Tenants entitled to propose rent on landlords failing to initiate review procedure – Proposed rent to be revised rent on landlords failing to apply for appointment of valuer within three months of proposal – Tenants proposing current rent – Landlords failing to apply within three-month time-limit – Landlords contending that time not intended to be of the essence – Judgment for tenants
Commercial premises in Bristol were held by the defendant tenants on a 15-year lease granted in 1989 by a predecessor to the plaintiff landlords at a rent of £14,750 pa, subject to upwards-only reviews with effect from June 24 1994 and 1999. Under the review provisions the landlords were entitled, in the absence of an agreed nomination of a valuer, to apply for a nomination by the president of the Royal Institution of Chartered Surveyors, such application (a RICS application) to be made not more than six months before or at any time after the commencement of the relevant review period. In the event of the landlords not making a RICS application, the tenants were entitled, at any time after such commencement, to serve a notice on the landlords proposing a revised rent (the proposed rent) not less than the passing rent. It was further provided that the proposed rent “shall be the revised rent for the relevant review period unless the Landlord shall make [a RICS application] within three months after the service of such notice”.
The plaintiff landlords acquired the reversion in December 1996, at which time no steps had been taken to implement the review provisions in regard to the 1994 review. On July 161997, following abortive negotiations, the tenants served a notice proposing a rent of £14,750 pa, ie the same as the rent for the previous period. The landlords made no RICS application within the three months allowed for by the lease. As the market rent on the relevant date was substantially higher than the proposed rent, the landlords, relying on Phipps-Faire Ltd v Malbern Construction Ltd [1987] 1 EGLR 129, sought a declaration that the time-limit imposed on the making of a RICS application was not of the essence. The tenants relied on the opposite conclusion reached in Scotland by the Inner House of the Court of Session in Visionhire Ltdv Britel Fund Trustees Ltd [1992] 1 EGLR 128. Both courts had considered provisions indistinguishable from those under consideration.
Held Judgment for the tenants.
1. The issue was whether the parties had used a form of expression that, by clearly evincing the concept of finality attached to the end of the prescribed period, was sufficient to rebut the presumption that time was not intended to be of the essence: see Henry Smith’s Charity Trustees v Awada Trading & Promotion Services Ltd [1984] 1 EGLR 116 per Slade LJ at p120, summarising the principles to be derived from United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 EGLR 61.
2. In Visionhire (supra) the Scottish court, having found that the relevant rules were common to both systems, held that the presumption was rebutted because the parties had specified “a kind of ultimatum procedure”, thereby making time of the essence. As a matter of judicial precedent, where there were conflicting decisions of courts of co-ordinate jurisdiction, the later should be preferred if it were reached, as here, after full consideration of the earlier decision: see Minister of Pensions v Higham [1948] 2 KB 153. In fact, the correctness of Phipps Faire (supra) was open to doubt.
3. The landlords could not contend that Visionhire could not be followed without disregarding the decision of the Court of Appeal in Mecca Leisure Ltd v Renown Investments (Holdings) Ltd [1984] 2 EGLR 137. The relevant provisions were in a significantly different form. Notwithstanding certain dicta in Bickenhall Engineering Co Ltd v Grandmet Restaurants Ltd [1995] 1 EGLR 110, no conflict could be found between the decisions in Mecca and Henry Smith’s Charity (supra).
Wayne Clark (instructed by Pinsent Curtis) appeared for the plaintiffs; Edward Cole (instructed by Lindley Johnstone, of Bristol) appeared for the defendants.
Alan Cooklin, barrister
