Rent review — Lease providing for rent to remain the same if lessor not requesting determination by surveyor by contractual review date — Whether time of the essence for lessor’s request — Whether claimant entitled to pay rent at same level until next review date — Claim allowed
The defendant was the landlord and the claimant was the tenant under a lease for a term of 42 years from 1971. The rent was payable quarterly in arrears on the usual quarter days and was reviewable at seven-year intervals to the higher of the passing rent or the current market rental value. The contractual review date was the last day of the preceding seven-year period. The market rental value was to be agreed by the parties not less than two months before the review date or, if not agreed, was to be determined by an independent surveyor of the RICS on the request of the lessor. A proviso stated that if no such request had been made by the review date, then the rent would remain the same for the next seven years.
The 2006 review date passed without the parties agreeing a market rental value or the defendant requesting a valuation by an independent surveyor. The defendant subsequently made a request that was three months late. The claimant maintained that the defendant had, by its delay, lost its right to request a determination, and brought proceedings to establish its right to continue to pay rent at the existing level for the next seven years. It contended that the general presumption, that time was not of the essence in respect of the rent review provisions of a lease, was rebutted by a contra-indication in the proviso, which clearly and unambiguously prescribed the consequences of a failure to comply with the contractual rent review timetable. The defendant submitted that the proviso was not part of the rent review machinery and did no more than provide a fall-back position as to the rent payable pending a completed review after the review date; the reference to the next seven years merely indicated the maximum time for which that fall-back position could apply.
Held: The claim was allowed.
The parties had clearly indicated by the proviso that the timing for the request to an independent surveyor imposed a final limit. The proviso stipulated the consequences of a failure by the landlord to request a determination by the given date, and that was a sufficient contra-indication to rebut the presumption that time was not of the essence. On the ordinary meaning of the words used, the parties had explicitly provided that if, by the review date, no agreement had been reached as to the market rent or any request for a determination, then the rent was to remain the same for the next seven years: Starmark Enterprises Ltd v CPL Distribution Ltd [2001] EWCA Civ 1252; [2002] Ch 506 and United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 EGLR 61; (1977) 243 EG 43 and 127 applied. The proviso did not merely provide a fall-back position pending a completed review.
Although, on that construction, there was a lacuna in the lease, since it did not specify what the rent was to be pending a completed review where the request had been made in time, that lacuna was more apparent than real in circumstances where the rent was payable quarterly in arrears and a review was likely to be completed before the next quarter day.
Nicholas Dowding QC (instructed by Maples Teesdale) appeared for the claimant; Kirk Reynolds QC (instructed by Reynolds Porter Chamberlain) appeared for the defendant.
Sally Dobson, barrister
