Landlord and tenant — User clause — Rent review clause construction — Whether use allowed within the Town and Country Planning (Use Classes) Order 1972 could be interpreted as including a reference to a substituted provision in the Town and Country Planning (Use Classes) Order 1987, the scope of which was wider — If so, the reviewed rent would be likely to be higher on that account — No prescription — Question turns on proper construction in context — Indications that construction favoured by landlords could not be justified
lease of a technology centre for a term of 20 years a recital provided that
references in the lease to ‘the Planning Acts’ were deemed to include any
statutory modification or re-enactment thereof for the time being in force and
also to include any statutory instruments for the time being in force
thereunder — A user covenant in the lease provided inter alia for use for the
lessees’ business ‘or with the consent of the landlord such consent not to be
unreasonably withheld any other use within Class 3 of the Use Classes Order
1972’
sought by an originating summons for construction to establish that the
reference to ‘Class 3’ in the user covenant (which was evidently to Class III
in the Schedule to the 1972 order) should now be taken to refer to class B1 in
the Schedule to the 1987 order — Class III in the 1972 order consisted of ‘Use
as a light industrial building for any purpose’, but class B1 in the 1987 order
was of a wider scope, being as follows:
Use for all
or any of the following purposes —
(a) as an office other than a
use within class A2 (financial and professional services),
(b) for research and
development of products or processes, or
(c) for any industrial
process,
which can be carried out in any residential area without detriment to the
amenity of that area by reason of noise, vibration, smell, fumes, smoke, soot,
ash, dust or grit.
rejecting the landlords’ suggested construction, that the recital which
specifically provided that references to the Planning Acts were to include any
statutory modifications thereof showed that the draftsman was well aware of the
need to make such an intention clear where it was intended — There was no
presumption either way — The user covenant made no reference to the Planning Acts
and referred only to Class III of the 1972 order; it contained no substituted
reference formula — The contrast pointed strongly to the intention that the
reference in the user covenant was to be to the 1972 order alone — There was
nothing irrational or uncommercial in such a construction; it was
understandable that a landlord should wish to confine the benefit to the tenant
within a range he knew for certain at the time of the lease — Plaintiffs’
summons dismissed with costs
The following
cases are referred to in this report.
Brett v Brett Essex Golf Club Ltd
[1986] 1 EGLR 154; (1986) 278 EG 1476, CA
City of London Corporation v Secretary of State for
the Environment (1971) 23 P&CR 169; 71 LGR 28; [1972] EGD 957; 224 EG
1559
This was an
originating summons by the plaintiff landlords, the Brewers’ Company, raising a
question of construction of user provisions in a lease which were relevant to
the operation of a rent review clause. The lease was for a term of 20 years of
units in the Dame Alice Owen Technology Centre, Goswell Road, London EC1. The
defendants were the tenants, Viewplan plc.
G E Moriarty
QC and R Glover (instructed by Withers Crossman Block) appeared on behalf of
the plaintiffs; J C Harper (instructed by McKenna & Co) represented the
defendants.
Giving
judgment, MORRITT J said: By this originating summons the plaintiff raises a
question of construction relevant to the operation of a rent review clause in a
lease dated July 1 1983, whereby it granted a term of 20 years, of units 10, 12
and 15, in the Dame Alice Owen Technology Centre, Goswell Road, London, to the
predecessors in title of the defendant.
So far as
material the lease provides, in recital F:
The Planning Acts are deemed to include
the Town and Country Planning Acts 1971 to 1981 and references to the Planning
Acts or to any Act of Parliament whether general or specific are deemed to
include any statutory modification or re-enactment thereof for the time being
in force and also to include any statutory instruments orders rules or
regulations for the time being in force thereunder.
By clause
2(7)(a) the tenant covenanted:
Not during the term to carry on or permit
to be carried on in or upon the demised premises or any part of them any noisy
or offensive trade or business or to do anything upon the demised premises
which would be a nuisance damage annoyance or inconvenience to other occupiers
of the building or to any owners or occupiers of other nearby premises or which
are illegal or immoral but to use the demised premises only for the purposes of
the lessees business of
— and then the lease is blank. Then it
continues:
or with the consent of the landlord such
consent not to be unreasonably withheld any other use within Class 3 of the Use
Classes Order 1972 and in particular not to allow the demised premises or any
part of it to be used for residential purposes.
By clause 2(9)
the tenant covenanted:
At all times during the term to comply in
all respects with the provisions and requirements of the Planning Acts in
respect of the use of the demised premises or any trade or business carried on
therein and not to carry out or permit or suffer to be carried out in or upon
the demised premises or any part of them any development or any change of use
within the meaning of the Planning Acts.
At the time of
the lease the property had been developed by the erection of a three-storey
building comprising 28,500 sq ft pursuant to a permission granted in 1980 and
subject to the terms of a section 52 agreement made between the plaintiff and
the local authority dated July 7 1987. In effect, the permitted use was that of
a light industrial building with offices only ancillary to that use.
The reference
in clause 2(7)(a) of the lease is to the Town and Country Planning (Use
Classes) Order 1972 (SI no 1385). Class III is ‘use as a light industrial
building for any purpose’. There had been three earlier such orders made in
1948, 1950 and 1963.
On June 1
1987, the 1972 order was revoked and superseded by the Town and Country
Planning (Use Classes) Order 1987 (SI no 764). Article 3(1) of that order
provided:
Subject to the provisions of this Order,
where a building or other land is used for a purpose of any class specified in
the Schedule, the use of that building or that other land for any other purpose
of the same class shall not be taken to involve development of the land.
Class B1 is in
the following terms:
Use for all or any of the following
purposes —
(a) as an office other than a use within class A2
(financial and professional services),
(b) for research and development of products or
processes, or
(c) for any industrial process,
being a use which can be carried out in
any residential area without detriment to the amenity of that area by reason of
noise, vibration, smell, fumes, smoke, soot, ash, dust or grit.
The plaintiff
contends that clause 2(7)(a) of the lease must now be read as containing a
reference to class B1 of the 1987 order so that subject to its consent, which
cannot be unreasonably withheld, the permitted use is now wider and in
consequence the reviewed rent will be higher than previously.
The plaintiff
argues that the relevant part of clause 2(7)(a) is a relaxation of the tenant’s
primary obligation under clause 2(7)(a) and its obligation under clause 2(9)
and that in each case that relaxation was to be governed by the planning law
for the time being in force.
Where a deed
incorporates the provisions of a statute or subordinate legislation in the
absence of express words, there is no presumption either way as to whether it
was intended that that reference should include a reference to the law for the
time being in force. The question depends on the proper construction of the
words of incorporation in the context in which they are used: cf Brett v
Brett Essex Golf Club Ltd [1986] 1 EGLR 154 at p 157.
In this lease
the draftsman was well aware of the necessity to make plain where intended that
a reference to existing legislation included a reference to any statutory
modification for the time being in force because that is what he did in the
definition of ‘the Planning Acts’ in recital F.
‘The Planning
Acts’ are referred to in clause 2(9) with the consequence that use within class
B1 of the 1987 order would not infringe that covenant. But clause 2(7)(a) does
not refer to the Planning Acts, it refers only to Class III of the 1972 order.
Use classes orders seem to have changed almost as frequently as the primary
legislation, but no provision is made for any substituted reference in that
clause.
This contrast
points strongly to an intention that clause 2(7)(a) was to be confined to the
1972 order alone. Moreover, I see nothing irrational or uncommercial in such a
construction. The provision that consent should not be unreasonably withheld
went wider than section 19(3) of the Landlord and Tenant Act 1927 and was an
additional benefit to the tenant. It is readily understandable that the
landlord should wish to confine that benefit within a range of which he knew at
the time of the lease. At the date of the lease clause 2(7)(a) and clause 2(9)
would be largely coterminous, but they would not necessarily always be so.
In my
judgment, therefore, the landlord’s construction would involve a substantial
interpolation into or alteration of clause 2(7)(a) which is not justified on
the construction of the lease as a whole. On that ground I dismiss the
originating summons.
Counsel for
the tenant had an alternative argument to the effect that the planning
conditions and the section 52 agreement overrode the 1987 order anyway. For
this proposition he relied upon City of London v Secretary of State
for the Environment (1971) 23 P&CR 169. But in the light of my decision
on the question of construction this point does not arise and I will say no
more about it.
The plaintiff’s summons was dismissed
with costs.
