Rent review — Defendants acting for plaintiff lessee — Appointment of independent surveyor — Request for written representations — Rent determined — Whether defendants negligent in failing to submit representations — Amount of damages — Plaintiff succeeds on one allegation
The plaintiff is lessee holding a 25-year underlease from March 1976 of a small lock-up shop at 385 Station Road, Harrow. Stimpsons, estate agents, are the underlessors and they occupy the adjoining premises. The underlease contains provisions for five-year rent reviews to an “open market rent”; where the parties have failed to agree a rent three months before any review date, the “lessor may at anytime thereafter … require an independent surveyor … to determine the rent”.
The rent review provisions further provide that following his appointment, “Notice is writing of his appointment shall be given by the Surveyor to the Lessor and the Lessee and he shall invite each to submit within a specified period (which shall not exceed four weeks) a valuation accompanied if desired by a statement of reasons”. The independent surveyor is entitled to “act as an expert and not as an arbitrator and shall consider any valuation and reason submitted to him within the said period but shall not be in any way limited or fettered thereby”.
At the time of the 1986 rent review, the lessors initially proposed a rent of £8,000, although they reduced this to £7,500; the defendants, who were instructed to act for the plaintiffs, proposed a rent of £4,500. On August 22 1986 the independent surveyor was appointed, and he called for representations by September 15 1986. The defendants made no such representations on behalf of the plaintiff, and the surveyor determined the rent at £9,200.
The plaintiff claimed that the defendants had been negligent in failing to submit any representations; in failing to advise properly on the real open market value of the shop; in failing to inform the plaintiff of the lessors’ reduced offer; and in failing to warn the plaintiff that the rent might be fixed at a figure higher than that originally asked for by the lessors.
Held The defendants were negligent in failing to submit representations to the independent surveyor; they should have known the date by which these had to be submitted and they should have given the figure they were prepared to settle with the lessors. However, in respect of the other allegations of the plaintiff, the defendants had not been negligent. Damages were determined at £8,500, being the difference in value of the underlease on the basis of the rent determined in 1986 and the rent of £7,000 that the parties would probably have settled at. The plaintiff was awarded 25% of his costs.
Kitchen v Royal Air Force Association
[1958] 1 WLR 563 not followed.
Patrick Sinclair (instructed by Hart Fortgang) appeared for the plaintiff; and Philip Shepherd (instructed by Lloyd Cooper) appeared for the defendants.