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Construction

This page contains cases dealing with various construction points:
  • General principles applied to rent review clauses.
  • Date from which rent increase is take effect (House of Lords).
  • Operation by tenant.
  • Proviso giving rise to the obligation.
  • Turnover rent - inclusive of VAT
See also the pages on "time of the essence" and "presumption of reality" - see contents on left.


General principles

Applied to rent review clause

Scottish Widows Fund & Life Assurance Society v BGC International
[2012] EWCA Civ 607

Summary

A rent review clause contained an error and which meant that its proper construction was at odds with the actual words used. No rectification was, however, ordered.

See also the cases on construction on the Contract page in the Property Transactions section of the site

Facts

This was a dispute over the proper interpretation of a rent review clause in a commercial lease (clause 2(c)). It stated that the rent was to be the higher of
    ‘rent A [the initial rent] and the market rent on the immediately preceding Review Date.’
There had been two previous rent review dates, one in 2001 and another in 2006.

On one interpretation of the clause the market rent could, as it did, dip, and so fix the rent lower. However, on another interpretation, any dip in the market rent would be ignored as any previous higher market rent would set a floor to the market rent. On this basis it was argued that the correct interpretation was that the phrase “market rent” would mean the “higher of the market rents on the review dates in 2006 and 2001”.

The parties had also considered that the compensation for taking the sub lease (and the rent clause) was valued at £10 million.

First Instance

Norris J held that something had undoubtedly gone wrong with the clause and construed the clause as meaning the higher of the market rents “on any preceding review date”.

Court of Appeal

The appeal was allowed and a cross appeal to rectify was dismissed. Lady Justice Arden set out the more recent authorities on construction, notably < ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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