Weekly tenancy – Rent review – Date from which reviewed rent effective – Tenancy agreement specifying date – Whether appellant landlord’s notices specifying different date effective to increase rent – Whether residential landlord validly implementing rent review provisions contained in weekly tenancy – Appeal allowed
The appellant housing association let a property to the respondents by way of an assured tenancy. The lease permitted the appellant to increase the rent annually at a rent variation date in June of each year.
The appellant wished to alter the rent increase date to April in each year. It imposed no rent increase in June but notified the respondents that it proposed to implement the new system the following April, which it did.
The appellant subsequently brought proceedings against the respondents, seeking possession on the ground of rent arrears lawfully due. In their defence, the respondents claimed that the rent arrears were not lawfully due under ground 10 of Schedule 2 to the Housing Act 1988 because the appellant had departed from the contractual rent variation procedures in respect of the variation date.
Finding in favour of the appellant, the judge at first instance decided that the four notices were valid on the grounds that although the tenancy agreement required a 28-day notice to be served to take effect on the first Monday of June, time was not of the essence of that date. Accordingly, it was open to the appellant to implement the rent review with effect from a different and later date.
The Court of Appeal allowed the respondents’ appeal. It held that the tenancy agreement envisaged a review taking place on the first Monday of June each year and the appellant was not entitled to seek a rent increase on a later date: see [2005] EWCA Civ 1385; [2006] 1 EGLR 45; [2006] 14 EG 76. The appellant appealed.
Held: The appeal was allowed.
Assuming that the tenancy agreement identified the first Monday in June as the date upon which payment of the reviewed rent must start, the appellant’s argument that time was not of the essence was misconceived. If the tenancy agreement provided that the only date upon which the rent could be increased was the first Monday of June in each year, it was impermissible to contend that, simply because of the principle that equity did not normally regard time limits as being essential, one could interpret the rent review provisions to enable the appellant to review the rent on some different date: United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 EGLR 61; (1977) 243 EG 43 and 127 distinguished.
However, it did not follow that the only date upon which the appellant could seek to increase the rent payable under the tenancy agreement in any particular year was the first Monday of June. One possible interpretation of the rent review provisions was that the appellant could increase the rent only once in any year from the first Monday of June, and it could exercise the right to do so on any date from and including the first Monday of June, provided that it gave 28 days’ prior notice.
In the present circumstances, which did not concern a rent review entered into in the normal commercial context but involved a charitable, publicly funded, registered social landlord and relatively poor tenants with limited experience of interpreting legal documents, such a moveable rent review date appeared sensible and fair. If the appellant did not serve the notice in early May, the respondents had the benefit of a later review of the rent, but the appellant would not lose the right to review the rent altogether. However, the respondents would not suffer liability for a retrospective increase in the rent.
On a fair reading, the combined effect of the operative rent review provisions was that the appellant was entitled to increase the rent once a year on 28 days’ notice, which notice could take effect at any time on or after the first Monday of June. Nothing in the tenancy agreement indicated that the four weeks’ notice period had to expire by any particular date.
Andrew Arden QC, Jonathan Seitler QC and Iain Colville (instructed by Bremners, of Liverpool) appeared for the appellant; Jan Luba QC, Michael Barnes QC and Adam Fullwood (instructed by Stephensons, of St Helens) appeared for the respondents; Christopher Baker and Tom Leech (instructed by Devonshires) appeared for the Housing Corporation, as interested party.
Eileen O’Grady, barrister
