British Gas Corporation v Universities Superannuation Scheme Ltd
| Jurisdiction | England & Wales |
| Date | 1986 |
| Court | Chancery Division |
Landlord and Tenant - Rent - Review lease - Review rent to be fixed by reference to rack rent - Rack rent to be open market rent on same terms as existing lease excluding provisions “as to the yearly rent” - Whether future rent reviews to be disregarded
The plaintiff was the lessee of office premises under a 35-year lease containing provision for five-yearly rent reviews. Under the terms of a schedule to the lease on the giving of a landlord's review notice, the rent payable as from the review date was to be “the higher of (i) the yearly rent payable immediately before such review date and (ii) the The rack rental value was to be agreed or determined as the best yearly rent at which the demised premises could reasonably be expected to be let in the open market for a term equal to the term granted by means of a lease “containing the same provisions (other than as to the yearly rent)” as the actual lease. At the first review date the parties failed to agree the rack rental value, which therefore fell to be determined by an independent valuer. The plaintiff sought a declaration that the words “a lease containing the same provisions (other than as to the yearly rent)” should be construed so as to exclude only the provisions relating to the rent actually payable at the relevant review date.
On the question whether the valuer, in assessing the “rack rental value” should assume a hypothetical letting of the premises on terms which included provisions for review of the rent every five years:—
Held, that the underlying commercial purpose of a rent review provision was to enable a landlord to obtain the open market rental which the premises could command if let on the same terms at the review date and that in the absence of clear words or special circumstances the words “containing the same provisions (other than as to the yearly rent)” should be construed so as to give effect to that underlying purpose and not to confer a benefit on the landlord which he could not obtain on an actual letting on the open market at the review date; that, accordingly, on the true construction of the schedule to the lease the rack rental value should be fixed on the basis that the hypothetical letting was on the terms of the actual lease, excluding the rent quantified and payable up to the review date but including provisions for five-yearly rent reviews (post, pp. 401G–H, 403A–C, G).
The following cases are referred to in the judgment:
Datastream International Ltd. v. Oakeep Ltd. (Note) [
Equity & Law Life Assurance Society Plc. v. Bodfield Ltd. (
M.F.I. Properties Ltd. v. B.I.C.C. Group Pension Trust Ltd., The Times, 7 February 1986, Hoffmann J.
National Westminster Bank Plc. v. Arthur Young McClelland Moores & Co. (
Pearl Assurance Plc. v. Shaw (
Pugh v. Smiths Industries Ltd. (
The following additional cases were cited in argument:
English Exporters (London) Ltd. v. Eldonwall Ltd. [
High Road, Kilburn, In re No. 88 [
Mecca Leisure Ltd. v. Renown Investments (Holdings) Ltd. (
Ponsford v. H.M.S. Aerosols Ltd. [
Regis Property Co. Ltd. v. Lewis & Peat Ltd. [
United Scientific Holdings Ltd. v. Burnley Borough Council [
ORIGINATING SUMMONS
By summons dated 16 August 1985 the plaintiff, the British Gas Corporation, 152, Grosvenor Road, London S.W.1, sought as against the defendant, Universities Superannuation Scheme Ltd., Richmond House, Rumford Place, Liverpool, a declaration that upon the true construction of a lease dated 1 April 1980, made between Hovis Ltd. as landlord and the plaintiff as tenant, the rack rental value of the demised premises (as defined in paragraph 3 of the second schedule thereto), to be determined (in default of agreement between the parties) by an independent surveyor, meant the best yearly rent at which the demised premises could reasonably be expected to be let in the open market by a willing landlord to a willing tenant for a term equal to the term granted by the lease by means of a lease containing the same provisions as the lease (other than the amount of rent actually payable under the said lease at the relevant review date) and in particular containing like provisions for the review of the rent as are contained in the lease and upon the other express assumptions set out in the...
To continue reading
Request your trial
-
Basingstoke and Deane Borough Council v Host Group Ltd
...in several recent cases, and is not in doubt. Sir Nicolas Browne-Wilkinson V-C expressed it in these terms in British Gas Corporation v Universities Superannuation Scheme Limited (1986) 1 W.L.R. 398, at 401: "There is really no dispute that the general purpose of a provision for rent review......
-
LVT/0013/04/13: 115 Pantbach Road, Cardiff
...command on the open market” (per Sir Nicholas Browne‐Wilkinson V‐C in British Gas Corporation ‐v‐ Universities Superannuation Scheme Ltd [1986] 1 WLR 398 at p 401(British Gas) (e) The possibility that the outcome may be unfair to one or other of the parties is not a consideration (see Arnol......
-
Arnold v National Westminster Bank Plc
...clauses indicate that Walton J. was wrong. 14The Vice-chancellor in British Gas Corporation v. Universities Superannuation Scheme [1986] 1 WLR 398 laid down general guidelines for the construction of rent review clauses which this court has approved in Equity & Law Life Assurance Society p......
-
Arnold v National Westminster Bank Plc
...tenant, as in fact he was attempting to do, I do not think impresses me very much." 6 In the subsequent case of British Gas Corporation v. Universities Superannuation Scheme Ltd. [1986] 1 W.L.R. 398 Sir Nicolas Browne-Wilkinson V.-C. had to consider a somewhat similar rent review clause. Th......