The reddendum in the lease provided for a rent review: ‘there will be a rent review for each of the review periods’. The express machinery for such review could only be initiated by the landlord, but in refusing to initiate a review the landlord was frustrating the provisions of the contract that there should be a rent review.
Held: The court could substitute its own machinery: ‘It is the landlord’s contention, put very cogently by Mr Kim Lewison QC on their behalf, that on its true construction para 1 of the fourth schedule places the question of whether there will or will not be a rent review for any particular review period at the option of the landlord. It is a fairly common feature of rent review provisions in leases that the landlord is given the option whether or not to invoke the rent review machinery. This is commonly done by providing that the rent review machinery may be invoked by a notice in writing served by the landlord not later than some specified date. Clauses of that character have given rise to a number of cases and gave rise, in particular, to the leading case, United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, in which the House of Lords ruled that the time limitations in rent review clauses were normally not to be treated as of the essence of the agreement so that a failure by the landlord to comply with the requisite time-limits did not necessarily preclude the service out of time of an effective notice invoking the rent review machinery. But in those cases the lessor had expressly been given the option whether or not to serve a notice invoking the rent review machinery. The present lease contains no such express option. Indeed, in my view, the implication to be gained from the lease as a whole, in particular the reddendum which I have read and paras 1 and 2 of the fourth schedule, is that there will be a rent review for each of the rental periods. . . . In my judgment, the issue depends upon whether construing the lease as a whole, the conclusion is justified that the landlord was intended to have that option. If the landlord was intended to have that option, the landlord was entitled to exercise it and to decide whether or not there should not be a rent review. But if the judge below was right in concluding that the provision in question was no more than mere machinery for the carrying out of rent reviews which were intended to happen in any event, then, on authority, there is no reason why the landlord’s failure to make the application should be allowed to frustrate the contractual intention discerned from the lease as a whole. The court will in that event if necessary supply machinery to prevent that frustrating refusal from achieving its purpose.’
Judges:
Sir Richard Scott, V-C
Citations:
[1996] EWCA Civ 804, [1996] EGCS 168, [1997] 1 EGLR 101
Jurisdiction:
England and Wales
Citing:
Applied – Sudbrook Trading Estate Ltd v Eggleton HL 1982
The grantors of an option, which contained a machinery for fixing the price, had refused to appoint a valuer and that made it impossible for the contractual machinery for the valuation of the option price to work. The House of Lords held that the . .
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 . .
Cited – Addin v Secretary of State for the Environment ChD 1997
The lease provided for seven-yearly rent reviews. The landlord argued that the reddendum gave the right to trigger a review to him alone. If he chose not to do so, then no review would take place. The tenant contended that the opening words of the . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 01 November 2022; Ref: scu.140671
