HMV UK Ltd has failed in a High Court challenge to an arbitrator’s ruling in the latest rent review over premises in Reading.
HMV had hoped Mr Justice Warren would grant it permission to appeal against the arbitration award made by John Male QC in July last year, in the rent review process for its former store at Friar Street, which closed its doors in February.
HMV claimed that the rent, which fell to be calculated as 57.69% of the notional value of hypothetical similar premises in the prime retail location of Broad Street, should be reduced on the basis of an assumption that the imaginary premises were, like its premises, deficient in relation to fire escape provision.
However, the adjudicator backed landlord Propinvest Friar Limited Partnership’s argument that the fire escape qualities of hypothetical premises for assessing the comparable rental value were to be identified by the terms of the lease, not the actual qualities of the Friar Street premises, which has only one fire escape.
Propinvest successfully argued that the lease expressly provided that it was to be assumed that the requirement of the lease that the premises met with fire precautions had been fully performed and observed.
HMV argued that the arbitrator’s decision to find in favour of Propinvest, and not reduce the rent calculation to take into account the fire escape situation, was “obviously wrong”.
However, the judge refused HMV permission to appeal, ruling that the arbitrator had reached the correct decision.
He said: “This is a case where the parties had chosen to appoint a highly respected and knowledgeable arbitrator to decide a very narrow point in a much wider dispute. In those circumstances, the court would be reluctant to allow the matter to proceed in any event.”
The court heard that HMV’s rent for the premises is £191,500 per year, subject to review.
