Lease – Rent demand – Forfeiture – Lease providing for payment of insurance rent as contribution to insurance of premises – Lease requiring written notice of insurance rent due – Whether provision of copy of insurance renewal notice by landlord to tenants constituting valid demand for insurance rent – Appeal dismissed
The respondent was the freehold owner of a property leased to the appellant tenants. Under the terms of the lease, the appellants were required to pay a rent deposit of £50,000 and the respondent was permitted to draw down from that deposit sums necessary to satisfy arrears of rent. The lease also provided for the respondent to serve notice in writing requiring payment of any arrears of rent and the appellants were required to maintain the deposit in the sum of £50,000. Further, the right of re-entry contained in the lease was to be exercised in the event of any breach of the lease by the appellants.
When the premises were destroyed by a fire, the respondent demolished the buildings and left the property as a cleared site with access barred by hoardings. There was a provision in the lease for the abatement of rent if the property was destroyed by an insurance risk such as fire which left the premises unfit for occupation or use. By the time of the fire, substantial arrears of rent had accrued. The respondent drew down £20,000 from the rent deposit and asked the appellants to make up that amount. When they failed to do so, the respondent served a notice under section 146 of the Law of Property Act 1925 pursuant to which it re-entered the property and determined the lease.
The appellants sought a declaration that the lease was not forfeit by reason of unpaid arrears of rent, alternatively they sought relief from forfeiture. The county court refused to grant the declaration but allowed relief from forfeiture on terms. The appellants argued that the arrears had wrongly included sums in respect of insurance rent which had not been properly demanded and so were not due from them. The respondent contended that the insurance rent had in fact been paid and did not form any part of the arrears which led to the forfeiture of the lease. The court held that, although respondent had never made a formal demand for the insurance rent, as it had provided the appellants with a copy of the insurance renewal demand which included a statement of the premium due, they had had notice that contributions had been made towards the insurance. The appellants appealed.
Held: The appeal was dismissed.
On the proper construction of the lease, the provision of a copy of the insurance renewal notice constituted a written demand from the respondent to the appellants for the insurance rent. The best evidence of what had to be paid was the renewal notice issued by the insurers since that would inform the appellants precisely of the amount of their additional liability. The lease did not specify any particular requirement for the demand other than that it be written. As the lease was a commercial contract, its words were to be interpreted in the way in which a reasonable commercial person would construe them which was hostile to technical interpretations and undue emphasis on the niceties of language: Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 considered.
Since the lease did not state “ … written demand made by the landlord of the tenant”, it was enough that there was a document, the terms of which amounted to a demand for what was insurance rent. Any written demand would suffice provided that, viewed objectively, a reasonable recipient would understand that the writing amounted to a request for payment of the further rent, taking account of the relevant objective context and the purpose of requiring the demand to be in writing.
In the present case, reasonable persons placed in the position of the appellants would have understood that the renewal notice was a sufficient written memorial of the amount due, that the respondent was requesting payment and that, taken together, this was a demand in writing for payment of the insurance rent. The appellants had in fact paid the insurance rent. The county court had come to the right conclusion for the right reasons.
Adrian Davies (instructed by Van Eaton Solicitors) appeared for the appellants; Russell Stone (instructed by Whitmore Law LLP Solicitors, of Ilford) appeared for the respondent.
Eileen O’Grady, barrister