Summary

Construction of a rent review clause in a lease which made reference to 'the land'. Whether rent was to be assessed in relation to the land or to the land together with buildings erected on it thereafter.

Facts

Plaintiff's appeal against the decision of HH Judge Boggis QC in respect of the construction of rent review provisions contained in a lease. The plaintiff was the tenant, from 1983, of premises at Aldridge, West Midlands. The defendant was the landlord at the date of the relevant lease. Cl.1 of the lease contained a definition of the expression 'the demised premises' as meaning 'the piece of land hereby demised together with the buildings and works constructed thereon in accordance with the covenants herein contained and all authorised additions thereto'. Cl.3 contained provisions for determining the rent. The first five years of the first 20 year period were specifically provided for; the yearly rent thereafter and for the second and third 20 year periods 'shall be such higher sum or sums as shall be assessed as a reasonable rent for the land for the appropriate period'. The plaintiff submitted that on the true construction of the lease the rent payable for the 20 year period beginning 25 March 1992 and for the subsequent period beginning on 25 March 2012 should be assessed in accordance with cl.3 disregarding the buildings and other structures now on hereafter standing on the demised land. The judge rejected this argument concluding that the reference to 'the land' in the clause included the buildings and other structures 'now or hereafter standing on the land' demised by the lease.

Held

(1) It was a prima facie assumption that under rent review clauses the court valued the premises as they were at the time of the rent review; Ponsford v HMS Aerosol Ltd (1979) AC 63, Laura Investment Co Ltd v Havering London Borough Council (1992) 1 EGLR 155, Goh Eng Wah v Yap Phooi Yin (1988) 2 EGLR 148. It followed that prima facie if demised premises consisted of land and buildings the rent should be determined by reference to both; British Airways PLC v Heathrow Airport Ltd (1992) 1 EGLR 141. However the lessee and lessor were contractually entitled to direct that, for valuation purposes, the presence of the buildings on the land let should be ignored by the valuer. (2) The decision in Goh v Yap (supra) did not however lay down any firm rule of construction applicable to all cases and obliging the court to read references to 'the land' or 'the said land', when appearing in rent review clauses, as necessarily referring to the land and buildings thereon. Reference to the particular lease was essential. (3) The draughtsman in cl.1 had given a careful definition of 'the demised premises' so as to include the buildings as well as the land; he had gone on to use the same phrase several times in cl.2. It was inconceivable, in the light of the fact that the draughtsman had used the words 'the land' in cl.3 instead of 'the demised premises', that it was contemplated that on a rent review the rent would be ascertained by reference to the land as developed thereafter with buildings thereon. (4) Reading the lease as a whole there was a substantial distinction between the land on the one hand and the buildings on the other and the only legitimate inference from the lease was that on a review the rent was to be assessed by reference to the land alone.

Appeal allowed.