Lease of shop premises — Provisions of rent review — Requirement that notice of review be given to lessee six months before review date — Lessor failed to give notice within the time-limit — Whether lessor entitled to review — Whether time of the essence — High Court holding that right to review did not arise — Judgment for the lessee
A 25-year lease of shop premises in Cheltenham was made between Chelsea Building Society, as lessor, and R&A Millett (Shops) Ltd, as lessee, on July 1, 1976. It reserved certain specified rents during the initial period. The rent review clause entitled the landlord to an upwards only rent review. Under clause 4(6) of the lease it was to be a condition precedent to the determination of the full market rental value of the premises that the lessor should give the lessee during the first six months of the fifth, 10th, 15th or 20th year of the term as relevant, notice in writing that such value should be agreed or ascertained as at the expiration of the relevant year. A question arose whether the six-month period was a period as to which time was to be treated as of the essence so as to disentitle the lessor from putting into operation the rent review provisions of the lease as from the end of the 15th year of the term, the lessor not having in fact given any notice within that six-month period. The lessor applied to the court for a declaration that time was not of the essence.
Held The application was refused.
1. In relation to time tables laid down by the rent review provisions in leases, there was a presumption that time was not of the essence unless the parties had made it plain by the provisions of the lease that it was: United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904.
2. Thus, the only question which arose in the present case was whether the terms of the lease indicated sufficiently clearly an intention that time should be of the essence in respect of clause 4(6).
3. The words of clause 4(6) expressed the clearest possible intention on the parties’ part that the lessor should not have a right to a rent review unless the lessor first gave notice within the first six months of the relevant year of the term. To say that the giving of such a notice within such a time was a condition precedent of the lessor’s right to have a new market rent determined was equivalent to saying that that right of the lessor should not arise unless he gave notice as required by clause 4(6) within the period: North Hertfordshire District Council v Hitchin Industrial Estate Ltd [1992] 37 EG 153 not followed.
4. By making the giving of notice within the specified six-month period a condition precedent to the landlord’s right to have the rent review provisions operated, clause 4(6) of the lease in the present case made it plain that the giving of such notice within that term was of the essence of the contract.
5. Accordingly, the lessor’s right to have the full market rental value of the premises determined as at the end of the 15th year of the term had not arisen and could not now arise. Accordingly the lessor’s claim for declarations to the contrary failed.
Kirk Reynolds QC (instructed by Bower Cotton & Bower) appeared for the lessor; Jonathan Karas (instructed by Titmuss Sainer & Webb) appeared for the lessee.
