Six months’ notice of rent review procedure required by clause in lease, ‘provided that failure to give such notice shall not render void the right of the landlord to require determination of a new rent as aforesaid’–These words mean what they say–Landlord nearly three months late with his notice, but still entitled to operate review procedure
This was an
appeal by E C Little & Co Ltd, of Greenway, Southbank Road, Kenilworth,
Warwickshire, from a judgment of Megarry J on January 21 1974 holding in favour
of the respondents, Kenilworth Industrial Sites Ltd, of 42 Queens Road,
Coventry, that a notice dated October 10 1972 was effective to bring into
operation rent review provisions contained in a lease of factory premises in
Farmer Road, Kenilworth, for 21 years from January 19 1968.
Mr E J Prince
(instructed by Martin & Nicholson, agents for Pitt & Derbyshire, of
Birmingham) appeared for the appellants, and Mr C P F Rimer (instructed by
White & Leonard, agents for J Arch & Co, of Coventry) represented the
respondents.
Giving
judgment, MEGAW LJ said that clause 1 of the lease in question provided for a
rent of £2,980 to be paid for the first five years, from January 19 1968 until
January 18 1973. Clause 5 provided:
‘Not more
than 12 months nor less than six months before the expiration of the fifth,
tenth and fifteenth years of the term the landlord shall serve upon the tenant
a notice to agree the rent . . . for the ensuing five years and thereupon the
parties hereto shall agree a new rent as aforesaid . . . provided always that
any failure to give or receive such notice shall not render void the right of
the landlord hereunder to require the agreement or determination as aforesaid
of a new rent.’
On October 10
1972, which was less than the required six months before the expiration of the
fifth year of the term, the landlords served notice on the tenants to agree a
rent for the second five years of the term and proposing a rent of £6,176 per
annum. Megarry J granted the landlords a declaration that that notice was
effective to bring into operation the provisions of clause 5 for determination
of a new rent, and the tenants now appealed.
It was clear
that in clause 1 of the lease express words fixed the rent for the first five
years only. If clause 5 for some reason could not be operated, it would seem
that the consequence was that no rent at all would be payable, at least for the
next five years and possibly not for the remaining 16 years. But that would be
to ignore the proviso to the clause, which said that even though the time limit
for the serving of notice had not been observed, that was not to render void
the right of the landlords to require the agreement or determination of a new
rent for the succeeding five years. Counsel for the tenants had submitted that
clause 5 was in the nature of an option and so was affected by the special
principles of law which (he said) governed all option agreements. He conceded,
however, that if on a true view the clause was not to be regarded as in the
nature of an option, he could not complain of Megarry J’s decision. He (his
Lordship) thought it impossible to treat the clause as an option. It was to his
mind clear, as the judge held, that failure by the landlords to comply with the
requirements of the opening words of the clause did not prevent them from
thereafter, outside the time for service of notice, validly demanding agreement
or arbitration of a new rent. The appeal was without substance, and should be
dismissed.
LAWTON and
ORMROD LJJ agreed, and the appeal was dismissed with costs.
