Trillium (Prime) Property GP Ltd v Elmfield Road Ltd, Court of Appeal - Civil Division, July 04, 2018, [2018] EWCA Civ 1556

Resolution Date:July 04, 2018
Issuing Organization:Civil Division
Actores:Trillium (Prime) Property GP Ltd v Elmfield Road Ltd
 
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Case No: A3/2016/4704

Neutral Citation Number: [2018] EWCA Civ 1556

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM HIGH COURT OF JUSTICE, CHANCERY DIVISION

Mr David Halpern QC, (sitting as a Deputy High Court Judge)

HC/2016/000335

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 4th July 2018

Before :

LORD JUSTICE LEWISON

and

LORD JUSTICE LEGGATT

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Between :

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Mr Timothy Dutton QC (instructed by DLA Piper LLP) for the Appellant

Mr Guy Fetherstonhaugh QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Respondent

Hearing date : 26 June 2018

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JudgmentLord Justice Lewison:

  1. The issue on this appeal is the interpretation of an index-linked rent review clause contained in a reversionary lease of offices in Bromley. The dispute between the parties concerns the figure to which indexation is to apply. If the indexation is applied to the Initial Rent payable under the lease, the resulting rent for the rent review period beginning on 25 March 2015 is £1,595,235.63. That is the figure for which the landlord contends. If, on the other hand, the indexation is applied to the rent which was payable immediately before the reversionary lease took effect, the resulting rent for that review period is £1,282,835.31. That is the figure for which the tenant contends. Mr David Halpern QC, sitting as a judge of the Chancery Division, found in favour of the landlord. His judgment is at [2016] EWHC 3122 (Ch). The tenant now appeals.

  2. The story begins with the grant of an underlease of the property on 23 June 1986. This is referred to in the lease with which we are concerned as ``the Initial Lease''. It was granted for a term of 25 years from 25 March 1985, and was thus limited to expire on 24 March 2010. The Initial Lease contained an upwards only rent review clause to market rent at five yearly intervals, with a final review a few days before the term was due to expire. The first rent review resulted in an increase in the rent to £1,160,000. That rent remained constant for the second and third reviews. On 28 December 2005 the parties entered into a number of memoranda and a deed of variation. The memoranda recorded that the rent was to remain at its current level of £1.16 million until 28 September 2005. By the deed of variation, it was agreed that:

    i) The rent for the period from 29 September 2005 to 24 March 2010 would be reduced to £965,000;

    ii) The final rent review was deleted;

    iii) A number of tenant's covenants were relaxed or widened.

  3. At the same time the parties entered into the reversionary lease with which we are concerned. The reddendum provided:

    ``YIELDING AND PAYING therefor FIRSTLY from the Term Commencement Date ... the Initial Rent ... and such rent to be subject thereafter to such increase calculated in accordance with the provisions of paragraph 3 of the First Schedule...''

  4. Clause 1 defined ``the Initial Rent'' as follows:

    ``The initial rent payable under this Lease from and including the Term Commencement Date to and including 25 March 2015 being rent equivalent to the [greatest] of (a)...

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