Property law reports

Landlord and tenant: Rent review

Landlord's trigger notice - whether served too late - lease providing specifically for earliest but not for latest date - review date specified as 'material date' for other rent review purposes - tenant disputing validity of notice served after material date - tenant's contention upheld

First Property Growth Partnership LP v Royal & Sun Alliance Property Services Ltd, Chancery Division (Mr Justice Rimer): 8 March 2002

The defendant tenant occupied offices in Tunbridge Wells under a 35-year lease that began on 7 May 1975, paying an annual rent, last reviewed in 1990, of 377,900.

By clause 4 of the lease, a landlord's notice requiring the rent to be reviewed could be given 'at any time not more than 12 months before the expiration of each or any of the following years of the said term - that is to say every fifth year thereof but not at any other time...'.

The reviewed rent, if higher than the passing rent, became payable 'as from the material date', meaning 'the end of the year of the said term during which such notice is given'.

In April 2001, the claimant (the landlord) acquired the reversion on the lease.

On the same day, it purported to serve a notice triggering a review as from 7 May 2000.

The tenant disputed the validity of the notice, contending that any such notice had to be given no later than 6 May 2000, and that the passing rent accordingly remained payable until such time as an upward review was properly effected for the period commencing 7 May 2005.

According to the tenant, the words 'not at any other time' excluded any date falling before or after the 12 months preceding the material date.

The landlord accepted that the clause laid down the earliest date on which the notice could be given, and that a revised rent could not be claimed for any period before the material date.

However, the landlord went on to argue that the notice was valid because no date had been specified in the lease as the last date upon which a notice could be served.

Held: The notice was invalid.

While the landlord's interpretation accurately reflected what might be described as the literal meaning of the words in issue, the modern approach required that 'we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey' (see per Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 1 EGLR 57, 66).

A more obvious choice of words could have been used to give effect to the intention advocated by the landlord.

On their true construction, the words 'but not at any other time' imply a defined period, which has already been identified as the period within which any notice had to be given.

Thus construed, those words did, as conceded by the landlord, make time of the essence.

Kim Lewison QC and Jonathan Arkush (instructed by Cawdery Kaye Fireman & Taylor) for the claimant.

Jonathan Brock QC (instructed by Mace & Jones) for the defendant.

Town and country planning: lawful use certificate

Lawful use certificate - material change of use - appellant applying for lawful use certificate for helicopter landings on department store roof - secretary of state refusing on ground that proposed use not ordinarily incidental to primary use - whether secretary of state applying correct test - whether proposed use amounting to material change of use - appeal dismissed

Harrods v Secretary of State for the Environment, Transport and the Regions and another: Court of Appeal (Lords Justice Schiemann and Sedley and Mr Justice Charles): 7 March 2002

The appellant, Harrods, proposed to use the roof of its department store for helicopter landings by its chairman.

It accordingly applied to the second respondent council for a lawful use certificate, pursuant to section 192 of the Town and Country Planning Act 1990.

It claimed that the proposed use was ancillary to the existing use of the premises, and so did not amount to a material change of use for the purposes of section 55.

The council refused permission on the basis that the proposed use was not ordinarily incidental to the primary use as a retail department store within class A1 of the Town and Country Planning (Use Classes) Order 1987.

Harrods' appeal against that decision was dismissed by the first respondent secretary of state, contrary to the recommendation of his inspector.

In reaching his decision, the secretary of state applied a test of whether the proposed use was 'ordinarily' incidental to the primary use, and found that it was not, since the benefits of it were more closely related to the appellant's key worker than to the business itself.

Harrods brought proceedings under section 288 of the 1990 Act, seeking to challenge that approach.

It contended, among other things, that the established 'incidental and ancillary' test for permitted changes of use could not be qualified by the insertion of the word 'ordinarily'.

The judge dismissed the claim after finding that a strict interpretation of the test, asking whether a use was 'ordinarily' incidental and ancillary, was appropriate when applying section 192, given that substantial and significant uses could be introduced under it.

Harrods appealed.

Held: The appeal was dismissed.

The statutory test, in deciding whether to grant a lawful use certificate under section 192 of the 1990 Act, was whether the proposed use amounted to a material change of use.

Although phrases such as 'ancillary', 'incidental' and 'ordinarily incidental' had been used in the case law to describe various situations in which there was no material change of use, such phrases were not to be substituted for the statutory test.

A change of use would not be material where it was one normally associated with the operation of department stores in general.

Such an approach struck the right balance between the interests of the landowner and those of the community.

Harrods' neighbours could reasonably expect that it would conduct activities of a type generally associated with the operation of a shop of that size, and, accordingly, such activities could fairly be described as ancillary and as not amounting to a material change of use.

On the other hand, a proposed use that was particular to Harrods, and had significant planning consequences, would amount to a material change of use, since neighbours might reasonably expect it to be subjected to the scrutiny of the planning procedure.

Such a use could still be introduced if the planning authority found no reasons of public interest for refusing planning permission.

It followed that the secretary of state, in having regard to what was ordinarily done in department stores, had asked the correct question, and he had answered it in a way that was open to him on the facts as found by the inspector (Hussain v Secretary of State for the Environment, Transport and the Regions (1971) 221 EG 627 and Lydcare Ltd v Secretary of State for the Environment, Transport and the Regions [1984] 2 EGLR 180 considered).

Guy Roots QC (instructed by Hammond Suddards Edge, of Leeds) for the appellant.

Philip Sales (instructed by the Treasury Solicitor) for the first respondent.

Timothy Straker QC (instructed by the solicitor to Kensington and Chelsea Royal London Borough Council) for the second respondents.