(New Zealand Court of Appeal) The court considered whether a review in a lease without a ratchet (upwards only) rent review clause could be exercised only at the instigation of the landlord: ‘The fact that as a consequence the parties agreed upon assignment of a lease that would not contain a ratchet clause but would provide for rent review at the lessor’s discretion is not such an absurdity as justifies departing from the plain meaning of the words used. It is clear that the ability of the lessor to elect not to have the rent reviewed effectively negates the benefit of the exclusion of the ratchet clause. It will be a rare case in which a lessor initiates review without being confident that the rent will increase as a result, but that does not make the provisions inconsistent. The provisions are clear in their terms and are capable of being read and of operating together in that the prospect of rent reduction is preserved in the event of a review. That is what the parties agreed to, albeit because they did not advert to that consequence.’
Gault J
[1996] 1 NZLR 45
England and Wales
Citing:
Applied – Australian Mutual Provident Society v National Mutual Life Association of Australasia Limited 1995
(New Zealand Court of Appeal) The Court was asked whether a rent review clause which provided for an open review was inconsistent with the rent review being operable by the lessor alone. The lease did not contain a ratchet clause, or upwards only . .
Cited by:
Appeal from – Board of Trustees of the National Provident Fund v Shortland Securities Limited PC 1997
(New Zealand) Lord Hoffmann: ‘The expression ‘ratchet clause’ is well understood in New Zealand to mean a particular type of clause, namely a provision such as cl 3.5(c)(i) which prevents the reviewed rent from being lower than the previous rent. . .
Cited – Hemingway Realty Ltd v Clothworkers’ Company ChD 8-Mar-2005
The lease provided for a rent review under which the rent might either be increased or decreased. The landlord had chosen not to exercise the clause in view of falling rents. The tenant purported to do so. The landlord said that it alone had the . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Leading Case
Updated: 11 November 2021; Ref: scu.223574