Licence to vary user clause and carry out works — Assumption at review that premises fit for use and occupation for authorised use — Whether premises in condition for authorised use — Whether hypothetical building which never existed to be assumed — Appeal by tenant allowed
By a lease made September 30 1968 the respondents hold a term of premises at Epworth Street, Finsbury, London EC2; the appellants are the landlords. The lease provides that the rent at review is to be an open market rent for a term equal to the unexpired residue of the actual term and upon the terms of the lease there being disregarded the matters referred to in paras (a), (b) and (c) of section 34 of the Landlor d and Tenant Act 1954. Planning permission was granted for a use within Class II of the Town and Country Planning (Use Classes) Order 1972 in 1985: the planning permission was personal. The lease was varied to permit that use; the licence providing that the rent at review would be on the basis of the authorised use (and the tenant acknowledging that the premises were fit for use and occupation) but disregarding improvements carried out by the tenant. Pursuant to a licence dated July 30 alterations were carried out to the premises for the permitted use.
In respect of the 1989 rent review the landlords’ contention that the condition of the premises at the date of the grant of the hypothetical lease must be in a state to enable the hypothetical lessee to carry on the business described in the 1985 planning permission was upheld (November 23 1990) by His Honour Judge Bromley QC (sitting as a judge of the Chancery Division). The appellants appealed; the respondents cross-appealed.
Held The appeal was allowed and the cross-appeal was dismissed.
The acknowledgement by the tenant that the premises were fit for use and occupation for the authorised use related to the condition of the property before the alterations were carried out. It did not permit the valuation of a notionally altered building.
Applying Law Land Co v Consumers Association (1980) 255 EG 617 meant that the use permitted by the planning permission and incorporated into the user clause should be assumed to be available to the hypothetical tenant, but not to its associated or subsidiary companies.
Trusthouse Forte Albany Hotels v Daejan Investments Ltd (1981) 256 EG 915 approved.
Kim Lewison (instructed by Theodore Goddard) appeared for the appellants; and Terence Cullen QC and Carolyn Walton (instructed by Julian Holy) appeared for the respondent.
