Rent review at end of fifth year — Surveyors failed to serve rent notice in time — Solicitors serving notice after expiration of fifth year — Whether rent payable from end of fifth year or from end of sixth year — Clause not providing for late notice — Question of construction — Appeal by defendant surveyors allowed
The plaintiff trustees are the owners of 108 Kilburn High Road, London NW6. By a lease dated March 19 1975 they demised the premises for a 35-year term subject to rent reviews. By clause 3 of the lease at any time during the six months before the expiration of the fifth year of the term the lessors “may serve on the Lessee a notice in writing (… a rent notice) providing for the increase of the rent payable [there] under as from the expiration of the year of the term then current to an amount specified …”. In July 1980 the first defendants, a firm of surveyors, served an ineffective rent notice in respect of the first review; the second to ninth defendants, partners in a firm of solicitors, then served a rent notice on December 15 1980 stating that the rent from March 25 1980 was £30,000. The lessees’ contention that the reviewed rent should commence on March 25 1981 was accepted by the plaintiffs on the advice of the second to ninth defendants.
The plaintiffs, who claimed that they had lost a year’s rent and interest, contended that the first defendants were negligent in failing to serve the rent notice in time; the first defendants denied negligence on the basis that the rent was recoverable retrospectively and there would have been no loss. The first defendants appealed from the decision of Potts J (October 17 1989) who held that under the lease the reviewed rent was payable only from March 25 1981.
Held The appeal was allowed.
Time was not of the essence in the rent review clause. The clause did not provide for the late service of a rent notice. One could not apply to late notices the provisions applicable to timeous notices and therefore the clause had to be adapted to achieve the purpose of reviewing the rent from the end of the fifth year of the term. Equity would not prevent the plaintiffs under this clause from receiving the reviewed rent from the end of the fifth year merely on account of a late notice. The scheme of the lease envisaged reviews every five years; because of the late rent notice there was a gap in the machinery provided by the lease. It was not enough to look at the literal words of the lease and the court would imply that it was the intention of the parties that the reviewed rent commenced at the end of the fifth year of the term.
Weller v Akeburst (1980) 257 EG 1259 distinguished.
Paul Collins (instructed by Brice Droogleever & Co) appeared for the appellants; Kenneth Farrow (instructed by Sharpe Pritchard) appeared for the respondent plaintiffs; and James Thom (instructed by Reynolds Porter Chamberlain) appeared for the respondent second to ninth defendants.
