Review of rent of business premises–Operation of clause in lease affected by counter-inflation legislation–Letter from lessors’ agents to RICS setting out position treated as ‘application’ within meaning of clause–Further issue on date of letter–Delivery on September 25 1973 held ‘not less than six months before March 25 1974’
This was a
summons by Rank City Wall Ltd, of London SW3, for a declaration that a letter
of September 25 1973 operated as a valid application for appointment of a
valuer to determine the rent payable from March 26 1974 under an underlease
granted to predecessors in title of the respondents, Gallaher & Johnston
Allen Ltd, of 3-9 Heddon Street, London W1, by predecessors in title of the
applicants on December 29 1967.
Mr A D Dinkin
(instructed by Richards, Butler & Co) appeared for the applicants, and Mr A
G Steinfeld (instructed by Fortescue & Sons) represented the respondents.
Giving
judgment, MR FRANK said that the lease in question was for a term of 14 years
from March 25 1967, and provided that the rent to March 25 1974 should be
£2,250 and from March 26 1974 for the residue of the term such amount (not
being less than £2,250) as might be agreed in writing between the lessors and
the lessees before September 29 1973, ‘or in the absence of such agreement as
may be determined by an expert valuer to be nominated by the president for the
time being of the Royal Institution of Chartered Surveyors on the application
of the lessors made not more than 12 months nor less than six months before
March 25 1974.’ No agreement for the
second seven years’ rent was reached before September 29 1973, nor had any
negotiations taken place, but on September 25 1973 Goddard & Smith, the
plaintiff’s managing agents, delivered a letter addressed to the secretary of
the Royal Institution of Chartered Surveyors in the terms that it was their
opinion that the present-day open market rental value of the accommodation was
£13,250 per annum exclusive and it was this figure which their clients would
have wished to have substituted within the document with effect from the next
March 25; nevertheless, the increase in rental would be
their clients would not be seeking to collect any increase over the amount
permitted by current legislation. On September 27 1973 an administrative
secretary of the institution replied saying that the application had been put
to one side until they heard further, but should it be wished to proceed with
the case the letter stood as the original application.
The first
question was whether the letter of September 25 was an application within the
meaning of the rent review clause. The defendants took three points. First it was
said that the letter by its terms did not apply for the appointment of a
valuer, but rather summarised the effect of the rent review clause, and instead
of asking for the appointment of a valuer contained an express request not to
do so. That argument was unacceptable. It seemed that there could only be one
reason for the letter, to preserve the lessors’ position under the review
clause; that was the purpose stated in the letter. That position could only be
preserved by an application for an appointment of a valuer, and the fact that
it was suggested that no appointment should be made for the time being seemed
not to invalidate the application as such, but rather to make a commonsense
suggestion. He (Mr Frank) had asked Mr Steinfeld what the position would have
been if the application had been drafted in formal terms by counsel, but had
had sent with it a letter along the lines of the last paragraph. Counsel had
answered that in his submission the letter would cancel the application, but he
(his Lordship) found that position untenable. Secondly, Mr Steinfeld argued
that the application should have been brought to the attention of the right
person, that is to say, it should have been addressed to the president of the
RICS. This argument seemed to be technical in the extreme, and the answer to it
was that technically the application was by the terms of the second paragraph
brought to the attention of the president, on the assumption that the
secretary, having read that paragraph, then carried out his assumed duty of
passing the application on to the president. In any event, in the absence of
evidence to the contrary, Goddard & Smith were in his (Mr Frank’s) judgment
entitled to assume that the secretary acted as agent for the president in such
matters, and the partners, being members of the institution, would be well
aware of the realities of the organisation. Thirdly, it was said that the
application should have stated the name of the landlords and of the present
tenants, but he (his Lordship) found nothing in the clause concerned which so
required.
On the
remaining issue, whether the notice was served not less than six months before
March 25 1974, Mr Steinfeld argued that six clear months must have elapsed
between the date and the date of service and that accordingly September 24 1973
was the last date for service. For the plaintiffs, Mr Dinkin pointed out that
all the clause required was six months’ notice, not more than six months’, and
that in computing that six months one should include the day of service but
exclude the day by which the notice had to be served. In the absence of
authority, he (Mr Frank) would have thought that according to ordinary
understanding a period of six months beginning on September 25 ended on the
following March 24, and that therefore the earlier date was not less than six
months before the latter. However, there was authority, and it seemed to
confirm the view just expressed. It was Schnabel v Allard [1967]
1 QB 627, where it was held that a notice to quit served on March 4 requiring
the tenant to give up possession on April 1, the Friday four weeks from March
4, was valid both at common law and under the Rent Act 1957. Mr Steinfeld
contended that that case did not go to the point, because the notice to quit
would not have taken effect until midnight on April 1 and that therefore there
were in fact 28 clear days. However, there was nothing in the judgments to
support that proposition, and the Court of Appeal had held that Thompson
v Stimpson [1961] 1 QB 195 had been wrongly decided. In that case the
Divisional Court had decided that ‘not less than four weeks’ necessitated that
there should be four clear weeks exclusive both of the day of service and of
the day on which the premises were to be vacated. The Court of Appeal held that
the proper construction was that ‘not less than four weeks’ meant inclusive of
the day of service and exclusive of the day of expiry. Accordingly, he (Mr
Frank) concluded that the application in the present case was served in time.
Mr Dinkin argued, in the alternative, that time was not of the essence, but
under the circumstances it was not necessary to decide that, and there would be
judgment for the plaintiffs in the terms of the declaration sought.
