Torminster Properties Ltd v Green
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE KERR |
| Judgment Date | 17 March 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J0317-4 |
| Docket Number | 83/0142 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 March 1983 |
[1983] EWCA Civ J0317-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION GROUP B
(MR. JOHN MOWBRAY QC, SITTING AS A DEPUTY HIGH COURT JUDGE OF THE CHANCERY DIVISION)
Royal Courts of Justice
Lord Justice Stephenson
and
Lord Justice Kerr
83/0142
1980 T No. 1499
MR. R. WAKEFIELD (instructed by Mr. Richard Southern, Solicitor, London EC3M IDT) appeared on behalf of the Defendants (Appellants)
MR. VIVIAN CHAPMAN (instructed by Messrs. Slowes, Solicitors, London W1R OLB) appeared on behalf of the Plaintiffs (Respondents)
This appeal raises a novel point, the effect of a surrender of a lease on a claim for increased rent fixed after the surrender. The appeal arises out of a lease made on 18th October 1973 between the respondent, Torminster Properites Limited ("the lessor") of the first part and Cadac (London) Limited ("the lessee") of the second part and the appellants Green and Kerridge ("the surety") of the third part, by clause (1) demising unto the lessee a factory unit in Harpenden for the term of 25 years from 24th June 1973, yielding and paying during that term the rents set out in the 4th Schedule.
By clause (2) the lessee covenanted to perform the covenants set out in the 5th Schedule, including a covenant to pay during the term the rent reserved on the day and in the manner aforesaid.
By clause (4) the surety covenanted to perform the covenants set out in the 7th Schedule, including a covenant that the lessee would pay the rent reserved and in default of such payment would pay and make good to the lessee all losses thereby arising. There were further provisions for the surety taking over the lease in the event of the lessee entering into liquidation and the liquidator disclaiming the lease.
The 4th Schedule provided as follows:
"Rent. (A) For the first five years of the said term the rent of £7,100
(B) For the next five years of the said term and for each successive period of five years of the said term thereafter either the yearly rent reserved in sub-clause (A) hereof or the open market rental value of the demised premises at the review date or the rental then under review whichever is the higher and in any case the same shall remain constant during the whole period referred to in each of such successive periods of five years
"AND the said rents shall in all cases be paid by equal quarterly payments in advance from the usual quarter days in every year without any deduction whatsoever the first payment apportioned in respect of the period from the date hereof to the quarter day next hereafter to be paid on the execution hereof
"PROVIDED THAT for the purposes of sub-clause (B) hereof it is hereby agreed that the following definitions and provisions shall apply namely:-
(1) The expression 'open market rental value' means the annual rental value of the demised premises in the open market which might reasonably be demanded by a willing landlord on a lease for a term of years certain equivalent in length to the residue unexpired at the review date of the term of years hereby granted with vacant possession at the commencement of the term but upon the supposition (if not a fact) that the Lessee has complied with all the obligations as to repair and decoration herein imposed on the Lessee (but without prejudice to any rights or remedies of the Lessor in regard thereto) and there being disregarded (if applicable) those matters set out in paragraphs (a) (b) and (c) of Section 34 of the Landlord and Tenant Act 1954 and there being disregarded (so far as may be permitted by law) all restrictions whatsoever relating to rent or to security of tenure contained in any statute or orders rules or regulations thereunder and any directions thereby given relating to any method of determination of rent such lease being on the same terms and conditions (other than as to amount of rent and length of term) as this present demise without the payment of any fine or premium:
(2) The expression 'review date' means the expiration of the fifth year of the said term or the expiration of the tenth year of the said term or the expiration of each successive period of five years as the context requires for the purpose of ascertainment of the open market value under sub-clause (B) hereof
(3) The open market rental value shall be determined in manner following that is to say it shall be such annual sum as shall be
(a) specified in a notice in writing signed by or on behalf of the Lessor and posted in a pre-paid envelope addressed to the Lessee at the demised premises at any time after the beginning of a clear period of six months immediately preceding the review date (and such notice shall be conclusively deemed to have been received by the Lessee in due course of post) or
(b) agreed between the parties before the expiration of three months immediately after the date of posting of such notice as aforesaid in substitution for the said sum or
(c) determined at the election of the Lessee (to be made by counter-notice in writing served by the Lessee upon the Lessor not later than the expiration of the said three months) by an independent surveyor appointed for that purpose by the parties jointly in writing or upon their failure to agree upon such appointment within one month immediately after the date of service of the said counter-notice then by an independent surveyor appointed for that purpose on the application of either party alone by the President for the time being of the Royal Institution of Chartered Surveyors and in either case in accordance with the provisions of the Arbitration Act 1950
Delay in rent determination
(4) In the event of failure to agree or of the determination of such independent surveyor not having been published prior to the review date for any reason whatever then in respect of the period of time (hereinafter called the delay period) beginning with the review date or the date of the Lessor's notice under sub-clause 3(a) (whichever shall be the later) and ending on the quarter day immediately following the date on which such determination shall have been agreed or published the Lessee shall pay to the Lessor in manner hereinbefore provided rent at the yearly rate payable immediately before the review date PROVIDED that at the expiration of the delay period there shall be due as a debt payable by the Lessee to the Lessor on demand a sum of money equal to the amount whereby the yearly rent agreed or determined by such independent surveyor shall exceed the yearly rent at the yearly rate aforesaid but duly apportioned on a daily basis in respect of the delay period"—
I need not read the rest of the 4th Schedule.
Paragraph (B)(5)—that is the next paragraph, which I have not read—made time of the essence; paragraph (C) provided for payment by way of further rent of a proportion of (inter alia) insurance and service charges.
On 10th March 1978 the lessor's agents gave the lessee notice under clause (1) and the 4th Schedule that they intended to increase the rent to £15,500 per annum. There was no agreement and on 13th July 1978 the lessor's agents gave the lessee notice under paragraph (A)(3)(c) of the 4th Schedule that it required the open market rental value of the premises to be determined by an independent surveyor. But the lessee was in financial difficulties, a receiver was appointed and on 25th October 1978 solicitors wrote to the Surety on behalf of the lessor calling on both the appellants to pay one quarter's rent in advance, due date 29th September 1978, amount payable £1,775, and insurance, but stating that the total amount of the rent due as from the review date was not shown because it had not been finalized.
On 13th November 1978 a winding-up order was made. The liquidator appointed did not disclaim the lease, but by an exchange of letters dated 4th April 1979 between him and the lessor's solicitors the lessee surrendered the lease to the lessor. On 22nd January 1979 the President of the Royal Institution of Chartered Surveyors had appointed an independent surveyor under paragraph (B)(3)(c) of the 4th Schedule. On 6th May 1979 the lessor's solicitors wrote to both appellants that as a result of the surrender the lessor was now able to finalize its claim against the appellants and enclosed a statement claiming £2,947.82. That is the sum claimed in this action against the appellants and awarded by Mr....
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