Rent review — Rent of “Standard Warehouse Building” — Extra large open yard — Whether regard to be had to extra large yard or smaller yard appropriate to a standard warehouse — Lessors’ construction accepted
The plaintiffs are the lessors of a lease granted for a term of 30 years from March 1981 at an initial rent of £68,000 per annum; the defendants are the lessees. The rent was subject to review every five years to the highest of the previous rent, “140% of the Standard Warehouse rent … [or] the Open Market rent …”. “Standard Warehouse rent” was defined by reference to the open market rent of a “Standard Warehouse Building”, meaning “a building of a reasonable shape having an internal gross area equal to that of the buildings on the demise … and enjoying … facilities (including those comprised in the remainder of the demised premises) … constructed … in accordance with the description and specification annexed hereto (and not the description and specification of the demised premises)”. The demised premises consist of unit 35 on the Milton Trading Estate, Abingdon. The lessees took the lease after negotiations; they required a number of special features to be added to the buildings. The area of the demise was such as to give 1.75 acres of open yard space, an area three times the size of conventional warehouse plots on the estate. The plaintiffs contended that in determining the rent at review the extra large open yard of 1.75 acres must be taken into account; the defendants argued that the reference in the review clauses to “Standard Warehouse Building” referred also to the conventional and standard open yards on the estate — an area of about half an acre. In the event of the plaintiffs’ interpretation being accepted, the defendants claimed rectification of the lease on the grounds of common or unilateral mistake.
Held 1. The open yard area to be considered at a rent review is the actual yard area of 1.75 acres. The reference in the rent review provisions to a “Standard Warehouse Building” was to identify a hypothetical building or building type, but enjoying the facilities “in the remainder of the demised premises”. One therefore excludes the actual building; the remainder of the demised premises must be a reference to the actual yard.
2. Any decision leading to rectification of the lease based on common or unilateral mistake must depend on an evaluation of the evidence. The evidence showed that negotiations for the lease were directed towards the type of building which was to be used as a comparable for rent review purposes and little intention, if any, was paid to the question of the surrounding yard. Accordingly, there were no grounds to support a claim that there had been a common mistake. Neither was there any convincing evidence of a unilateral mistake on the part of the lessees.
It was not necessary to decide the point raised by the plaintiffs in their defence to the counterclaim, namely that a claim for rectification would not in any event lie against the plaintiffs as they were not the original party to the lease and only became the lessor by later assignment.
Kim Lewison (instructed by Herbert Smith) appeared for the plaintiffs; and Jonathan Brock (instructed by Joynson-Hicks) appeared for the defendants.
