Lease – Rent – Limitation – Respondent company acquiring freehold of property of which apellant held lease – Agreement for lease containing rent review clause – Terms of sale excluding seller’s liability for rent arrears — Arbitrator hearing dispute on rent review — Respondent obtaining possession order based on forfeiture for non-payment of rent — Whether claim being statute-barred — Appeal dismissed
By a lease dated 5 May 1969, the then freeholder let premises for a term of 50 years. By clause 1, the rent payable for the first 25 years was £60 pa. Clause 2 contained a rent review clause and provided that “until such new rent shall have been determined the rent firstly hereinbefore reserved shall continue to be payable and any difference between that and the new rent during such period as this last proviso operates shall be added to and be payable with the next instalment of rent due after the said new rent has been determined”.
The first 25-year period expired on 24 March 1994 but no rent review took place. In July 2005, the appellant acquired the leasehold of the premises. The terms of sale excluded the seller’s liability for arrears of rent above £60 pa so that the appellant might have realised that he was potentially liable, as the buyer, for any arrears of rent above that figure that might result from a rent review.
In March 2006, the respondent’s company acquired the freehold of the premises and raised the question of a rent review. In August 2007, the matter was referred to an arbitrator, who increased the rent from £60 to £1,700 pa. Following that award, the respondent notified the appellant of the rent due from 25 March 1994 to 29 September 2007. The appellant failed to pay the sum demanded and the respondent issued a default notice for non-payment of rent. The county court granted an order for possession. The appellant appealed, contending that the respondent was statute-barred from demanding rent arrears for that period since there had been a delay of more than 13 years, namely from 1994 to 2007, in seeking a rent review, which was longer than any applicable limitation period.
Held: The appeal was dismissed.
The complaints concerning delay in seeking the rent review were matters that the appellant could and should have raised before the arbitrator. Had he done so, the arbitrator might have concluded that the review was too late or he might have accepted the respondent’s arguments. Either way, those matters had not been raised when they should have been and the appellant could not raise them by a collateral attack in court. The judge had been bound by the determination of the arbitrator.
In any event, the contract had not either expressly nor by implication, made time of the essence. Furthermore, even unreasonable delay in a case where time was not of the essence did not provide the tenant with a defence, especially where, as as in the instant case, no evidence was available to found a defence of estoppel or similar: Amherst v James Walker (Goldsmiths & Silversmiths) Ltd [1983] 2 EGLR 108; (1983) 267 EG 163 considered.
Nicholas Macleod-James (instructed by under the direct access scheme) appeared for the appellant; Carl Fain (instructed by Kingsley Napley) appeared for the respondent.
Eileen O’Grady, barrister
