Starmark Enterprises Ltd v CPL Distribution Ltd [2001]

FACTS:

The Claimant was a tenant and sought a declaration that a counter notice served out of time under a rent review clause in the lease was valid and that the reviewed rent should therefore be determined by arbitration. The landlord, CPL, argued that pursuant to a sub-clause, the Claimant was deemed to have agreed to pay the rent proposed by CPL in the original notice given that the counter notice had not been served within the time period as specified by the lease. CPL contended that the deeming provision in the lease meant that time was of the essence and the counter-notice was ineffective. The Claimant argued that the deeming provision did not have that effect.

In the Court of First Instance the Judge concluded that the counter-notice was valid and the Claimant appeals against that decision.

The Claimant appealed against a ruling that a counter notice served in response to a landlord’s rent review notice was valid. The lease enabled the tenant to serve a counter notice within a specified time limit in response to a rent review notice served by the landlord but provided that the proposed new rent would be deemed to be the rent if the counter notice was served outside the time limit. The Claimant had served a rent review notice on CPL, which had responded with a counter notice outside the specified time limit.

The case went to the Court of Appeal.

HELD:

The appeal was allowed as the presumption of that time was not of the essence in a rent review clause. 

Kay LJ in his judgment found that the case of Mecca Leisure was wrongly decided. The conclusion of Kay LJ was entirely consistent with the conclusion of Browne-Wilkinson LJ in Mecca Leisure, with the observation of Simon Brown LJ in Bickenhall.  Kay LJ held that the court was not bound to follow that decision and that the court is bound by the earlier decision in AWADA [1984] 1 EGLR 116, (1984) 47 P&CR 607 applying the principles emerging from both United Scientific and AWADA.

In this case the provision in the rent review clause clearly stated what the parties to the contract intended should be the position once the required period had elapsed with no counter-notice having been served and that accordingly the presumption as to time not being of the essence had no part to play in this case.  Kay LJ therefore allowed the appeal and granted the declarations in the terms sought by the Claimant.

Arden LJ agreed with the judgment of Kay LJ and Gibson LJ.  Arden LJ found the question in the case was whether on the true interpretation of the relevant provisions of the lease, and considered the fact that the mere insertion of a timetable was not enough to make time of the essence, the parties to this lease clearly indicated that the time limit for service of the tenant’s counter-notice is a final limit.  The judgment held that where there is a deeming provision of the type in this case and nothing more, the time for service of the counter-notice should normally be taken to be a final one therefore the appeal in this case should be allowed.

Gibson LJ agreed and allowed the appeal.

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