thereof, and A’s declaration of such election or ‘waiver’ by words,
conduct or inaction, influences B to alter his position to his detriment, A is
estopped, as against B, from thereafter resorting to the course of action which
he has thus intimated his intention of relinquishing, dispensing with or
‘waiving’.
The
defendants’ argument runs thus. The plaintiff on December 25 1977 had the
choice either of demanding rent at the rate of £18,000 per annum or of
initiating a rent review, as it alone could do, by serving a notice under
clause 5(2)(a). If the plaintiff had elected for the latter, the rent payable
by reason of clause 5(3) was £14,600 per annum until the rent was determined,
that being the rent previously payable. The plaintiff elected to demand rent at
the rate of £18,000 per annum and the defendants were thereby influenced to pay
rent at that rate. In so doing they lost the benefit of having the use of the
difference between rent at the rate of £18,000 per annum and rent at the rate
of £14,600 until the determination.
The crucial
first step in the argument is that the plaintiff at the start of the first
review period was put to the choice of electing between two mutually exclusive
courses of action. It would appear that implicit in this is the suggestion that
the lessor had to initiate the rent review procedure if at all not later than
the first demand for rent for the first review period, although Mr Wood did not
in fact rely on clause 5(3) on the first issue. I must examine the rent review
provisions in further detail to see whether the plaintiff was in fact faced
with such a choice.
The relevant
part of the reddendum required the defendants to pay whichever should be the
higher of £18,000 or the open market value as determined in accordance with
clause 5. The reddendum was not worded as a requirement to pay either £18,000 or
at the election of the lessor the open market value as so determined. Thus the
rent payable according to the reddendum could not be less than £18,000 but
could be higher if so determined under clause 5. Clause 5 also contained
directory language for the determination of the open market value. The
machinery laid down for that determination was, first, that the lessor should
specify the rental value in a notice; second, if that value was not accepted by
the lessee, the lessee within three months of the notice could either agree a
different value with the lessor or elect for the determination of the value by
an independent surveyor. The final part of clause 5(2) states ‘every such
determination’ (ie every determination by the independent surveyor) ‘shall be subject
to the further provisions of the next succeeding sub-clause thereof’. So clause
5(3) is expressed to have effect in respect of the determination by the
independent surveyor under clause 5(2)(c), but not in respect of a
determination pursuant to clause 5(2)(a) and (b). Clause 5(3) contains a
condition precedent to its operation, that is to say, ‘In the event of the
determination by such independent surveyor not being made and communicated to
both parties thereto prior to the commencement of the relevant review period’.
If that condition is satisfied, then in the period defined as ‘the said
interval’ beginning with the commencement of the review period and ending on
the quarter day following the date on which ‘such determination’ shall have
been made and communicated to both parties, the rent is to continue to be paid
at the rate payable immediately prior to that period. The reference to such
determination can only be a reference to the determination by the independent
surveyor. Accordingly, unless there is such a determination there is no period
marked out for the payment of the rent at the previous rate. It follows that
this provision cannot apply at a time when there might be no such
determination, for example when the rent review procedures have not yet been
initiated at all or when they have been initiated but have not reached the
stage of the lessee’s election pursuant to clause 5(2)(c) for determination by
an independent surveyor. It can apply only when the lessee has elected but the
independent surveyor has not yet made his determination and the review period
has commenced. If that is right there can be no question of the plaintiff being
put to its election with its first rent demand for the first review period or
having elected by demanding rent at the rate of £18,000. £18,000 was the
correct rate unless and until the rent review procedures had been initiated and
had proceeded as far as the lessee’s election under clause 5(2)(c).
In so
construing clause 5(3) I am aware that there are difficulties attendant
thereto. One is that because clause 5(3) once operated specifies the rent for
the whole of the said interval and that rent in respect of the first review
period is £14,600, the defendants will (as Mr Lewison accepts) be entitled to a
rebate. In contrast to the provision for the payment by the lessee of an
additional sum when the rent is determined by the independent surveyor, there
is no express provision for the payment by the lessor of any rebate. The
possibility of any rebate could of course arise only in respect of the first
review period. There is no difficulty in principle in a rate of rent being
applied retrospectively to an earlier date from which the rent was payable (see
C H Bailey Ltd v Memorial Enterprises Ltd [1974] 1 WLR 728 as
approved in the United Scientific case), and I do not think that this
difficulty compels a different construction of clause 5(3). A second difficulty
lies in the use of the word ‘continue’ in that clause. Once rent has been paid
at the rate of £18,000 per annum it cannot be said that the rent shall continue
to be paid at the rate of £14,600. Again this difficulty arises only in respect
of the first review period and I do not think that this provision should be
construed differently in relation to the different review periods. In the
context of a provision that the rent to be payable in the said interval is to
be the same as the rent payable in the period immediately prior to the said
interval, the word ‘continue’ is not inappropriate. Again I do not regard this
difficulty as sufficient to outweigh the other considerations pointing towards
the construction I favour.
I would add
that in any event I am not persuaded that the mere service by the plaintiff of
a demand for rent at the rate of £18,000 per annum and the payment by the
defendants in accordance with that demand is a sufficient foundation of fact
for the defendants to succeed under the doctrine of common law election. There
must be an unequivocal demonstration by the party alleged to have made an
election of a choice of one alternative and the rejection or waiver of the
other alternative. In the context of a provision for a minimum rent of £18,000
and the possibility of a higher rent being determined once the lessor initiates
the rent review procedure, some clearer indication of an election would, in my
view, be necessary before the court would hold that the lessor had given up the
right to a rent review. Certainly there is no evidence that the defendants
thought that the plaintiff had deliberately chosen to abandon that right when
demanding rent at the rate of £18,000 per annum. While a plaintiff will not be
permitted to blow ‘hot and cold’, he is entitled to blow ‘hotter’, such as when
he exercises one right to receive a payment and later exercises another right
not inconsistent therewith to receive more (see Lissenden v CAV Bosch
Ltd [1940] AC 412 at 429). In my judgment this is a case of the plaintiff
legitimately blowing hotter.
Thus despite
the ingenuity of the argument and the skill with which it was presented, I
cannot accept Mr Wood’s submission under this head.
(2) Promissory Estoppel:
The second way
in which Mr Wood puts his case on the second issue is on the basis of
promissory estoppel. He says that the demand by the plaintiff for rent at the
rate of £18,000 was a representation that the plaintiff would not initiate the
rent review procedure under clause 5 and that in reliance thereon the
defendants paid rent at that rate instead of at the rate of £14,600 per
annum and thereby the defendants lost the benefit of the use of £3,400 per
annum.
I take as a
statement of the conditions needed to establish promissory estoppel the
following passage from the recent judgment of Oliver LJ in James v Heim
Gallery Ltd (1981) 41 P & CR 269 at 280 [256 EG 819, [1980] 2 EGLR
119]:
In order to
found a promissory estoppel, there has first to be found some clear and
unequivocal representation, either by words or conduct, that the party claimed
to be estopped will not rely upon his strict contractual rights. Secondly, the
representation must be made with the intention, or at least the knowledge, that
it is to be acted upon by the other party by altering his legal position, and
thirdly he must so alter his legal position in reliance upon the representation
in such a way that it would be inequitable, or unfair, to permit the party
claimed to be estopped from departing from the representation.
If I am right
on the question of construction, the argument based on promissory estoppel
seems to me to be bound to fail. The plaintiff could not be said to be making
any such representation as is alleged as the rent demanded was the correct rent
payable and the defendants’ right to pay rent at the rate of £14,600 had not
arisen in the absence of the initiation of the rent review procedure and the
lessor’s election. If I am wrong on that construction and the rent was payable
only at the rate of £14,600, I am still unable to spell out of the bare demands
for rent at the minimum rate payable under the reddendum any clear or
unequivocal promise by the plaintiff not to serve a notice under clause
5(2)(a). Nor is there any evidence that in complying with the rent demand the
defendants relied on any such representation. There is nothing before me to
indicate that the defendants thought that the plaintiff was making any promise
of any kind (compare Kammins Ballroom Ltd v Zenith Investments
[1971] AC 850 at 994 per Lord Diplock).
Accordingly, I
must reject Mr Wood’s submissions under this head, too.
(3) Estoppel in pais:
The third way
in which Mr Wood puts his case is on the basis of an estoppel in pais. For
this, too, he must show a clear and unequivocal representation, but of a fact
rather than of a promise as to future conduct, which was intended to induce the
defendants to alter their position and on which the defendants relied in
altering their position to their detriment. Again Mr Wood relies on the rent
demands as being the representation. He says that thereby the plaintiff
represented that the rent currently due was rent at the rate of £18,000 and not
at the rate of £14,600, the latter being the appropriate rate if the plaintiff
intended to preserve the right to initiate the rent review procedure; and that
in reliance on that representation the defendants acted to their detriment by
paying rent at the higher rate and thereby losing the benefit of the use for
the time being of the difference between the two rates.
Again this
argument cannot run if I am right on the question of the construction of clause
5(3). If I am wrong on that question, I am still unable to spell out of the
bare rent demands for the minimum rent provided for by a reddendum an
abandonment of the right to serve a notice at any one time initiating a rent
review, and again I see no evidence that it was so understood by the defendants.
In any event even if the rent demands constituted representations such as to
estop the plaintiff from claiming that the rent for the nine quarters was other
than £18,000, or was other than at the rate of £18,000 per annum, I do not see
that it would prevent the plaintiff from having the rent reviewed in respect of
the remainder of the first review period.
This attack,
therefore, also fails.
(4) Unreasonable delay:
Mr Wood’s
fourth attack is on the basis of unreasonable delay. He says that there is an
implication of law that a notice initiating a rent review must be served within
a reasonable time from the date from which rent is to run and that this is a
doctrine independent of estoppel. He says that the delay of 2 1/4 years after
the start of the review period before the notice of March 19 1980 was served
was unreasonable in the context of a five-year review period and in particular
because of two factors. One is the provision for determining the rental value
as at the date of determination. The other is the payment of rent at the rate
of £18,000 for nine quarters instead of at the rate of £14,600. Mr Wood further
says that it is unnecessary to show that detriment resulted from the delay, but
that if it is necessary he points again to the defendants not having the use of
£3,400 per annum.
The
authorities on which Mr Wood relied were all cases where the rent review
provisions specified a date by which the lessor had to take action though time
was not made of the essence of that provision. Accordingly, in those cases it
was meaningful to talk of delay occurring after that contractual time-limit had
passed (see the Accuba case at p 1565 and Telegraph Properties
(Securities) Ltd v Courtaulds Ltd (1981) 257 EG 1153). In the latter
case Foster J referred to the dictum of Lord Salmon in the United Scientific
case at p 951: ‘Any unreasonable delay caused by the landlords and which is to
the tenants’ prejudice would prevent the rent being reviewed after the review
date’. That remark was made in the context of a timetable (in respect of which
time was not of the essence) being laid down by a lease. I note that in Amherst
v James Walker Goldsmith and Silversmiths Ltd (1980) 254 EG 123 at p 125
Sir David Cairns expressed ‘no more than a tentative opinion’ that a notice after
a contractual time-limit had passed might well have to be within a reasonable
time; while in James v Heim Gallery Ltd , [1980] 1 EGLR 86(supra)
at p 278, when argument had been addressed on the basis of abandonment, Buckley
LJ was similarly tentative: ‘If a party who unreasonably delays in asserting
some right can on that ground, distinct from promissory estoppel, be held to
have abandoned that right so as to be barred from asserting it, this is not, in
my judgment, such a case’. Let me assume, without deciding, that there is a
principle that unreasonable delay after a contractual time-limit has passed
prevents the party delaying from doing what he had agreed to do within that
time-limit, even though time was not made of the essence thereof. It nevertheless
does not follow that such a principle has any application to the present case
where so far from there being a time-limit specified for the service of the
lessor’s notice under clause 5(2)(a), the wording of the clause is that the
lessor may serve such a notice ‘at any time’. I have been referred to no
authority that supports the principle addressed to me by Mr Wood that the
notice must be served within a reasonable time from the date from which rent is
to run. In the circumstances I accept Mr Lewison’s submission that it is not
meaningful to describe the interval of time between the start of the review
period and the service of the notice as a delay, still less that it should be
categorised as unreasonable. Accordingly this argument, too, on the part of the
defendants fails.
In the result
I shall make the declarations as requested in the originating summons herein.
