Summary

On a true construction of a lease, the "open market value" of assets of a business was the value of the assets as at the date of expiry of the lease.

Facts

Determination of an issue of construction of a lease of 29 June 1993 between the defendant landlord ('L') and the claimant tenant ('T'). By the lease, L demised to T an area within one of its supermarkets for use as a pharmacy. The term of the lease expired on 27 October 2001. The issue was on what date an expert valuer appointed under the lease should determine the "open market value of the assets of the business" to be sold by T to L. Clause 3.9 of the lease provided that if T wanted to assign the term of the lease, it first had to offer to surrender the lease to L and offer to sell to L the assets of the business at their open market value. Clause 5.18 provided that on the expiry of the lease, T was to sell and L to purchase the "assets of the business" at the "open market value". "Assets of the business" were defined as including fixtures and fittings to be specified, goodwill, book debts, cash float, stock and the benefit of an NHS licence but excluding liabilities, save those relating to employees. "Open market value" was defined as the amount that might reasonably be expected to be paid on the open market by a willing assignor. T submitted that the value should be taken on the contractual term date of the lease, 27 October 2001. L argued that the value on the date of the expert's valuation should be taken.

Held

There were elements in the "assets" to be valued that could not be correctly valued in anticipation. It was not appropriate to value the "assets" at any date other than the date of expiry of the lease, which was when L went into possession. A valuation before expiry would lead to an unavoidable element of approximation and discrepancy. L became entitled to possession on 27 October 2001 with the fixtures and fittings as they then stood. Accordingly the "open market value" of the assets was the value as at the date of expiry of the lease.

Declaration accordingly.

Permission to appeal granted.

Chancery Division
Lloyd J

References
WHC 2084 (CLTL 21/7/2003 EXTEMPORE : [2004] 1 P & CR 27 : [2003] Eh)