Starmark Enterprises Ltd has succeeded in imposing a substantial rent increase on its tenant CPL Distribution Ltd, in respect of a property in Boscombe, Bournemouth.
Starmark claimed that CPL’s counter offer of £52,725 was made too late, and was invalid under the rent review terms contained in the lease. The appellant contended that, in the eyes of the law, CPL had accepted the new rent of £84,800.
In the High Court, Neuberger J ruled that the counteroffer, although late, was valid. He added that the state of the law on compliance with the timing of such “counternotices” was confused.
However, the Court of Appeal has held that time is of the essence with respect to rent review provisions, and CPLs failure to respond in time, hence, bound it to the new rent agreement.
It was held that the agreed rent review clause clearly set out the parties’ intention once the response period had expired.
In the Court of Appeal, Arden LJ said: “In this case the question is whether, on the true interpretation of this lease, mindful always of the fact that the mere insertion of a timetable is not enough to make time of the essence, the parties clearly indicated that the time limit for service of the tenants counternotice is a final limit.
“In my judgment, that question has to be answered, yes. By setting out the time limit, the parties have done more than merely mention a timetable for ensuring an orderly review of rent. They have used the timetable as a means of securing the determination of an increased rent.”
Landlords, tenants, surveyors and property agents are advised to check whether the rent review clauses of their leases contain deeming provisions, if they do, time limits for counter notices will become crucial.
PLS News 02/8/01
