Application for leave — Appointment of a surveyor out of time — Lease containing rent review provision — Surveyor to be appointed not less than four months before specified date — In default surveyor to be nominated — Failure to apply for nomination entailing that landlords’ notice shall be void — Whether landlords losing right to review — Whether appointment for expert or arbitrator — Judgment for tenants
The plaintiffs held the reversionary interest in a lease, of January 20 1974 of unit 18 occupied by the defendants, trading as Safeways, at Myrtle Walk Shopping Centre, Bingley. There was a rent review due at December 25, 1992. Under clause 3 of the third schedule, in order to invoke the rent review provision, an independent surveyor was to be appointed by agreement between the parties not less than four months before December 24 1992 (the review date). In default of such agreement, a surveyor was to be nominated by the President of RICS upon application of the landlord to be made not less than three months before the review date. Clause 6 provided that in default of the landlords making the application, then any notice which the landlords gave to the tenants, was to be void and of no effect. The plaintiffs instructed their surveyors to conduct their negotiations. The landlords proposed a rent of £140,000 pa and a counter-proposal followed upon the tenants’ rejection of that amount. The discussions and proposals, having been begun in June 1992, continued during August and September. Application to the President was made on November 4 1992. The appointed surveyor notified both sides of his appointment on December 7. In January 1993, the tenants sought to argue that the landlords had lost the right to review the rent. The landlords argued, inter alia, that both parties had negotiated in good faith and overlooked the strict time-limit set out in the schedule to the lease. The current rent was £58,000. The landlord sought an order pursuant to section 27 of the Arbitration Act 1950 that there be an extension of time to validate the November 4 application.
Held Leave was refused.
1. The clause in the lease contemplated an expert and not an arbitrator to be appointed to determine the rent: see Safeway Food Stores Ltd v Banderway Ltd (1983) 267 EG 850, where it was held that the umpire was to act as an expert and not as an arbitrator.
2. Further, time was of the essence of the rent review provision: see Stephenson & Son v Orca Properties Ltd [1989] 2 EGLR 129.
3. There was no dispute on the evidence and it was plain that the clause did not point “in any real way to an arbitration rather than a valuation” and that fell “far short of anything that could establish the clause as containing an arbitration clause”: see Langham House Developments Ltd v Brompton Securities Ltd (1980) 256 EG 719.
4. In the circumstances of the case, the court had no jurisdiction to entertain an application for leave to extend the time for the appointment.
John Martin QC (instructed by Teachers Stern Selby) appeared for the landlords; David Neuberger QC and Janet Bignell (instructed by the solicitor to the Argyll Group plc) appeared for the tenants.
