Burford UK Properties Ltd has failed in an Appeal Court preliminary dispute over the correct method of calculating a hotel rent review under the terms of the lease.
The dispute centred on a clause in the lease whereby the rent was to be based on net bedroom revenue (NBR), with a proviso that the tenant should use its best endeavours to maximise that revenue. Burford claimed that the proviso constituted a covenant by the tenant, Forte Hotels (UK) Ltd, breach of which would entitle the former to sue for damages.
On appeal, however, Arden LJ has held that the trial judge had been correct to hold that the proviso was not a covenant, but a formula by reference to which the NBR was to be calculated on the hypothesis, if not the fact, that the tenant had used its best endeavours to obtain maximum revenue from use of the bedrooms as sleeping accommodation.
Burford UK Properties Ltd and others v Forte Hotels (UK) Ltd (formerly Trust House Forte Ltd) and others Court of Appeal (Auld, Chadwick and Arden LJJ) 17 December 2003.
Paul Morgan QC and John McGhee (instructed by Clifford Chance) appeared for the appellants; Christopher Nugee QC and Jonathan Karas (instructed by Lovells) appeared for the respondents.
References: EGi Legal News 18/12/03
