Rent review — Landlord to apply “at any time” after appropriate date for appointment of surveyor in default of agreement — Whether time limit to be implied — Whether tenant entitled to serve notice making time of the essence for landlord’s application — Whether application outside that time period rendering appointment of surveyor invalid — Claim allowed
The claimant was the landlord of two sets of premises that were let to the defendant tenant. The schedule to the leases contained provisions for upwards-only rent reviews. It provided, in para 3, that if the landlord and tenant failed to agree the open market rental value before the appropriate date, that value would be determined by a surveyor agreed upon by both parties, “upon the application of the landlord at any time after the appropriate date”. If no agreement were reached, by a surveyor nominated by the president of the RICS would determine the value.
A review fell due in September 1999, that being the “appropriate date” for the purposes of para 3. No agreement was reached by that date, and, in June 2001, after a three-month gap in communication between the parties the defendant’s surveyor wrote two letters to the claimant requiring that it refer the matter to the president of the RICS by a specified date, and notifying it that time was to be of the essence. In the event, no application was made to the RICS until December 2001, when a surveyor was duly appointed in respect of each property.
The defendant maintained that the landlord’s failure to comply with the time limit meant that it was no longer entitled to pursue a rent review. The claimant sought a declaration that the appointment of surveyors was valid. The central issue was whether the defendant had been entitled to serve a notice making time of the essence.
Held: The claim was allowed.
Although the claimant was entitled to apply to the president of the RICS “at any time after the appropriate date”, there had to be some limit to the time within which it could take that step. Without such limitations, it would be able to do so a considerable time after the rent review period, or even after the end of the lease, which would make no commercial sense: Barclays Bank plc v Savile Estates Ltd [2002] EWCA Civ 589; [2002] 2 EGLR 16 considered. In the present case, it was an implied term of the lease that the landlord’s reference to the president should be made within a reasonable time of a failure to agree on the identity of a surveyor Essoldo Ltd v Elcrest Ltd [1971] 23 P&CR 1 and Patel and another v Earlspring Properties Ltd [1991] 2 EGLR 131 distinguished. It was not possible to make time of the essence until that time had passed.
If the defendant’s June letters made time of the essence, then the “reasonable time” for the claimant to apply to the president would have to have expired before those notices were served. On the available evidence, the defendant had not demonstrated a non-agreement by that date. Neither party had made clear its position on the point clear prior to June, so the “reasonable time” had not begun. Although the June letters made the defendant’s position clear at that point, that merely started the clock running for the landlord, and could not make time of the essence until the reasonable time had run its course. Accordingly, the letters were not effective to make time of the essence, and the claimant was entitled to the declaration sought.
Mark Wonnacott (instructed by Bullivant Jones, of Liverpool) appeared for the claimant; Wayne Clark (instructed by Addleshaw Goddard, of Leeds) appeared for the defendant.
Sally Dobson, barrister
