Landlord and tenant — Rent review clause in lease — Construction — Effect of use clause in lease and planning permission — Lease provided for use of the demised premises for any purpose within Class III in the Town and Country Planning (Use Classes) Order 1972 or any other class or classes within which fell the use or uses permitted by the planning authority from time to time — Last use before present lease was granted was use for light industrial purposes, but shortly before the grant of the lease planning permission was given for change of use to that of a non-teaching service unit for the Middlesex Polytechnic — The question arose whether the permitted purpose of the non-teaching service unit for the polytechnic was a composite use which did not fall into any of the use classes, or whether the wording was shorthand for listing all the various uses which the polytechnic might seek to make of the premises, such as office use, light industrial use for printing, storage use for warehousing, or anything else which might be considered relevant — The latter construction would enable any subsequent user (not the polytechnic) to take advantage of a whole range of uses — Held, affirming the judgment of Whitford J, from which the landlords had appealed, that the use authorised by the planning permission was a composite use which did not fall within any of the prescribed use classes — The consequence was that there was nothing in the rent review clause to permit the rent to be assessed by reference to any user authorised by a use class except for light industrial purposes within Class III of the Use Classes Order — Appeal dismissed
No cases are
referred to in this report.
This was an
appeal by the plaintiff landlords, Werner Wolff and Esther Wolff, as trustees
of the Wolff Charity Trust, from the decision of Whitford J [1985] 1 EGLR 75;
(1984) 273 EG 1121 in proceedings to determine the true construction of a rent
review clause in a lease of premises known as the Chase Side Works, in Chase
Side, Southgate. The defendants (the present respondents) were the tenants, the
London Borough of Enfield.
Michael Barnes
QC and J C Harper (instructed by Rabin Leacock & Partners) appeared on
behalf of the appellants; Anthony May QC and S A Furst (instructed by W D Day,
London Borough of Enfield) represented the respondents.
Giving the
first judgment at the invitation of FOX LJ, DILLON LJ said: This is an appeal
by the plaintiffs in proceedings against a decision of Whitford J given on December
13 1984. The appeal raises a question of the true construction and effect of a
rent review clause in a lease. The point raised lies in a very narrow compass,
and the clause is an unusual one to be applied in unusual circumstances.
The
appellants, the trustees of the Wolff Charity Trust, are the landlords by
assignment of the reversion; the respondents, the London Borough of Enfield,
are the tenants.
There are in
fact two leases, one a lease in possession and the other a reversionary lease,
both dated August 22 1977. Nothing turns on the fact that there are two leases.
The lease in
possession demised the premises (which are premises known as the Chase Side
Works, in Chase Side, Southgate) for a term from August 22 1977 to March 23
1983. The reversionary lease demised the same premises from March 25 1983 to
August 21 2002.
The rent under
the lease in possession was at a fixed yearly rate of £39,000 for the first
five years of the term, but for the remainder of the term (which is called ‘the
last period’) it was to be either a yearly rent of £39,000 or the fair market
rent of the demised premises at the commencement of the last period, whichever
was the higher.
Under the
reversionary lease, the rent for the period commencing on March 25 1983 and
continuing to August 21 1987 was to be a yearly rent equal to the yearly rent
payable immediately prior to the commencement of the term of the reversionary
lease under the previous lease, the lease in possession. There were then
provisions in the reversionary lease for later rent reviews.
The court has
to consider the rent review at the commencement of the last period of the lease
in possession. The wording which prescribes that is to be found in clause 1(2)
of that lease, which states:
The said fair
market rent shall be the amount which shall be agreed between the Landlord and
the Tenant to be the best annual rent for the time being obtainable as between
a willing landlord and a willing tenant in respect of the demised premises on a
letting thereof as a whole with vacant possession for use for any purpose
within Class III of the Town and Country Planning (Use Classes) Order 1972 or
any other class or classes of the said Order within which falls the use or uses
of the demised premises permitted by the planning authority from time to time .
. .
The Use
Classes Order prescribed a number of use classes. Under the Town and Country
Planning Act it was provided that in a case of buildings or other land which
are used for a purpose of any class specified in an order made by the Secretary
of State for the use thereof for any other purpose of the same class would not
involve development of the land.
Among the use
classes prescribed by the order, those said to be material to the present
appeal are Class II (use as an office for any purpose); Class III (use as a
light industrial building for any purpose); and Class X (use as a wholesale
warehouse or repository for any purpose).
When the
premises were last occupied before this lease was granted, they had been used
for light industrial purposes within Class III. Shortly before the lease was
granted, however, a planning permission was granted for a change of use. That
was granted by the planning authority of the London Borough of Enfield (who are
the prospective tenants) on July 29 1977 on an application made by their chief
education officer.
The permission
reads as follows:
Whereas in
accordance with the provisions of the Town and Country Planning Act 1971 and
the Orders made thereunder you have made application dated 28 6 77 and illustrated
by plans for the permission of the Local Planning Authority to develop land
situated at Chase Side Works, Chase Side, Southgate N14 by change of use of
existing premises from light industry to non-teaching service unit for the
Middlesex Polytechnic
Now therefore
THE COUNCIL OF THE LONDON BOROUGH OF ENFIELD, the Local Planning Authority,
HEREBY GIVE YOU NOTICE pursuant to the said Act and the Orders made thereunder
that permission to develop the said land in accordance with the said
application is HEREBY GRANTED.
There was a
condition as to the beginning of the development, but nothing turns on that.
In view of the
reference to the application, and to elucidate the words ‘non-teaching service
unit for the Middlesex Polytechnic’ it is convenient — and in my judgment
permissible — to look at the planning application referred to. That gives as
brief particulars of the proposed development ‘Non-teaching Service Unit for
the Middlesex Polytechnic, primarily office and light industrial work such as
printing’ and then, a little further down, in indicating the areas of each
aspect of that use, it sets out ‘Administrative offices, 600 square metres,
Special Research/Workshop storage, 2,180 square metres’.
Therefore one
can obtain an idea of what was meant by a ‘Non-teaching Service Unit for the
Middlesex Polytechnic’, but it is clear that the planning permission does not
tie the Middlesex Polytechnic to the use of precise areas for offices, or
precise areas for workshop or storage, or other purposes within the general
description.
We have in
evidence plans supplied by both sides indicating roughly what the premises,
which consist of a building having a ground floor and a lower-ground floor, are
used as. It appears that a substantial amount is used as offices, including a
filing area; there is also a warehouse or storage area, a boiler house and a
printing room. There would also appear to be another form of storage area or
stationery store — although the precise nature of that use is not clear. What
is clear, however, is that any printing activities are not ancillary to the
office activities. Likewise, the office activities are not ancillary to the
storage or printing activities. Each activity is ancillary to the general
purposes of the Middlesex Polytechnic, and that is why it is referred to as a
‘Non-teaching Service Unit’ for that institution.
The question
then is: how is the rent review clause to be applied to that grant of planning
permission? I have already referred to
the clause. One has to see what use is permitted by the planning authority from
time to time. It is a question of looking not at how the buildings are actually
used on the site but what is authorised by the planning permission. One then
has to consider whether what is authorised falls into any one or more of the
use classes within the Use Classes Order which I have mentioned.
A search of
the Use Classes Order would not disclose any use class which applies
specifically and in terms to non-teaching service units for the Middlesex
Polytechnic, or any other polytechnic or educational establishment.
The question
therefore is: whether the permitted purpose of the non-teaching service unit
for the Middlesex Polytechnic is a composite use which does not fall into any
of the use classes; or whether that wording is a shorthand phrase for listing
all the various uses which the Middlesex Polytechnic might seek to make of the
premises — such as office use, light industrial use for printing, storage use
for warehousing, or anything else which might be considered relevant.
It is
established that there are permitted planning uses which do not fall within any
of the classes in the Use Classes Order. One instance established of such a use
by a decision binding on this court is use as a builders’ yard. Another
instance, treated as such a use by a decision of the Divisional Court, is use
as a sculptors’ studio. I am not concerned to consider whether that decision
was right or wrong.
The difficulty
I feel about treating the description ‘non-teaching service unit for the Middlesex
Polytechnic’ as a form of shorthand describing uses within the classes is that,
as I read this permission, it was leaving it to the Middlesex Polytechnic to
decide which of its ancillary or non-teaching service activities were to be
carried on in the Chase Side Works. If, for instance, they had decided
initially to use them merely for the printing works and offices, then they
could do so; if they decided subsequently to close the printing works and use
the space they had occupied for storage of books and equipment for use in the
lecture rooms of the polytechnic elsewhere, they could do so under the legend
‘non-teaching service unit for the Middlesex Polytechnic’ without going back
for any further planning permission.
On the other
hand, I am not attracted by the notion that this is to be regarded as, in some
sense, a list of uses, authorising offices, light industrial use, storage use,
or anything else which might be regarded as being relevant to a service unit
for the Middlesex
Polytechnic) would be able to develop its own activities within the use classes
referred to which comprehend those particular activities of the Middlesex
Polytechnic which have supposedly been listed as separate permitted activities.
I prefer,
therefore, the view that what is authorised by this planning application is a
composite use which does not fall into any of the prescribed use classes. If
that be right, there is nothing in the rent review clause to permit the rent to
be assessed by reference to any user authorised by a use class except use for
light industrial purposes within Class III of the Use Classes Order. This is
the conclusion to which Whitford J came. I agree with him and would dismiss this
appeal.
RUSSELL LJ
said: I agree with the judgment delivered by Dillon LJ and have nothing to add.
For the reasons he has given, I, too, would dismiss this appeal.
FOX LJ also
agreed and did not add anything.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
