When a rent review clause falls to be construed by the courts, then, more often than not, one party will contend that a literal interpretation would give an unforeseen and unfair advantage to the other. Predictably, the court will be invited to apply “common sense”, a “purposive construction” or (if you can keep a straight face) “the presumption of reality”.
The outcome is frequently uncertain – which is not surprising, seeing that the clause will typically require the (notional) replacement of the real tenant, who wants to stay put, by an imaginary tenant, who is about to come in off the street. One cannot even speak of virtual reality.
Bellow Properties Ltd v Trinity College Cambridge [2000] EGCS 97 may be noted as a striking instance, where, despite the unfortunate and quite unexpected consequences for the landlord, the court could find no reason for departing from a literal meaning that made little commercial sense – in that case, an assumption that a lessee, in 1998, of (hypothetically) undeveloped land was required to build in accordance with plans approved in 1970.
More usefully, perhaps, the case may serve as a warning that some debugging may have to be carried out on building lease precedents.
When a rent review clause falls to be construed by the courts, then, more often than not, one party will contend that a literal interpretation would give an unforeseen and unfair advantage to the other. Predictably, the court will be invited to apply “common sense”, a “purposive construction” or (if you can keep a straight face) “the presumption of reality”.
The outcome is frequently uncertain – which is not surprising, seeing that the clause will typically require the (notional) replacement of the real tenant, who wants to stay put, by an imaginary tenant, who is about to come in off the street. One cannot even speak of virtual reality.
Bellow Properties Ltd v Trinity College Cambridge [2000] EGCS 97 may be noted as a striking instance, where, despite the unfortunate and quite unexpected consequences for the landlord, the court could find no reason for departing from a literal meaning that made little commercial sense – in that case, an assumption that a lessee, in 1998, of (hypothetically) undeveloped land was required to build in accordance with plans approved in 1970.
More usefully, perhaps, the case may serve as a warning that some debugging may have to be carried out on building lease precedents.
