Plaintiff letting property after negotiations – Defendants taking lease – Parties omitting to fill in part of lease purporting to define rent review – Plaintiff claiming omission in error – Defendants claiming agreement that rent to be flat rent without reviews – Whether lease to be rectified – Rectification ordered
The plaintiff owned a property at 110 North End Road, Fulham W14, which comprised a fish and chip shop with a flat above. He wished to let the property and entered into negotiations with the defendants. The parties agreed, inter alia, that the rent was to be reviewed every four years. By a lease dated September 28 1989 the plaintiff was to grant a lease to the first defendant for a premium of £150,000 and for a term of 16 years from June 14 1989 at an initial rent of £12,000 pa. The second defendant was to act as guarantor. Clause 2.10 of the lease defined “rent” to mean the initial rent and rent ascertained in accordance with the second schedule, which contained the machinery for revising the rent with effect from each review date by agreement or arbitration. Clause 1 of the lease purported to define the review dates, but it had been left blank.
Towards the end of the fourth year of the lease the first defendant claimed that the plaintiff was not entitled to review the rent. It was claimed that clause 1 had been intentionally left blank because, after the initial negotiations, the parties had entered further negotiations when the defendants had seen the accounts of the business, and it had been agreed there was to be a flat rent without reviews. The plaintiff issued proceeding for the lease to be rectified, claiming that at no stage had there been a change from the original negotiations, and that clause 1 had been mistakenly left blank. The second defendant could not be found and was not served with the proceedings.
Held Judgment for the plaintiff.
1. It was clear that there had been no agreement that the lease was not to contain rent reviews. Although there had been further negotiations after the initial agreement had been made, the initial terms were never altered. The omission was simply a careless omission. Accordingly, the lease would be rectified so as to set out the rent review dates as August 21 1993, August 21 1997 and August 21 2001, and a declaration made that the plaintiff was entitled to proceed by arbitration under schedule 2 of the lease to have the rent reviewed with effect from August 21 1993.
2. Since the second defendant had not been served with the proceedings, the plaintiff was to give an undertaking not to enforce the lease as rectified against the second defendant.
Owen Rhys (instructed by Kennedys) appeared for the plaintiff; the first defendant appeared in person; the second defendant did not appear and was not represented.
