Samuel Properties (Developments) Ltd v Hayek
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL |
| Judgment Date | 24 July 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J0724-6 |
| Docket Number | 1971 S No. 2129 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 July 1972 |
[1972] EWCA Civ J0724-6
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Chancery Division Group A
(Mr. Justice Whitford)
Lord Justice Russell
Lord Justice Edmund Davies and
Lord Justice Stamp
In The Matter of premises situate and "being all that Penthouse or flat number 16 on the 7th and 8th floors and the loggia on the roof of the "building known as "Ambassador House" Carlton Hill St. John's Wood Greater London and parking "bay number 16 used therewith
In The Matter of a Lease of the said premises made 2nd June 1964 between Sedgemoor Investments Limited of the one part and Bernard Ross of the other part
MR. V.G. WELLINGS (instructed by Messrs. Harold Stern & Co., Solicitors, London) appeared on behalf of the Plaintiffs (Appellants).
MR. G. LIGHTMAN (instructed by Messrs. Pritchard, Englefield & Co., Solicitors, London) appeared on behalf of the Defendant (Respondent).
Lord Justice Stamp is unable to be here this morning; he has asked me to say that he agrees with the judgment I am about to read.
This appeal by the plaintiff lessor concerns a rent review clause in a lease by the plaintiff to a predecessor in title of the defendant of a residential penthouse or flat No. 15 in a block known as Ambassador House in St. John's Wood, London. The lease, dated 2nd June 1960, was for a term of 21 years from 7th July 1964. The lessor was given power to put into operation a rent review clause by serving notice in writing "not later than two quarters before the expiry of the seventh and fourteenth years respectively of the said term". The seventh year expired at the end of the 7th July 1971. The landlord served the notice on 22nd February 1971.
The first question is one of construction. The lessor contends that the time requirement means not later than the penultimate usual quarter day before 7th July 1971, which was 25th March 1971. The lessee contends that it either means not later than half a year before 7th July 1971, (that is to say, 7th January 1971): or alternatively that if the usual quarters are referred to the latest date was 25th December 1970. In either case the notice would have been too late.
Alternatively the lessor contends that if its construction is wrong, time should not be considered to be of the essence in this regard, and that notice given on 22nd February 1971 was (on either of the lessee's constructions) given in a reasonable time thereafter.
Alternatively the lessor contends that if the time requirement of the notice was strict, equity should relieve the lessorfrom the consequences of a blunder. Blunder of some kind by someone there undoubtedly was: for the evidence is that clearly a review would have resulted in a very substantial increase in the rent. Under this last head the argument subdivided into (l) the question whether in the circumstances there was jurisdiction in equity to relieve; and (2) whether if jurisdiction existed it should be exercised and if so upon what if any terms and conditions.
I turn first to the terms of the lease before considering the questions of (1) construction and (2) whether strict adherence was required to the time laid down, on neither of which points did we call upon the respondent to argue.
The demise was of the premises from the 7th July 1964 "for the term of 21 years (determinable as hereinafter appearing)". The yearly rent as expressed was a total of £1,575 "the amount of the said rent being subject to increase at the end of the 7th and 14th years of the said terra in accordance with the provisions set out in the 4th schedule hereto…. by equal quarterly payments in advance on the four usual quarter days in every year". Provision was made for payment on execution of the lease of rent at that annual rate for the period from 7th July 1964 to 29th September 1964. Provision was further made for payment of an additional rent being. 1/15th of the lessor's costs of insuring the building "such payment to be made on the quarter day next succeeding" the payment by the lessor of the premium. Provision was made for a further rent representing a proportion of increase in the cost to the lessor of supplying services in accordance with the 3rd schedule. The lease contained various instances where a month or months (meaning of course calendar month ormonths) were referred to as such. An obligation to paint in the last 3 months of the term: a right for the lessor to carry out defects in repairs if a notice requiring this amendment were not complied with within one month: an obligation within one month of any assignment etc. to notify the lessor and pay a registration fee: a right in the lessor to fix a reletting board within 3 months before the end of the term.
Clause 2, sub-clause (13) contained a covenant against assigning or underletting the whole without first offering to surrender the premises unconditionally and without consideration: should the offer be accepted within one month the lessee was Obliged to surrender "on the quarter day next following" the expiry of that period of one month.
Clause 5 conferred on the lessee an option to break (forecast in the habendum). Its terms were these, and I quote them in order to remark on the similarity in phrase in the 4th schedule. "If the lessee shall be desirous of determining the term hereby granted at the end of the 7th or 14th years of the said term and of such desire shall give to the lessors at least one quarter's previous notice in writing the term hereby granted shall cease and be void at the end of the 7th or 14th year of the said term as the case may be" There follows a proviso best mentioned after reference to the 4th schedule.
The 4th schedule is headed "Provisions for Revisions of Rent". It will be recalled that just as the length of term in the habendum was expressed to be "determinable as hereinafter appearing" (which is the same as saying "subject to determination"), forecasting mainly clause 5: so the principal rent reserved in the reddendum was expressed to be "subject to increase in accordance with the provisions set out in the 4th schedule".
It is I think desirable to read the whole four paragraphs of that schedule. "1. The yearly rent reserved "by this Under lease shall "be subject to review at the option of the Lessors in the Seventh and Fourteenth years of the term hereby granted in the manner provided in the following paragraphs, 2. If the Lessors shall desire to have the said rent reviewed at the said time by reference to the open market rental value of the demised premises then prevailing and shall serve upon the Lessee a notice in writing to that effect not later than two quarters before the expiry of the said Seventh and Fourteenth years respectively of the said term then within one month after the service of the said notice the parties thereto by themselves or by their respective valuers shall agree the amount of the said open market rental value of the demised premises and in default of such agreement within the period of one month from the service of the said notice the said amount shall be determined by a valuer (acting as an expert and not an arbitrator) to be appointed by the President of the Royal Institution of Chartered Surveyors. 3 For the purpose of this Schedule the expression 'open market rental value of the demised premises' shall mean the rent at which having regard to the terms of this Lease (other than the yearly rent reserved thereby) the demised premises might reasonably be expected to be let in the open market by a willing Lessor but disregarding the condition of the premises arising from any want of decoration or repair by the Lessee, 4. In the event of the said amount of the open market rental value agreed or determined as aforesaid being higher than the yearly rent reserved by this Underlease then as from the expiry of the said Seventh or Fourteenth years of the term hereby reserved the Lessee shallbecome liable to pay an increased rent equal to the said higher amount and shall pay the same at the times and in the manner at and in which the yearly rent served by this Underlies is payable."
I now return to the proviso to clause 5,which reads as follows: "Provided always that if one quarter before the expiration of the first Seven or Fourteen years of the term hereby granted the reviewed rent referred to in the Third Schedule" - that is an error for the Uth schedule - "hereto shall not have been reviewed then the right of the Lessee to terminate as herein provided shall be extended until the expiration of one month from the date of notification of the reviewed rent to the Lessee."
Finally I mention the 3rd schedule, which is stated to contain provisions for payment of increase in cost of services, only to say that it is in parts obscure and that I did not understand that any reliance was placed upon its language by the appellant.
The point of construction is one which for present purposes in my judgment involves little doubt. I can see no justification whatever for construing the words "two quarters" in 4th schedule paragraph 2 otherwise than in their natural meaning of a period of time consisting of two consecutive periods of time; to construe the words as a reference to two usual quarter days seems to me quite artificial, particularly when the draftsman has shown himself well capable of referring to a usual quarter day as such in the reddendum, in clause 2 (13) (b), and indeed indirectly in the 4th schedule paragraph 4 by reference back to the reddendum. Moreover it was accepted that in clause 5,the lessee's power to break on giving "at least one quarter's previous notice in writing" the reference is to a period: and I cannot accept that there is any relevant...
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