(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. This is not the same as a clause giving the landlord an option to initiate review proceedings, even if in practice the economic effect is likely in most (though not necessarily all) cases, to be the same. McGechan J said: ‘[Brierley’s] agreement to provide a lease without a ratchet clause did not require provision of a lease with a mandatory review clause. The two were different and were not spoken of as the same’. The Court of Appeal agreed. In view of these concurrent opinions as to the meaning of what is in effect a term of art in New Zealand commercial property transactions, Their Lordships would be very reluctant to take a different view.’
Lord Hoffmann
[1997] 1 NZLR 1
England and Wales
Citing:
Appeal from – Board of Trustees of the National Provident Fund v Shortland Securities Limited 1996
(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 . .
Cited by:
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.
Commonwealth, Landlord and Tenant
Updated: 09 November 2021; Ref: scu.223595