Rent for business premises which by November 5 1972 was still only subject to contract held the relevant rent for purposes of the counter-inflation legislation
This was a
claim by the Co-operative Insurance Society against their tenants, Freeman Fox
& Partners, for arrears of rent amounting to £66,000 odd in respect of
rooms and offices on the first floor of Abford House, Wilton Road, Westminster,
London SW1.
B Galpin
(instructed by Allen & Son) appeared for the plaintiffs, and G Godfrey (instructed
by Richards, Butler & Co) represented the defendants.
Giving
judgment O’CONNOR J said that the defendants were in occupation of business
premises in London under a lease from the plaintiffs that expired on May 9
1972. The rent under that old lease was £6,500 a year. In the early part of
1972 the two parties were negotiating a new lease. It was agreed that the
defendants were going to remain in occupation, and everyone knew that the new
rent would be a great deal more than the £6,500 a year, which was fixed in 1959
or thereabouts. On June 7 1972 the parties reached agreement, subject to
contract, for a new lease from May 10 1972 to June 1976, the rent as from
September 1 1972 to be £28,000 a year. There could be no doubt that both
parties had used the technical and effective expressions necessary to keep all
negotiations subject to contract, and that in law there was no binding
agreement by November 5 1972 for the new lease. Indeed, the new lease was not
finally executed and exchanged until April 16 1974, and in the meantime the
plaintiffs’ agents went on asking for rent at £6,500 a year, this being all
that was paid throughout 1973 and into 1974. As soon as the formalities were
completed, the plaintiffs requested payment of the arrears of rent due to make
up £28,000 a year from September 1 1972, only to be met by a claim by the
defendants that the increase was prevented as from November 5 1972 by the
counter-inflation legislation.
The validity
of that argument turned on the rent payable for the premises in question on
November 5 1972. If one asked today what was the rent of the premises on that
day, there would be not a shadow of doubt as to the answer, because the lease
of April 16 1974 made clear that the rent then was payable at the rate of £28,000
a year. If one had asked the same question on November 5 1972 itself, again
there was not a shadow of doubt as to the answer: each party would have stated
that only a few weeks before, it had been determined that the rent from
September 1 was to be £28,000 a year. That was the business sense of the
matter, and he (his Lordship) was satisfied it was not putting any hole through
the counter-inflation legislation to hold that in the present case the rent of
the premises within the meaning of the order at November 5 1972 was £28,000 a
year.
The plaintiffs
were given judgment for £66,149.32, with agreed interest of £11,024 and their
costs.
